By Cecilia Butini

 

Shares in Atos SE traded sharply lower in early trading on Monday after the French IT company cut its 2021 financial targets on negative growth in the second quarter.

At 0855 GMT, Atos traded 14.9% lower at EUR45.00.

The company set a new operating margin target of about 6%, down from a previous margin range of between 9.4% and 9.8%, it said.

Atos is facing an accelerated decline in its legacy infrastructure business, Bryan Garnier analysts said, as the company said it expects flat revenue in the second quarter and that it sees this business shift persisting in the second half.

Free cash flow is expected at negative 364 million euros (negative $432.4 million) in the first half, versus negative EUR172 million in the same period in 2020. Free cash flow is being affected by a reduction in cash in advance from customers, Bryan Garnier said, adding that the company has decided to reduce cash in advance from customers moving forward.

Nevertheless, Atos reiterated its medium-term targets, based on intense transformation and expanding its focus on digital, cloud, security and decarbonization, analysts said.

Atos said it expects to improve on all its key performance indicators in 2022 and backed its medium-term targets for revenue growth in the range of 5% to 7% at constant currencies, operating margin of 11% to 12% and free cash flow conversion above 60%.

 

Write to Cecilia Butini at cecilia.butini@wsj.com

 

(END) Dow Jones Newswires

July 12, 2021 04:19 ET (08:19 GMT)

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