Atos shares tumble after accounting errors disclosed

French IT group Atos said on Thursday that auditors had discovered several accounting errors in two of its US units, sending shares in the company tumbling more than 20 per cent.

Paris-listed Atos, which is one of France’s largest tech groups, said auditors had found “several matters relating to internal control weaknesses over financial reporting process and revenue recognition” in the US businesses.

In its statement, the company added that these weaknesses also raised the “risk of override of controls”.

The two companies involved — Atos IT Solutions and Services and Atos IT Outsourcing Services LLC — represented “about 11 per cent of consolidated turnover and about 9 per cent of consolidated operating margin”, the Paris-based group said. The errors were not “material” to its 2020 financial statements, Atos added. 

Atos stock plunged as much as 22 per cent, before trimming some of those losses to trade down 15 per cent.

The revelations are a blow to the group, which was already trying to restore investor confidence following a failed takeover attempt earlier this year of US rival DXC Technology. That aborted acquisition was intended to allow it to better compete with larger rivals such as Accenture.

“Although things looked to be turning around when Atos laid the plans . . . for a higher-growth future, the company then dinged investors’ view of its ambitions when it announced that it was looking at a friendly takeover of DXC. Now, accounting issues could set the company back a bit further,” said analysts at JPMorgan.

Atos, which has a market capitalisation of €6.3bn, said it had hired external companies to look into the issue and added that it “is strongly enhancing its preventive controls and processes through a comprehensive action plan”.

The group is scheduled to release its first-quarter results on April 20 and its annual general meeting is set for May 12.