Tieto Oyj - Half Year financial report

Tieto’s Interim Report 2/2017 – Solid business performance continues

  · Encouraging order intake with new customer wins in all businesses,
especially in Sweden
  · Healthy profitability driven by Technology Services and Modernization
  · Automation programme and targeted investments in software businesses support
further profit improvement

The full interim report with tables is available at the end of this release.

Key figures for the second quarter

IT services

  · Sales growth totalled 1.0%, sales in local currencies up by 2.5%
  · Adjusted operating profit amounted to EUR 33.0 (32.4) million, 9.3% (9.3) of
sales

The Group

  · Sales growth totalled 1.2%, sales in local currencies up by 2.8%
  · Adjusted operating profit amounted to EUR 35.6 (35.8) million, 9.2% (9.4) of
sales
  · Order intake (Total Contract Value) at EUR 371 (326) million – book-to-bill
1.0 (0.9)

+-------------------------+--------+--------+--------+--------+
|                         |    4–6/|    4–6/|    1–6/|    1–6/|
|                         |    2017|    2016|    2017|    2016|
+-------------------------+--------+--------+--------+--------+
|Net sales, EUR million   | 385.5  | 381.0  | 778.7  | 748.5  |
+-------------------------+--------+--------+--------+--------+
|   Change, %             |  1.2   |   4.7  |   4.0  |   2.6  |
+-------------------------+--------+--------+--------+--------+
|   Change in local       |  2.8   |   5.9  |   4.8  |   3.6  |
|currencies, %            |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Operating profit (EBITA),|  32.0  |  35.7  |  57.6  |  67.3  |
|EUR million              |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Operating margin (EBITA),|   8.3  |   9.4  |   7.4  |   9.0  |
|%                        |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Operating profit (EBIT), | 28.2   |  32.3  |  50.1  |  60.6  |
|EUR million 1)           |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Operating margin (EBIT), |  7.3   |   8.5  |   6.4  |   8.1  |
|% 1)                     |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Adjusted 1) 2) operating | 35.6   |  35.8  |  71.0  |  67.3  |
|profit (EBIT), EUR       |        |        |        |        |
|million                  |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Adjusted 1) 2) operating |  9.2   |   9.4  |   9.1  |   9.0  |
|margin (EBIT), %         |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Profit after taxes, EUR  | 21.0   |  24.2  |  36.7  |  45.7  |
|million                  |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|EPS, EUR                 |  0.28  |  0.33  |  0.50  |  0.62  |
+-------------------------+--------+--------+--------+--------+
|Net cash flow from       | -6.1   | -13.7  |  73.6  |  33.2  |
|operations, EUR million  |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Return on equity, 12     |  23.6  |  26.2  |  23.6  |  26.2  |
|-month rolling, %        |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Return on capital        |  21.0  |  25.9  |  21.0  |  25.9  |
|employed, 12-month       |        |        |        |        |
|rolling, %               |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Capital expenditure, EUR | 21.0   |  11.8  |  30.3  |  21.2  |
|million                  |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Interest-bearing net     | 164.6  |103.3   | 164.6  | 103.3  |
|debt, EUR million        |        |        |        |        |
+-------------------------+--------+--------+--------+--------+
|Net debt/EBITDA          |  0.9   |   0.5  |   0.9  |   0.5  |
+-------------------------+--------+--------+--------+--------+
|Book-to-bill             |  1.0   |  0.9   |   1.0  |   0.9  |
+-------------------------+--------+--------+--------+--------+
|Order backlog            |   1 817|   1 757| 1 817  | 1 757  |
+-------------------------+--------+--------+--------+--------+
|Personnel on 30 June     |13 754  |  13 381|13 754  |13 381  |
+-------------------------+--------+--------+--------+--------+

1) the second quarter includes EUR 1.0 (0.7) million and the first half EUR 2.1
(1.4) million in amortization of acquisition-related intangible assets
2) adjusted for restructuring costs, capital gains/losses, goodwill impairment
charges and other items (see page 15)

Full-year outlook for 2017 unchanged

Tieto expects its adjusted1) full-year operating profit (EBIT) to increase from
the previous year’s level (EUR 152.2 million in 2016).

1) adjusted for restructuring costs, capital gains/losses, goodwill impairment
charges and other items

CEO’s comment

Comment regarding the interim report by Kimmo Alkio, President and CEO:

“We had another solid quarter with good underlying growth in all the service
lines. Our adjusted profit was healthy at 9% level while growth and
profitability were somewhat affected by negative currency impacts and the
shorter quarter. Highlights in the second quarter included several important
customer wins across all key markets, especially in Sweden. I am pleased to see
that we are actively contributing to the digitalization of Nordic society –
across all our markets.

We continue to foresee exciting business and innovation opportunities through co
-innovation with our customers. We maintain our total investment level with an
increased focus on software-centric industry solutions – and foresee strong
opportunities particularly in the financial services, healthcare and welfare,
and energy sectors. These investments will also support our competitiveness and
performance objectives in the second half of this year.

We are participating in a number of exciting initiatives to leverage the use of
data in an intelligent way to improve wellbeing and the quality of everyday life
through personalized predictive healthcare and social inclusion. Tieto will
continue to focus on attractive opportunities to participate in the creation of
new data-centric ecosystems.”

Financial performance by service line

+-------------------+--------+--------+---------+---------+---------+
|EUR million        |Customer|Customer|Change, %|Operating|Operating|
|                   |   sales|   sales|         |   profit|   profit|
|                   |4–6/2017|4–6/2016|         | 4–6/2017| 4–6/2016|
+-------------------+--------+--------+---------+---------+---------+
|Technology Services|     194|    196 |       -1|     20.5|     20.9|
|and Modernization  |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
|Business Consulting|      38|     37 |        2|      2.6|      1.2|
|and Implementation |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
|Industry Solutions |     122|    117 |        4|      9.3|     11.1|
+-------------------+--------+--------+---------+---------+---------+
|Product Development|     31 |     31 |        3|      2.4|      3.3|
|Services           |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
|Support Functions  |        |        |         |     -6.6|     -4.2|
|and Global         |        |        |         |         |         |
|Management         |        |        |         |         |         |
+-------------------+--------+--------+---------+---------+---------+
|Total              |     386|    381 |       1 |     28.2|     32.3|
+-------------------+--------+--------+---------+---------+---------+

Operating margin by service line

+-------------------+---------+---------+----------+----------+
|%                  |Operating|Operating|Adjusted1)|Adjusted1)|
|                   |   margin|   margin| operating| operating|
|                   | 4–6/2017| 4–6/2016|    margin|    margin|
|                   |         |         |  4–6/2017|  4–6/2016|
+-------------------+---------+---------+----------+----------+
|Technology Services|    10.5 |     10.6|      11.9|      10.8|
|and Modernization  |         |         |          |          |
+-------------------+---------+---------+----------+----------+
|Business Consulting|      7.0|      3.3|       4.0|       3.3|
|and Implementation |         |         |          |          |
+-------------------+---------+---------+----------+----------+
|Industry Solutions |      7.6|      9.5|       9.0|      10.9|
+-------------------+---------+---------+----------+----------+
|Product Development|      7.6|     10.7|       8.3|      11.1|
|Services           |         |         |          |          |
+-------------------+---------+---------+----------+----------+
|Total              |      7.3|      8.5|       9.2|       9.4|
+-------------------+---------+---------+----------+----------+
|1) adjusted for                                   |          |
|restructuring                                     |          |
|costs, capital                                    |          |
|gains/losses,                                     |          |
|goodwill impairment                               |          |
|charges and other                                 |          |
|items                                             |          |
+-------------------+---------+---------+----------+----------+

Customer sales by industry group

+--------------------------------+--------------+--------+---------+
|EUR million                     |Customer sales|Customer|Change, %|
|                                |      4–6/2017|   sales|         |
|                                |              |4–6/2016|         |
+--------------------------------+--------------+--------+---------+
|Financial Services              |            97|      93|        4|
+--------------------------------+--------------+--------+---------+
|Public, Healthcare and Welfare  |           127|     120|        5|
+--------------------------------+--------------+--------+---------+
|Industrial and Consumer Services|           132|     138|       -5|
+--------------------------------+--------------+--------+---------+
|IT services                     |          355 |     350|        1|
+--------------------------------+--------------+--------+---------+
|Product Development Services    |           31 |      31|        3|
+--------------------------------+--------------+--------+---------+
|Total                           |           386|     381|        1|
+--------------------------------+--------------+--------+---------+

M&A impact by service line

+-------------------+---------------------+---------------------+
|                   |            Growth, %|    Organic growth, %|
|                   |(in local currencies)|(in local currencies)|
|                   |            4–6/2017 |            4–6/2017 |
+-------------------+---------------------+---------------------+
|Technology Services|                  0.4|                  0.4|
|and Modernization  |                     |                     |
+-------------------+---------------------+---------------------+
|Business Consulting|                 3.1 |                 3.1 |
|and Implementation |                     |                     |
+-------------------+---------------------+---------------------+
|Industry Solutions |                 5.9 |                 1.8 |
+-------------------+---------------------+---------------------+
|IT services        |                 2.5 |                 1.1 |
+-------------------+---------------------+---------------------+
|Product Development|                 6.3 |                 6.3 |
|Services           |                     |                     |
+-------------------+---------------------+---------------------+
|Total              |                 2.8 |                 1.6 |
+-------------------+---------------------+---------------------+

M&A impact by industry group

+---------------------------------+---------------------+---------------------+
|                                 |            Growth, %|    Organic growth, %|
|                                 |(in local currencies)|(in local currencies)|
|                                 |            4–6/2017 |            4–6/2017 |
+---------------------------------+---------------------+---------------------+
|Financial Services               |                 5.6 |                 0.9 |
+---------------------------------+---------------------+---------------------+
|Public, Healthcare and Welfare   |                 7.3 |                 7.3 |
+---------------------------------+---------------------+---------------------+
|Industrial and Consumer Services |                -3.2 |                -3.5 |
+---------------------------------+---------------------+---------------------+
|IT services                      |                 2.5 |                 1.1 |
+---------------------------------+---------------------+---------------------+
|Product Development Services     |                 6.3 |                 6.3 |
+---------------------------------+---------------------+---------------------+
|Total                            |                 2.8 |                 1.6 |
+---------------------------------+---------------------+---------------------+


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

A teleconference for analysts and media will be held on Friday 21 July 2017 at
10.00 am EET (9.00 am CET, 8.00 am UK time). Analysts and media are also welcome
to participate in the conference at Tieto’s office in Espoo, address:
Keilalahdentie 2-4.

Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO, will present the
results online in English. The
presentation (http://webcast.tieto.com/quarterlyreport/?q=210717) can be
followed on Tieto's website (http://www.tieto.com/investors), for which
attendees need Adobe Flash plugin version 10.1.0 or newer. The teleconference
details can be found below.

Teleconference numbers
Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0)330 336 9105
US: +1 719 457 1036
Conference code: 4404154

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. The teleconference
is recorded and it will be available on demand later during the day.

Tieto publishes its financial information in English and Finnish.

TIETO CORPORATION

DISTRIBUTION
NASDAQ Helsinki
Principal Media

Tieto aims to capture the significant opportunities of the data-driven world and
turn them into lifelong value for people, business and society. We aim to be
customers’ first choice for business renewal by combining our software and
services capabilities with a strong drive for co-innovation and ecosystems.

Headquartered in Finland, Tieto has over 13 000 experts in close to 20
countries. Tieto’s turnover is approximately EUR 1.5 billion and shares listed
on NASDAQ in Helsinki and Stockholm. www.tieto.com

Attachments:

07218454.pdf