Ratos AB (publ)

ladies and gentlemen welcome to the autos group third quarter 2025 performance the call will be structured in two parts first a presentation by the autos group management team represented by philippe sal chairman and ceo and jacques francois de prest cfo afterwards there will be a q a session during this session you may only ask question by telephone by dialing pound key 5 on your telephone keypad to enter the queue i will now hand over to the management team gentlemen please go ahead

Thank you, operator. Good morning, everybody. Good afternoon for some of you in Asia. So we're going to do a presentation, and then after that, of course, taking all the questions you have. I'm, of course, together with Jacques Francois, the CFO of the group, and Marie, the ER of the group. So let's start with the first slide. So we're going to go on. One more. Okay, perfect. So in Q3, first, the performance is in line, I would say, with the full-year profitability and cash trajectory. I think it's very important. I understand, in fact, that probably the team has the credit and cash and cost. And, of course, we are spending quite a lot of time, I would say, on the top line, and I will give you more info during this call. The second is on bottom left. The Genesis plan is in motion to restore the strong financial performance. I just want to highlight that Genesis is a two-part project for me. The first one is the project on cost. And as you see, we are doing the job. We will probably execute Genesis on this one by mid-26. We estimate that probably in 18 months, we will have finished probably the job, except one or two countries where, of course, it's a little bit slower because it takes more time. I would say to the negotiations with the unions and you can imagine what countries are there. The second part of the Genesys plan that is very important is the top line. So Genesys is reducing costs and also I would say it's restarting the growth engine. And of course I would say the cost takes roughly 18 months. The restart of the engine growth is roughly a two-year effort. So we have done a lot of job I would say in 2025. reshuffle completely the organization, change a lot of people in the growth engine. And the idea, of course, is to start to produce results in 26. And of course, accelerating after that the top line in 27 and 28 according to our plan. And last, management team. So as you have seen, the top 20 is complete. The top 200 is almost complete. It will be probably by the end of the year. So I would say that the First, the circle and the second one will be, I would say, in force to execute, of course, HGDC in 26 and going forward. If we go to the next slide, some key numbers. So the order entry, 1.3 billion, 66%. In fact, it's more 70 plus on NATO's brand. It's slower in Eviden and mainly on HPC. Just as a comment, two things. The first one is that the book to build in Q3 is always low. It's roughly 70 to 80 when you look, for example, at our numbers for the last years. And secondly, it's very important that you understand that discipline is important. Discipline in cost, discipline also in the portfolio, in the top line. And for example, I have decided not to renew some contracts. And by doing that, I would say we have lowered, I would say, the book to build. I can give you just one example. There was a big contract in the US. If I could have re-signed this, it's a book-to-bill roughly 300 million plus, so it's roughly a 20% rate. I would have increased, I would say, the book-to-bill by 20 points, but the margin was too low, and we decided, I would say, to stop the negotiation. So it's very important to understand, of course, that the discipline on the portfolio lowers the book-to-bill on the short term. And of course, lower the revenues as we, of course, try to stop as many as possible contracts where we think it's impossible, I would say, to renegotiate the price with the customers. So revenue, it's 2 billion. It's roughly minus 10 versus last year. You have seen that in Eviden, we are in a growing pattern. And in fact, we are decreasing with Atos. Also, this one, I can give you one number on the discipline. 80% of the decrease in Atos, so 8-0, comes from the contract stop. So I would say we are managing the top line, and that's why it doesn't hurt, in fact, the profitability, because we are stopping contracts with roughly 0% margin. Important to know that roughly 5% of our turnover is what we call black contracts, so contracts with roughly zero profitability, and roughly 15%, it's red contracts, it's contracts between 5% and 15%. So roughly 20%, 1.5 billion plus, are contracts where right now I would say we have strong actions either to renegotiate to, I would say, change the delivery to beef up the margin or stop, I would say, the revenues. Net change in cash is roughly minus 38 million. And in fact, we are not stopping Genesys. So it's not because we are trying, I would say, to slow down the Genesys. It's just because, in fact, we are also doing a lot of actions, I would say, to decrease, for example, the accounts receivable, so to decrease the DSO. The teams are, I would say, in place to make sure that we pay faster. It's very important and it's, of course, on a recurring basis again. And then the liquidity, we still have 1.8 billion in cash, so I would say we are quite confident, of course, that everything is okay in terms of, I would say, liquidity for the plan and, of course, to pay, I would say, the genesis rammed on in terms of cost. Next slide, please. Commercial strategy, so as I said, the flip side of the decrease of cost is the increase of the top line. We are still aiming, I would say, to have zero plus growth in the course of next year. So I would say probably in Q3 this year, we are at the bottom for Atos in terms of revenues, we'll see. And then we have done a lot of things. So first, the commercial pipeline is gaining momentum. In fact, we have targeted the 100 accounts, the top 100 accounts of Atos. Just for information, it's roughly two-thirds of the revenues. And then for each CEP, so client executive partner of this account, they have now a plan, a three-year plan, where they look at the opportunities, I would say, in their own account and opportunities. Remember that during the capital market day, we say we have roughly 1.6 business lines per account. And the idea, of course, is to go at two, three for some of the accounts. So there was a lot of opportunities that have emerged, I would say, from this work, and it has been done, in fact, during the summer. Cross-sell, as I say again, increasing for a given customer, of course, the different, I would say, capabilities of the group, and, of course, a good traction also in cloud and cyber. We are, in the book to read, in fact, above 100, and we see that there is more and more interest, especially, I would say, also in Europe, of course, with the private cloud. And of course, I would say the sovereignty subject. You have below some contracts renewal and win. I'm not going to go in detail on this one. Next slide. The execution of Genesys. So in terms of people, we do also the AI, I would say, transformation. Of course, it's going to touch the delivery. It's going to touch, I would say, the service offerings that we're going to, I would say, propose to our clients. And it's going also to touch the back office Of Atos, you can see that we have also trained a lot of our project managers and also of our engineers in the data and AI space. Portfolio review is the number of countries, so we close six additional countries. When we say we close, there is no more commercial activity. Sometimes we still have, I would say, a company there, so let's say a juridical structure that will close, of course, but it takes sometimes more time, I would say, than I would say closing the business. And as I said, in the portfolio, we are resetting, I would say, the base of the portfolio. When I say resetting, it's really to shave the low profitability contracts. Remember, 20% of my portfolio is not at the rate of profitability. And if you see, for example, the signed contracts that we have for the first nine months of Atos, the margin is roughly four points above, I would say, the margin that I have on my P&L. So it means that the discipline is working, and for sure I would say we are probably more selective in terms of, I would say, business increase. And then delivery and G&A, we say this one is really going very well. The billability is stable, but I would say during Q3 it's normal because with the holidays there is an effect, of course, on this ratio. You will see probably an increase, in fact, in Q4, so we continue, I would say, increase this ratio and heading i would say to the 85 in the course of 26 and in terms of restructuring as you have seen we have a reduction of again 2600 people so we are now 67 in the company we spend roughly 90 million and nine zero of restructuring in terms of cash and we launch also a social plan in france in september to continue so we are i would say when i look at the direct people We have probably done roughly three quarter of the job by the end of 25. And in terms of indirect, we will have complete the job in five by the end of 25. So we are almost complete. And as I say, we will finish the job on direct people in the course of 26. Most of it will be done in H1. Next slide. This is the workforce. As I say, we are now 67 in the company. It will continue to slide. Remember that with the HPC, roughly 2,500 people will leave. And with the countries exit, it's probably several thousand also that will be taken off by the end of the year. So we still have some countries are going to close, in fact, in Q4 that will have a big impact. The one that we have closed, in fact, in Q3 are very small in terms of number of people. Next slide, please. So if I go on the revenue performance, I would say GEO by GEO. So let's go first on ATOS. So this is, I would say, the bridge between Q3, pro-pharma Q3 without the scope. Remember that we have sold the world grid last year, that we have also foreign exchange, eating, I would say, the top line, mainly, in fact, in the UK and the US, but also, for example, in Brazil. So I would say the pro-pharma is 2.2 billion. And as I say, organic decrease was roughly minus 200. And in fact, 80% of this, and in fact, it's more than 233 because it's mainly on ATOS, 80%, so it's roughly close to 300 million, 250 to 300 million comes from a contract that we have decided not to renew. Revenues is roughly 2 billion this quarter. And as I say, we maneuver in the 2 billion area, I would say, per quarter, plus or minus, of course, it depends on the quarter. And that's why we have gathered that we should, I would say, do 2 billion plus again in Q4 to be roughly at 8 billion plus at the end of the year. Next slide. So this is, I would say, the split between Atos and Eviden. And then go to the next slide, I would say, geo by geo. So you have, I would say, more color, I would say, by geo. So in Germany, I would say, contract type down is very important. There are contracts that we have decided to stop with a very low margin. Just for information, the OEM in fact in Germany will be positive for the first time in many years this year. And in fact for also the GEO, we call this GEO GACE, which is Germany, Austria and Central Europe. And next year we will probably triple, I would say, the profitability. So we have, I would say, we will see a lot of impacts of what we are doing in the course of 2025. Next, the GEO, we have North America, bigger decrease also with contracts exist. Again, I would say for some of, I would say probably U.S. have been hit, I would say, hardly on the financial restructuring in 24. That's probably the GEO that has suffered the most, I would say, from the situation in 24. And we have quite a good traction right now and probably restarting, I would say, to go in the course of 26. Next, the GEO. France also has suffered, I would say, from the situation in 2024, but we have also reduced the scope, I would say, in some low-margin contracts. And remember also that in France, with the financial instability coming from the country, this time not from Atos, the social, the public sector, in fact, public and defense, it's a big sector for us, 30% plus, has suffered, in fact, with no budget in the beginning of 25. And in fact, it has, I would say, delayed some contracts that we had. Next, the geo. UK and Ireland is like the US also. First, it has suffered from, I would say, the financial situation on 24. BPO contracts were there, so we stopped a lot of BPO contracts. And there is one, in fact, the digital workplace of people, I would say that was a big one, losing money. As I said, we have roughly two contracts in BPO going forward with a given size. It's roughly 30 million plus for each contract, still losing money in 2025. And we are, I would say, trying to be roughly cash neutral by 2027. One of them will be probably stopped by that time. Next to GEO, international markets, again, you are first comparable with the Olympics, of course, because, in fact, the major event is in this GEO and it's also in Spain, and Spain is part of international markets. And we have also some contracts done, in fact, in APAC and Switzerland. Now for Benelux, that's the one that is probably, let's say, resisting the most. We still have, I would say, some contract randoms, but we have a good traction right now in the pipe, and we have quite, I would say, good opportunities right now with Europe, with the European Commission, in fact. Okay, and then we have probably Eviden. So as I say, Eviden, this quarter, in fact, we have the Jupiter. But remember also that without Jupiter, in fact, we had a lot of also revenues that have been pushed to Q4. So, in fact, Jupiter was a good news, but we had also some other news that, in fact, is a mixed quarter for Eviden. And we still have, I would say, we still expect a strong quarter, in fact, in Q4. I think that's it for the, I would say, the revenues per GEO. If we go to the next slide, then I will give the floor to Jacques-François on the liquidity position.

Thank you very much, Philippe. Hi, everybody. As a reminder, the publication of our quarterly liquidity position is part of the regular reporting requirements, which were defined and agreed with the group's financial creditors. So the certificates have been posted yesterday night on our website. Our liquidity position remains strong at the end of September, thanks to limited estimated cash consumption over the summer. In Q3, the net change in cash is estimated at approximately minus 38 million euro, which includes the minus 87 million euro related to restructuring over the quarter. This figure is reported, of course, unlike previous quarters, without any use of accounts receivable factoring or specific optimization on trade payables. That number also reflects the results before the estimated impact of exchange rate fluctuations, which amount to approximately plus 11 million euros over the quarter. As a result, as of September 30th, Atos Group's liquidity is estimated at 1 billion 769 million euros compared to 1.804 million euros at the end of June 2025. This is more than 1.1 billion above the minimum requirement of 600 million euros which is set in our credit documentation. All right, thank you. With that, I will now hand back the mic to Philippe for the outlook.