Tieto Corporation INTERIM REPORT 25 April 2014, 8.00 am EET
• In IT services, organic growth in local currencies at 3%
• Improved performance in Consulting and System Integration and Managed Services
• Volatility in Product Development Services continues
The full interim report with tables is available at the end of this release
Key figures
• Net sales in local currencies were organically down by 1.4%
• In IT services, organic growth in local currencies up at 3.3%
• First-quarter operating profit excl. one-off items rose to EUR 34.5 (31.0) million,
margin increased to 8.9% (7.3)
| 1–3/2014 | 1–3/20132) | |
| Net sales, EUR million | 387.0 | 423.9 |
| Change, % | -8.7 | n/a |
| Organic change in local currencies, % | -1.4 | n/a |
| Operating profit (EBITA), EUR million | 34.4 | 30.3 |
| Operating margin (EBITA), % | 8.9 | 7.2 |
| Operating profit (EBIT), EUR million | 34.0 | 29.3 |
| Operating margin (EBIT), % | 8.8 | 6.9 |
| Operating profit (EBIT) excl. one-off items1), EUR million | 34.5 | 31.0 |
| Operating margin (EBIT) excl. one-off items1), % | 8.9 | 7.3 |
| Profit after taxes, EUR million | 24.6 | 21.4 |
| EPS, EUR | 0.34 | 0.30 |
| Net cash flow from operations, EUR million | 50.0 | 50.0 |
| Return on equity, 12-month rolling, % | 13.5 | 3.7 |
| Return on capital employed, 12-month rolling, % 3) | 15.3 | 8.1 |
| Investments, EUR million | 13.4 | 17.3 |
| Interest-bearing net debt, EUR million | -20.5 | 18.3 |
| Net debt/EBITDA | -0.1 | 0.1 |
| Book-to-bill | 1.0 | 0.9 |
| Order backlog | 1 582 | 1 468 |
| Personnel on 31 March | 14 102 | 15 845 |
1) Excl. capital gains, impairments and restructuring costs
2) Figures restated according to IFRS 11 ‘Joint arrangements’
3) The figure for 2013 restated according to the new calculation of the figure
Full-year outlook for 2014
Tieto expects its full-year operating profit (EBIT) excluding one-off items to increase from the previous year’s level (EUR 141.2 million in 2013).
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“I’m pleased with the strong execution across many of our businesses in the first quarter. The combination of our strong order book and profitability of close to 9% reflects both our improved competitiveness in IT services and potential for sustainable profit improvement. The efficiency measures we have taken are visible in most of our businesses. However, we continue to face challenges in Product Development Services.
This was the first quarter during which the Consulting and System Integration service line demonstrated clear performance improvement. In Managed Services, the positive development in both cloud services and profitability continued. Our longer-term growth investments in areas such as Customer Experience Management, Industrial Internet, Lifecare and cloud services are well positioned to help us take advantage of current market demand.
While the first-quarter profitability performance reflects clear improvement in utilization rates, both competitiveness and profitability will remain high on our agenda. New technologies, such as cloud services, will continue to play a big role in driving efficiency and supporting renewal of our customers’ business. This, coupled with simplification and automation enable continuous efficiency improvement. At Tieto, we are well positioned to harness new technologies in driving our competitiveness.”
Financial performance by service line
| EUR million | Customer sales 1–3/2014 | Customer sales 1–3/2013 | Change, % | Operating profit 1–3/2014 | Operating profit 1–3/2013 |
| Managed Services | 127 | 120 | 6 | 10.9 | 0.7 |
| Consulting and System Integration | 100 | 108 | -8 | 11.1 | 3.8 |
| Industry Products | 100 | 109 | -8 | 15.5 | 17.6 |
| Product Development Services | 60 | 86 | -30 | 1.1 | 9.3 |
| Support Functions and Global Management | -4.6 | -2.1 | |||
| Total | 387 | 424 | -9 | 34.0 | 29.3 |
Operating margin by service line
| % | Operating margin 1–3/2014 | Operating margin 1–3/2013 | Operating margin excl. one-off items1) 1–3/2014 | Operating margin excl. one-off items1) 1–3/2013 |
| Managed Services | 8.5 | 0.6 | 8.4 | 0.3 |
| Consulting and System Integration | 11.1 | 3.5 | 11.2 | 4.7 |
| Industry Products | 15.4 | 16.1 | 15.4 | 16.1 |
| Product Development Services | 1.9 | 10.8 | 2.6 | 11.6 |
| Total | 8.8 | 6.9 | 8.9 | 7.3 |
1) Excl. capital gains, impairments and restructuring costs
Organic change in local currency by service line
| EUR million | Customer sales adj. for acquisitions and currency 1–3/2014 | Customer sales adj. for divestments 1–3/2013 | Change, % |
| Managed Services | 130 | 120 | 9 |
| Consulting and System Integration | 100 | 101 | -1 |
| Industry Products | 106 | 104 | 1 |
| IT services | 336 | 325 | 3 |
| Product Development Services | 61 | 78 | -21 |
| Total | 397 | 403 | -1 |
The following divestments affected first-quarter sales: local businesses in Germany and the Netherlands, the forest business in the UK and the security solutions business in Denmark. Additionally, the acquisition of Canvisa Consulting is eliminated.
Customer sales by industry group
| EUR million | Customer sales 1–3/2014 | Customer sales 1–3/2013 | Change, % |
| Financial Services | 83 | 80 | 4 |
| Manufacturing, Retail and Logistics | 79 | 76 | 3 |
| Public, Healthcare and Welfare | 100 | 107 | -6 |
| Telecom, Media and Energy | 65 | 74 | -12 |
| Product Development Services | 60 | 86 | -30 |
| Total | 387 | 424 | -9 |
Organic change in local currency by industry group
| EUR million | Customer sales adj. for acquisitions and currency 1–3/2014 | Customer sales adj. for divestments 1–3/2013 | Change, % |
| Financial Services | 85 | 79 | 8 |
| Manufacturing, Retail and Logistics | 80 | 75 | 6 |
| Public, Healthcare and Welfare | 103 | 101 | 1 |
| Telecom, Media and Energy | 69 | 70 | -2 |
| IT services | 336 | 325 | 3 |
| Product Development Services | 61 | 78 | -21 |
| Total | 397 | 403 | -1 |
The following divestments affected first-quarter sales: local businesses in Germany and the Netherlands, the forest business in the UK and the security solutions business in Denmark. Additionally, the acquisition of Canvisa Consulting is eliminated.
For further information, please contact:
Lasse Heinonen, CFO, tel. +358 2072 66329, +358 50 393 4950, lasse.heinonen (at) tieto.com
Tanja Lounevirta, Head of Investor Relations, tel +358 2072 71725, +358 50 321 7510, tanja.lounevirta (at) tieto.com
Press conference for analysts and media will be held at Tieto’s premises in Stockholm, address: Fjärde Bassängvägen 15, at 11.00 am EET (10.00 am CET, 9.00 am UK time). The results will be presented in English by Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO.
The conference will be webcasted and can be viewed live on Tieto's website. The meeting participants can also join a telephone conference that will be held at the same time. The telephone conference details can be found below.
Telephone conference numbers:
Finland: +358 (0)9 6937 9543
Sweden: +46 (0)8 5033 6539
UK: +44 (0)20 3427 1903
US: +1646 254 3364
Conference code: 1579669
To ensure that you are connected to the conference call, please dial in a few minutes before the start of the press and analyst conference. There will also be a possibility to present questions online. An on-demand video will be available after the conference.
Tieto publishes financial information in English, Finnish and Swedish. The full interim report with tables is available only in English and Finnish.
For further information, please contact:
Tanja Lounevirta, Head of Investor Relations, tel. +358 50321 7510, tanja.lounevirta (at) tieto.com
TIETO CORPORATION
DISTRIBUTION
NASDAQ OMX Helsinki
NASDAQ OMX Stockholm
Principal Media
Tieto is the largest Nordic IT services company providing full life-cycle services for both the private and public sectors and product development services in the field of communications and embedded technologies. The company has global presence through its product development business and global delivery centres. Tieto is committed to developing enterprises and society through IT by realizing new opportunities in customers’ business transformation. At Tieto, we believe in professional development and results.
Founded 1968, headquartered in Helsinki, Finland and with approximately 14 000 experts, the company operates in over 20 countries with net sales of approximately EUR 1.6 billion. Tieto’s shares are listed on NASDAQ OMX in Helsinki and Stockholm. Please visit www.tieto.com for more information.
