IT services vendor Atos Origin SA has reported a fall in sales for the third quarter of 2006, as UK sales continued to slide.
In the three months to the end of September, Atos’s sales fell 1.3% to 1.28bn euros ($1.62bn), with UK revenue down 17.8% at 235m euros ($298.2m). The company said its poor performance in the UK was partly due to the loss of a major contract with the Metropolitan Police, which was picked up by a consortium led by local rival Capgemini in October last year, but also the result of double-digit sales declines across all three service lines: consulting, systems integration, and managed operations.
In the first half of 2006, Atos’s UK sales fell 7.9% and the company announced the implementation of an action plan aimed at reviving its fortunes in the region. The fall in revenue during the third quarter, however, was sharper than expected, and Atos was forced to admit that the impact of the action plan was taking longer to come through than had been forecast.
Nevertheless, Atos was able to point to some more positive recent developments in the UK as signs of a recovery. In the last two months, the company has won significant deals with the Department for Constitutional Affairs, the Association of Train Operating Companies, and the Cabinet Office.
Paris, France-based Atos was forced to halve its organic revenue growth target for full-year 2006 to 1.5% following the results announcement. The company also warned investors that its operating margin would be hit by factors such as lower order intake on short-term new business, further delays in negotiating contracts in the UK and higher than forecast attrition rates, which were up to 14.3% in the third quarter, from 12.0% in the second quarter.
Atos said a review of the group’s structure and organization is already under way, with a transformation plan to be made public in January 2007.
The company also moved to quash speculation that it was the target of a takeover bid from private equity firm Blackstone Group. In a conference call to discuss the company’s third-quarter results, Atos CEO Bernard Bourigeaud said that it was not currently in active discussions regarding a possible acquisition.
Atos’s shares fell 2% in morning trading on the Paris stock exchange to just over 44 euros per share. The company’s stock suffered a sharp fall in July on the back of unimpressive results for the first half of the year, but recovered earlier this month thanks to the flurry of takeover speculation.