Tieto Corporation INTERIM REPORT 5 February 2015, 8.00 am EET
· Growth emerging in IT services driven by cloud services
· Increased investments in growth businesses
· High one-off restructuring costs in Product Development Services as guided
The full interim report with tables is available at the end of this release
Key figures for the fourth quarter
· Organic growth in local currencies was 0.9%
· In IT services organic growth in local currencies was 3.5%
· Order intake (Total Contract Value) amounted to EUR 672 (551) million and
order backlog was EUR 1 784 (1 540) million
· Fourth-quarter operating profit excl. one-off items rose to EUR 44.4 (42.0)
million, 11.0% (10.4) of sales
· Cash flow rose to EUR 90.2 (57.5) million
Key figures for the full year
· Organically, net sales in local currencies were down by 1.1%
· In IT services, organic growth in local currencies was 2.6%
· Full-year operating profit excl. one-off items rose to EUR 150.2 (141.2)
million, 9.9% (8.8) of sales
· Proposed dividend EUR 1.00 (0.90) per share, up by 11%, and an additional
dividend of EUR 0.30
· Dividend yield of 6%, or close to 5% excluding additional dividend
+-----------------------------+-------+------------------+---------+---------+
| | 10-12/| 10-12/| 1-12/| 1–12/|
| | 2014| 20132)| 2014| 20132)|
+-----------------------------+-------+------------------+---------+---------+
|Net sales, EUR million |402.9 | 405.1 |1 522.5 |1 606.8 |
+-----------------------------+-------+------------------+---------+---------+
| Change, % | -0.6 | n/a| -5.3 | n/a|
+-----------------------------+-------+------------------+---------+---------+
| Organic change in local | 0.9 | n/a| -1.1 | n/a|
|currencies, % | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Operating profit (EBITA), EUR| 9.7 | 18.2 | 62.1 | 89.4 |
|million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Operating margin (EBITA), % | 2.4 | 4.5 | 4.1 | 5.6 |
+-----------------------------+-------+------------------+---------+---------+
|Operating profit (EBIT), EUR | 9.5 | 17.3 | 61.1 | 85.7 |
|million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Operating margin (EBIT), % | 2.4 | 4.3 | 4.0 | 5.3 |
+-----------------------------+-------+------------------+---------+---------+
|Operating profit (EBIT) excl.| 44.4 | 42.0 | 150.2 | 141.2 |
|one-off items1), EUR million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Operating margin (EBIT) excl.| 11.0 | 10.4 | 9.9 | 8.8 |
|one-off items1), % | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Profit after taxes, EUR | 6.7 | 15.0 | 35.0 | 62.2 |
|million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|EPS, EUR | 0.09 | 0.21 | 0.48 | 0.86 |
+-----------------------------+-------+------------------+---------+---------+
|Net cash flow from | 90.2 | 57.5 | 167.9 | 159.0 |
|operations, EUR million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Return on equity, 12-month | 7.1 | 12.0 | 7.1 | 12.0 |
|rolling, % | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Return on capital employed, | 9.8 | 13.5 | 9.8 | 13.5 |
|12-month rolling, % 3) | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Investments, EUR million | 12.9 | 23.6 | 43.5 | 71.7 |
+-----------------------------+-------+------------------+---------+---------+
|Interest-bearing net debt, |-59.2 | 15.5 | -59.2 | 15.5 |
|EUR million | | | | |
+-----------------------------+-------+------------------+---------+---------+
|Net debt/EBITDA | -0.4 | 0.1 | -0.4 | 0.1 |
+-----------------------------+-------+------------------+---------+---------+
|Book-to-bill | 1.7 | 1.4 | 1.2 | 1.1 |
+-----------------------------+-------+------------------+---------+---------+
|Order backlog | 1 784 | 1 540 | 1 784 | 1 540 |
+-----------------------------+-------+------------------+---------+---------+
|Personnel on 31 Dec |13 720 | 14 318 | 13 720 | 14 318 |
+-----------------------------+-------+------------------+---------+---------+
1) Excl. capital gains, goodwill impairment charges and restructuring costs
2) Figures restated according to IFRS 11 ‘Joint arrangements’
3) The figure for 2013 has been restated.
Full-year outlook for 2015
Tieto expects its full-year operating profit (EBIT) excluding one-off items to
increase from the previous year’s level (EUR 150.2 million in 2014).
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“We are pleased with the performance improvement of our IT services business
throughout 2014. Our quality and efficiency measures progressed well during the
year and supported the improvement in underlying margins, which was also visible
in our fourth-quarter performance.
During 2014, our IT services business grew by nearly 3% in local currencies
while order intake growth was 5% and further accelerated in the fourth quarter.
Underlying profitability of IT services continued to improve despite increased
investments in new services. Simultaneously, our Product Development Services
underwent significant changes due to external market conditions. I’m also
pleased with the progress of our start-up operations – they drive innovation
with our customers and provide highly agile ways of working. These serve as good
role models to reinvent the culture within Tieto.
The global IT services market continues to change at a fast pace, driven
primarily by our customers’ digitalization agenda. This rapid pace of change
provides ample new business opportunities, while requiring us to continuously
renew our own operations. The actions that we announced in early January 2015
regarding our service portfolio and competence renewal are proactive measures to
take Tieto into a market leading position. It has been exciting to shift our
attention towards new services and growth acceleration, as visible in increased
investments towards the year end. The next stage of our strategy combines
efficiency, innovation and growth, which I expect to be highly beneficial and
inspiring to our customers and employees."
Financial performance by service line
+-------------------+--------+---------+-------+----------+----------------+
|EUR million |Customer| Customer|Change,| Operating|Operating profit|
| | sales| sales| %| profit| 10–12/2013|
| | 10|10–12/201| |10–12/2014| |
| |-12/2014| 3| | | |
+-------------------+--------+---------+-------+----------+----------------+
|Managed Services | 131| 129| 1| 8.2| 0.4|
+-------------------+--------+---------+-------+----------+----------------+
|Consulting and | 107| 102| 5| 10.4| -1.6|
|System Integration | | | | | |
+-------------------+--------+---------+-------+----------+----------------+
|Industry Products | 107| 111| -4| 17.4| 28.3|
+-------------------+--------+---------+-------+----------+----------------+
|Product Development| 58| 63| -8| -4.4| -1.3|
|Services | | | | | |
+-------------------+--------+---------+-------+----------+----------------+
|Support Functions | | | | -22.1| -8.5|
|and Global | | | | | |
|Management | | | | | |
+-------------------+--------+---------+-------+----------+----------------+
|Total | 403| 405| -1| 9.5| 17.3|
+-------------------+--------+---------+-------+----------+----------------+
Operating margin by service line
+-----------+----------+----------+----------+----------------------+
|% | Operating| Operating| Operating|Operating margin excl.|
| | margin| margin| margin| one-off items1)|
| |10–12/2014|10–12/2013| excl.| 10–12/2013|
| | | | one-off| |
| | | | items1)| |
| | | |10–12/2014| |
+-----------+----------+----------+----------+----------------------+
|Managed | 6.2| 0.3| 6.9| 6.9|
|Services | | | | |
+-----------+----------+----------+----------+----------------------+
|Consulting | 9.8| -1.6| 9.5| 7.6|
|and | | | | |
|System | | | | |
|Integration| | | | |
+-----------+----------+----------+----------+----------------------+
|Industry | 16.3| 25.5| 18.3| 25.7|
|Products | | | | |
+-----------+----------+----------+----------+----------------------+
|Product | -7.5| -2.0| 20.5| 4.2|
|Development| | | | |
|Services | | | | |
+-----------+----------+----------+----------+----------------------+
|Total | 2.4| 4.3| 11.0| 10.4|
+-----------+----------+----------+----------+----------------------+
|1) Excl. | | |
|capital | | |
|gains, | | |
|impairments | | |
|and | | |
|restructuring | | |
|costs | | |
+-----------+----------+----------+----------+----------------------+
Organic change in local currency by service line
+----------------+-------------------------+-----------------------+---------+
|EUR million | Customer sales adj. for|Customer sales adj. for|Change, %|
| |acquisitions and currency| divestments 10–12/2013| |
| | 10–12/2014| | |
+----------------+-------------------------+-----------------------+---------+
|Managed Services| 134| 130| 4|
+----------------+-------------------------+-----------------------+---------+
|Consulting and | 108| 101| 8|
|System | | | |
|Integration | | | |
+----------------+-------------------------+-----------------------+---------+
|Industry | 110| 111| -1|
|Products | | | |
+----------------+-------------------------+-----------------------+---------+
|IT services | 353| 341| 4|
+----------------+-------------------------+-----------------------+---------+
|Product | 55| 63| -13|
|Development | | | |
|Services | | | |
+----------------+-------------------------+-----------------------+---------+
|Total | 408| 404| 1|
+----------------+-------------------------+-----------------------+---------+
|Fourth-quarter |
|sales were |
|affected by the |
|divestment of |
|the security |
|solutions |
|business in |
|Denmark. |
|Additionally, |
|the acquisitions |
|of part of |
|Siemens |
|Convergence |
|Creators' |
|business are |
|eliminated. |
+----------------+-------------------------+-----------------------+---------+
Customer sales by industry group
+--------------+----------+-------------------------+---------+
|EUR million | Customer|Customer sales 10–12/2013|Change, %|
| | sales| | |
| |10–12/2014| | |
+--------------+----------+-------------------------+---------+
|Financial | 90| 89| 2|
|Services | | | |
+--------------+----------+-------------------------+---------+
|Manufacturing,| 82| 81| 1|
|Retail and | | | |
|Logistics | | | |
+--------------+----------+-------------------------+---------+
|Public, | 115| 105| 9|
|Healthcare and| | | |
|Welfare | | | |
+--------------+----------+-------------------------+---------+
|Telecom, Media| 59| 68| -14|
|and Energy | | | |
+--------------+----------+-------------------------+---------+
|IT services | 345| 342| 1|
+--------------+----------+-------------------------+---------+
|Product | 58| 63| -8|
|Development | | | |
|Services | | | |
+--------------+----------+-------------------------+---------+
|Total | 403| 405| -1|
+--------------+----------+-------------------------+---------+
Organic change in local currency by industry group
+--------------+-------------------------+-----------------------+---------+
|EUR million | Customer sales adj. for|Customer sales adj. for|Change, %|
| |acquisitions and currency| divestments 10–12/2013| |
| | 10–12/2014| | |
+--------------+-------------------------+-----------------------+---------+
|Financial | 92| 89| 4|
|Services | | | |
+--------------+-------------------------+-----------------------+---------+
|Manufacturing,| 83| 80| 3|
|Retail and | | | |
|Logistics | | | |
+--------------+-------------------------+-----------------------+---------+
|Public, | 118| 105| 12|
|Healthcare and| | | |
|Welfare | | | |
+--------------+-------------------------+-----------------------+---------+
|Telecom, Media| 60| 68| -11|
|and Energy | | | |
+--------------+-------------------------+-----------------------+---------+
|IT services | 353| 341| 4|
+--------------+-------------------------+-----------------------+---------+
|Product | 55| 63| -13|
|Development | | | |
|Services | | | |
+--------------+-------------------------+-----------------------+---------+
|Total | 408| 404| 1|
+--------------+-------------------------+-----------------------+---------+
|Fourth-quarter |
|sales were |
|affected by the |
|divestment of the |
|security |
|solutions |
|business in |
|Denmark. |
|Additionally, the |
|acquisitions of |
|part of Siemens |
|Convergence |
|Creators' |
|business are |
|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 (http://calltotel+358207271725), +358 50 321 7510, tanja.lounevirta (at)
tieto.com
Press conference for analysts and media will be held at Tieto’s premises in
Helsinki, address: Aku Korhosen tie 2–6, on Thursday 5 February 2015 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 (http://webcast.tieto.com/quarterlyreport/?q=050215) and can be viewed
live on Tieto's website (http://www.tieto.com/investors). To join the
conference, attendees need Adobe Flash plugin version 10.1.0 or newer. 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 9590
Sweden: +46 (0)8 5065 3937
UK: +44 (0)20 3427 1909
US: +1212 444 0896
Conference code: 8765732
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. An on-demand video
will be available after the conference.
Tieto publishes financial information in English and Finnish.
TIETO CORPORATION
DISTRIBUTION
NASDAQ Helsinki
NASDAQ Stockholm
Principal Media
Tieto is the largest IT services company in the Nordics providing full lifecycle
IT services. We also provide global product development services for companies
in the communications and embedded technologies arena. Through industry insight,
technology vision, and innovative thinking, Tieto proactively strives to inspire
and engage our customers in finding new ways of accelerating their business.
Building on a strong Nordic heritage, Tieto combines global capabilities with
local presence. Headquartered in Helsinki, Finland, Tieto has over 13 000
experts in more than 20 countries. Turnover is approximately EUR 1.5 billion.
Tieto’s shares are listed on NASDAQ in Helsinki and Stockholm. www.tieto.com
