Atos Origin SA is aiming to become the biggest European IT services provider, after announcing strong results for 2005.
In the 12 months to December, Atos recorded net profit of 235.4m euros ($280.7m), up from 113.3m euros ($135.1m) in the previous year, on revenue of 5.5bn euros ($6.5bn), up 4% on 2004 and including organic growth of 8%.
According to figures released by Atos, the company is the fifth largest IT services provider in Western Europe, with a 4.2% share of a total market which it values at 118.9bn euros ($141.8bn).
Atos made 93% or 5.1bn euros ($6.1bn) of its revenue from Europe last year, which puts it level with EDS, but trailing IBM Global Services with estimated European sales in excess of $10bn, Accenture ($7.7bn) and Capgemini (around $6.6bn in Europe).
Network services vendors T-Systems and BT Global Services have respective annual sales of $11bn and $14bn, but there is limited overlap between what these vendors do and Atos Origin’s core activities.
To achieve its goal of becoming the top European IT services player, Atos will initially be looking to grow in the UK and Germany. The UK is Atos’ second-largest geographical market, but the company is aiming to improve on its 2005 performance, when sales in the region fell 4% to 1.2bn euros ($1.4bn).
In Germany and Central Europe, Atos made revenue in 2005 of 562m euros ($670.2m), up 68.3% on the previous year but still relatively small when compared to the company’s major European rivals. LogicaCMG, for example, recently beefed up its German presence with the acquisition of Unilog SA.
Atos Origin has a history of being one of the more successful executors of an M&A strategy in the IT services space. It has rapidly grown its annual sales from just $1.2bn in 1998 through purchases including Origin in the Netherlands and Sema Group in France.
Atos also revealed plans for a significant expansion of its offshore and nearshore headcount. At the end of 2005, the company had approximately 3,000 staff in offshore locations, including about 1,200 in India, out of a worldwide headcount of 47,684. The company is planning to increase its total offshore workforce to 5,000 by the end of 2006, of which some 2,500 will be based in India.
While India will be the main focus for offshore support services, Atos’ commercial growth in Asia-Pacific will be driven by expansion in China. The company said that its contract to manage the IT systems for the 2008 Olympic Games in Beijing would provide an important platform for promoting our services in the country.
Atos’ operating margin for the year was 7.6%, up from 7.3% in 2004. The company said that this improvement was largely due to successful restructuring within the company. However, the margin was at the lower end of expectations, which Atos claimed was due to lower than expected profitability in a number of non-core businesses, most of which have now been divested.
Paris-based Atos has recently been struggling with a large net debt, but it succeeded in lowering debt by 312m euros ($372.1m) to 180m euros ($214.7m) during 2005.