2009-04-24 07:00:00 CEST
2009-04-24 07:02:06 CEST
REGULATED INFORMATION
TietoEnator Oyj - Interim report (Q1 and Q3)
TIETO's interim report 1/2009 (January-March) - Net sales and profits decline, outsourcing activity picking up
TietoEnator Corporation Interim Report 24 April 2009, 8.00 am EET
To download the PDF file, please use this link:
http://hugin.info/3114/R/1307674/301268.pdf
Highlights - January-March
* Net sales totalled EUR 438.0 (468.3) million, down 6%. Main part
of the sales decline is attributable to exchange rates. In local
currencies, net sales declined by 2%.
* Operating profit amounted to EUR 4.9 (24.6) million.
* Operating profit, excluding one-off costs related to the
Performance Improvement Programme, amounted to EUR 21.3 (37.7)
million, representing an operating margin of 4.9% (8.1).
* Profit after taxes was EUR 1.0 (16.3) million.
* Net cash flow from operations amounted to EUR 42.0 (64.6)
million.
* Good flow of new outsourcing agreements including Fonecta, Ruukki
and Nokia Siemens Networks.
* Tieto expects the IT services market to decline in 2009 and tough
market conditions to continue. Therefore Tieto expects its
full-year net sales and operating profit to decline from last
year. In the Nordic countries, the company sees good prospects in
outsourcing.
Q1/2009 Q1/2008
Net sales, EUR million 438.0 468.3
Change in net sales, % -6 6
Operating profit, EUR million 4.9 24.6
Operating margin, % 1.1 5.3
Profit after taxes, EUR million 1.0 16.3
Net cash flow from operations, EUR million 42.0 64.6
EPS, EUR 0.01 0.23
Personnel at 31 March 16 638 16 351
Hannu Syrjälä, President and CEO:"The first three months of 2009 were tough and the overall demand for
IT services continued to decline. This led to lower business volumes
compared to last year which in turn had a negative impact on Tieto's
profitability, resulting in a modest operating margin of 4.9%,
excluding one off costs related to our Performance Improvement
Programme.
The recovery of the overall economy and the IT market is not yet in
sight. Tieto has started a number of streamlining actions to adjust
our cost base to the current market situation. At the same time we
are putting a lot of effort into our sales activities, as we believe
that IT can solve many of our customers' challenges and make a major
contribution to their business success, especially during a downturn.
Despite the tight budgets, savings and personnel adjustments, Tieto's
transformation continues. Our new operating model and business
structure make us more efficient, enabling us to better harness
competence and resources throughout the company. Combining our
industry knowledge with a firm grip of our operating countries has
already led to good development in many of our local businesses.
Without the transformation that we started last year, Tieto would be
facing even tougher times than the ones we are experiencing at the
moment."
Market development
Polarization of the IT services market has increased during the
quarter. On the one hand, the market for new, large-scale IT projects
has declined in most sectors. On the other, outsourcing activity has
picked up and the size of new potential outsourcing cases has grown.
Customers are primarily seeking to cut costs and improve productivity
instead of focusing on topline growth. Price pressure remained hard
during the quarter, especially in new agreements and contract
renewals.
Demand for IT services continued at a good level in the public, i.e.
government, healthcare and welfare sectors as well as the utilities
sector. In the finance sector, demand has been weak. For example in
the UK and the Baltic countries, IT spending has been cut
significantly and today, banks concentrate on very few selected
projects. There is growing interest towards outsourcing in the main
markets, but the competition is tough.
In the telecom sector, competition has remained tough and industry
transformation continues. Customers have implemented aggressive cost
savings and supplier consolidation programmes. Demand for offshore
production has increased and customers are shifting their core
operations and decision-making to Asia, especially China and India.
In the first quarter, overall IT demand remained weak and investments
by operators and telecom equipment manufacturers are expected to be
low for some time.
Uncertainty prevails over the future development of the IT market.
New investments will be postponed, unless they offer clear short-term
productivity benefits. However, companies' efforts to achieve cost
savings by rationalizing their operations might open up new business
opportunities and, as a result, balance the changes in demand. More
than half of Tieto's business is related to application and ICT
infrastructure management as well as maintenance, which are more
resilient to the impacts of an economic downturn.
Market development by country
In Finland, the decline in the telecom sector is now followed by that
of the Finnish exports sector, especially the metal and forest
industries. IT budgets in the public sector have not been affected.
Demand for new IT projects and consultancy slid in the first quarter.
However, several new outsourcing opportunities opened up during the
quarter, first in the telecom sector and subsequently in other
sectors. Additionally, existing customers are in the market to buy
enhancements to existing applications.
In Sweden, weak demand in the telecom sector is expected to continue
during the coming quarters. Due to general cautiousness, the trend is
that only few new development projects are started. On the other
hand, new outsourcing-related opportunities have opened up,
especially in the finance and public sectors.
Outside Finland and Sweden, the recession has hit the IT markets
hard, but impacts vary country by country. In general, the most
affected sectors are telecom and finance.
In Germany, the automotive sector has been hit the hardest and is now
going through a heavy transformation process. Telecom is still less
impacted, but the signs of a weaker market are visible in the telecom
as well as forest and manufacturing sectors. Energy and healthcare
markets are still positive.
In Norway, demand in the local finance and energy market is at a
reasonable level. However, business with global customers in the
finance sector as well as global oil & gas customers is declining.
Performance Improvement Programme and new streamlining actions
The targets set for Tieto's Performance Improvement Programme have
been reached and the programme has been completed. The target was to
generate annual cost savings of EUR 130 million with full effect as
from the end of 2009. The one-off costs related to the programme,
including write-downs, were expected to amount to approximately EUR
160 million of which EUR 144.3 million materialized in 2007 and 2008.
The remaining costs materialized in the first quarter of 2009.
To adjust its operations to the current market situation and to
address the declining trend in demand, Tieto started new streamlining
actions during the first quarter. The company's target is to achieve
additional annualized cost-savings amounting to EUR 100 million, of
which approximately EUR 70 million is expected to materialize in
2009.The streamlining measures include personnel adjustments,
decreased use of subcontractors, accelerated utilization of offshore
resources, consolidation of offices and cutting business expenses
throughout the Group.
Costs of EUR 16.4 million related to Performance Improvement
Programme materialized in the first quarter. In addition to these,
Tieto estimates to book no more than EUR 35 million in one-off costs
related to the new streamlining actions in 2009. All costs will have
a cash flow effect.
Financial performance in January-March
First-quarter net sales declined by 6% and amounted to EUR 438.0
(468.3) million. As 38% of Tieto's net sales are generated in
non-euro countries, the weakened currencies, especially the Swedish
currency (SEK), had a negative impact on net sales in euros. In local
currencies, net sales declined by 2%. Weak performance in the finance
and telecom sectors had a negative impact on the Group's net sales.
First-quarter operating profit amounted to EUR 4.9 (24.6) million.
Operating profit, excluding one-off costs of EUR 16.4 million related
to the Performance Improvement Programme, amounted to EUR 21.3 (37.7)
million, representing a margin of 4.9% (8.1). Personnel costs
excluding restructuring costs related to the programme were down by
5.7% but that was insufficient to offset the decline in net sales.
Net financial expenses stood at EUR 2.8 (2.9) million in the first
quarter. Net interest expenses were EUR 1.8 (2.3) million and net
losses from foreign exchange transactions EUR 1.3 (1.4) million, of
which EUR 0.1 million were unrealized net gains. Other financial
income and expenses amounted to EUR positive 0.3 (0.8) million.
First-quarter earnings per share (EPS) totalled EUR 0.01 (0.23).
Operating profit (EBIT) includes EUR 2.3 (2.5) million from
amortization on allocated intangible assets. The costs arising from
share-based payments were EUR 1.3 (1.3) million and the result-based
bonuses EUR 1.2 million (6.5).
The 12-month rolling return on capital employed (ROCE) was 25.3% and
the return on shareholders' equity (ROE) 10.2%.
The order backlog, which only comprises services ordered with binding
contracts, amounted to EUR 1 084.3 (1 061.3) million at the end of
the period. In total, 60% (55) of the backlog is expected to be
invoiced in 2009.
Financial performance by country
Net sales
Net sales in EBIT EBIT
in Q1/2008, margin in margin in
Q1/2009, EUR Q1/2009, Q1/2008,
EUR million million Change, % % %
Finland 227 232 -2 9.7 12.9
Sweden 119 141 -16 -7.3 6.9
International 141 135 4 -2.8 -2.0
Group elimination -48 -40 21
Total 438 468 -6 1.1 5.3
In Finland, net sales were down by 2%. The market for new outsourcing
cases improved during the quarter and Tieto concluded several small
and mid-sized agreements, e.g. those with Ruukki and Nokia Siemens
Networks. However, new agreements were not sufficient to compensate
for the expired contracts. Telecom was the most challenging sector,
whereas sales to the healthcare and public sectors were on the rise.
First-quarter operating profit amounted to EUR 22.1 (30.0) million
and the operating margin was 9.7% (12.9). The decline in net sales
was the main contributor to the lower margin.
In Sweden, net sales declined by 16%. In local currency the decline
was 2%. Excluding the currency impact, the drop in sales was mainly
attributable to the weak development in the telecom sector. Telecom
accounts for close to half of Tieto's net sales in Sweden. The
strongest developing sectors were healthcare and welfare, finance and
public. Operating profit totalled EUR -8.7 (9.7) million and included
EUR 9.4 million in restructuring costs. Operating margin was -7.3%
(6.9), or 0.6% excluding one-off costs. Exchange rates were the main
reason for the weakened profitability as part of the costs are in
other currencies than the Swedish currency (SEK).
In International, net sales rose by 4%, or 8% in local currencies.
Demand in the healthcare sector was at a reasonable level, whereas
net sales in the international finance and telecom sectors were
dropping off. Germany and Denmark were the most challenging markets.
Net sales and operating profit include an income of EUR 7.7 million
due to a change in the revenue recognition estimate. First-quarter
operating profit amounted to EUR -4.0 (-2.7) million and included EUR
5.8 million in restructuring costs. Operating margin was -2.8%
(-2.0), or 1.3% excluding one-off costs.
Net sales by customer sector
Net sales in Net sales in
Q1/2009, EUR Q1/2008, EUR
million million Change, %
Telecom 153 167 -9
Finance 89 104 -14
Industry sectors 197 198 0
Total 438 468 -6
In the telecom sector, Tieto's net sales fell by 9%. More than half
of this drop is attributable to weaker currencies. Customers are
running aggressive cost savings programmes while cutting new
investments. Despite the shrinking market Tieto has been able to hold
on to its market position.
In the finance sector, net sales fell by 14%. Exchange rate changes
account for around 40% of the drop. Additionally, two major contracts
that expired in 2008 had a negative impact on net sales. The finance
sector is hit hard by the credit crisis. Products and business with
global customers suffer the most from the current market situation.
However, the trend in net sales remained positive in local businesses
in the Nordic countries.
In the industry sectors, net sales remained at the same level as in
the first quarter of 2008. In Tieto's reporting, the industry sectors
cover customers in healthcare and welfare, forest, energy,
manufacturing, automotive, public, retail and logistics.
Manufacturing, forest and automotive were the weakest areas. In the
forest sector, restructuring measures have been ongoing for a long
time. The market for manufacturing has deteriorated, especially in
the metal industry, affecting investments in new IT solutions. Net
sales growth in the healthcare and welfare as well as public sectors
was at a healthy level.
Cash flow and financing
First-quarter net cash flow from operations, including the decrease
of EUR 28.1 (21.7) million in net working capital, amounted to EUR
42.0 million (64.6).
Tax payments amounted to EUR 6.4 (positive 1.4 due to refund)
million.
Acquisitions related mainly to transactions made in 2008 totalled EUR
2.4 (8.0) million in the first quarter.
The equity ratio was 40.0% (38.0). Gearing decreased to 17.5% (31.0).
Net debt totalled EUR 79.2 (139.7) million, including EUR 170.1
million in interest-bearing debt, EUR 13.2 million in finance lease
liabilities, EUR 9.5 million in finance lease receivables and EUR
94.6 million in cash and cash equivalents.
The interest-bearing debt consists of one seven-year bond at EUR 100
million (maturing in December 2013) and one seven-year private
placement at EUR 50 million (maturing in July 2012) and usage of EUR
19.5 million from the short-term EUR 250 million commercial paper
programme. The five-year 250 million committed syndicated loan
facility (maturing in December 2011) was not in use on 31 March 2009.
Investments
Accrual-based investments totalled EUR 16.1 (36.2) million for the
period. Capital expenditure, including financial leasing, accounted
for EUR 15.9 (30.1) million and investments in subsidiary and
associated company shares for EUR 0.2 (6.1) million.
Personnel
In February, Tieto started personnel negotiations to decrease the
number of employees by some 350 people, of which approximately 170
are in Sweden and 180 in Tieto International. The personnel
adjustments were part of the Performance Improvement Programme.
The number of full-time employees totalled 16 638 (16 351) at the end
of March. A total of 497 (735) employees were hired during the first
quarter. A total of 223 were recruited in high-cost countries, and
274 in offshore locations. From the beginning of 2009, the net number
increased by around 200 in offshore sites, and by 20 in onshore
countries.
At the end of March, the number of employees in the global delivery
centres had increased by 27% year on year and totalled about 4 480 (3
530), or 26% (20) of the total headcount. In line with the company's
strategy, global operations grew fast, especially in India and
China.
The labour market has settled down in 2009, easing pressure for
higher salaries. The employee turnover for January-March stood at
6.4% and the 12-month rolling turnover at 11.1% at the end of March.
The average number of full-time employees was 16 718 (16 391) in the
first quarter.
Management
In March, Per Johanson was appointed as Executive Vice President of
Tieto's Financial Services and member of the Leadership Team as of 16
May 2009.
Annual General Meeting
Tieto's Annual General Meeting on 26 March re-elected the Board's
current members: Bruno Bonati, Mariana Burenstam Linder, Risto
Perttunen, Olli Riikkala and Anders Ullberg. The meeting elected
Kimmo Alkio and Markku Pohjola as new members. In addition, the
company's personnel shall appoint two members, each with a personal
deputy, to the Board of Directors. The personnel representatives on
the Board are Anders Eriksson (deputy: Bo Persson) and Jari
Länsivuori (deputy: Esa Koskinen).
The Board of Directors elected Anders Ullberg as its Chairman and
Olli Riikkala as its Vice Chairman. The Board also appointed a
Remuneration and Nomination Committee comprising Anders Ullberg
(Chairman), Kimmo Alkio, Mariana Burenstam Linder and Markku Pohjola,
and an Audit and Risk Committee comprising Olli Riikkala (Chairman),
Bruno Bonati, Risto Perttunen and Anders Ullberg.
The meeting re-elected the firm of authorized public accountants
PricewaterhouseCoopers Ltd. as the company's auditor for the
financial year 2009.
The meeting authorized the Board to repurchase the company's own
shares. Under the authorization, up to 7 200 000 shares,
corresponding to approximately 10% of the aggregate number of shares,
may be purchased.
The Board was also authorized to decide on the issuance of shares,
options and other special rights entitling to shares.
Under the authorization, up to 14 500 000 new or treasury shares,
corresponding to approximately 20% of the aggregate number of shares,
may be issued. However, out of the maximum amount of shares to be
issued, no more than 620 000 shares, currently corresponding to
approximately 1% of the aggregate number of shares, may be issued as
part of the company's share-based incentive plans.
The meeting approved the change of the company name to Tieto
Corporation.
Dividend
The Annual General Meeting resolved to distribute a dividend of EUR
0.50 (0.50) per share. The total dividend payment of EUR 35.8 million
took place on 15 April.
Shares and share-based incentives
At the end of March, the total number of shares amounted to
72 023 173 and the share capital to EUR 75 841 523. The number of
shares in the company's possession totalled 361 650, representing
0.5% of the total number of shares and voting rights. The outstanding
number of shares, excluding the shares in the company's possession,
was 71 661 523.
On 26 March, the Board of Directors decided to convey a total of
74 260 existing shares held by the company, for free, to the key
personnel participating in Tieto's Share Ownership Plan 2006-2008, as
a proportion of the reward to be paid as shares on the basis of the
earning period 2008. The authorization to convey own shares by means
of a directed bonus issue was granted by the Annual General Meeting
on 26 March 2009. The conveyance will take place at the end of April.
Following that, the company will hold a total of 287 390 own shares.
The Annual General Meeting decided to issue stock options to Tieto's
key personnel. The maximum total number of stock options shall be 1
800 000, which entitle their holders to subscribe for or acquire a
total maximum of 1 800 000 company shares. The stock options shall be
issued free of charge.
Flagging announcements
In March, Swedbank Robur Fonder AB announced that its holding in
Tieto had increased to 5.04%.
Events after the reporting period
On 7 April, Tieto started Group-wide personnel adjustments in
selected operating countries, mainly in Europe. The adjustments are
part of new streamlining actions targeting at annualized cost-savings
of EUR 100 million. The negotiations are expected to lead to a
reduction of a total of about 620 employees as follows: approximately
300 in Finland, 150 in Sweden, and 170 in ten of Tieto's
International countries. In addition to personnel redundancies, the
company is negotiating temporary lay offs in Finland. Most of the
negotiations are expected to be completed during the second quarter.
The total costs of these measures, including also other than
personnel costs, are expected to be no more than EUR 35 million.
Near-term risks and uncertainties
As 38% of Tieto's net sales are generated in non-euro countries, the
weakness of currencies, especially the Swedish currency (SEK), will
have a negative impact on net sales and operating profit translated
into euros.
Weak demand for IT services might lead to lower utilization of
resources and hence lower profitability if the company is not able to
adjust its cost base fast enough to negative changes in the market
situation.
Changes in the company structure and the ongoing personnel
negotiations may create uncertainty. Additionally, credit risks
related to receivables might pose a growing risk.
A comprehensive description of the major long-term risks is available
on the company's website.
Outlook for 2009
The impacts of the economic downturn have hit the IT sector harder
and faster than earlier expected, and uncertainty prevails over the
future development of the IT market. In the full year, Tieto expects
the IT services market to decline and tough market conditions to
continue. Therefore Tieto expects its full-year net sales and
operating profit to decline from last year.
In the Nordic countries, the best prospects for growth in 2009 are
seen in the outsourcing of application and ICT infrastructure
management.
Financial calendar for 2009
Interim report for January-June 2009 on 17 July
Interim report for January-September 2009 on 21 October
Accounting policies in 2009
The interim report has been prepared in accordance with International
Accounting Standard (IAS) 34, Interim Financial Reporting, as adopted
by the EU.
Tieto has reclassified all internal long-term loans to Swedish
subsidiaries as a net investment in a foreign operation according to
IAS 21. All related unrealized foreign exchange gains and losses from
the net investment are recognized directly in shareholders' equity.
Excluding this change the accounting policies adopted are consistent
with those used in the annual financial statements for the year ended
31 December 2008 and as described in the annual financial statements.
Of the new standards and interpretations Tieto adopted in 2009, IFRS
8 "Operating Segments" is the only one with a major impact on the
Group's financial statements.
Tieto adopted a new financial reporting structure at the beginning of
2009. The countries are the main operating segments and its reporting
covers Finland, Sweden and International. Reportable segments are
defined based on IFRS 8, "Operating Segments". Deviating from IFRS 8,
Tieto will start to report the Group's net sales by products and
services in 2010.
IAS 1 (Revised) "Presentation of Financial Statements" will have a
minor impact on required disclosures.
The figures in this report are unaudited.
Key figures 2009 2008 2008
1-3 1-3 1-12
Earnings per share, EUR
- basic 0.01 0.23 0.83
- diluted 0.01 0.23 0.83
Equity per share, EUR 6.31 6.29 6.75
Return on equity rolling 12 month, % 10.2 -7.7 12.6
Return on capital employed rolling 12 month, % 25.3 7.2 25.2
Equity ratio % 40.0 38.0 41.1
Net interest-bearing liabilities, EUR million 79.2 139.7 101.4
Gearing, % 17.5 31.0 21.0
Investments, EUR million 16.1 36.2 97.9
Number of shares 2009 2008 2008
1-3 1-3 1-12
Outstanding shares, end of period
Basic 71 661 523 71 661 523 71 661 523
Diluted 71 739 083 71 661 523 71 739 083
Outstanding shares, average
Basic 71 661 523 71 661 523 71 661 523
Diluted 71 739 083 71 661 523 71 739 083
Company's possession of its own shares,
End of period 361 650 361 650 361 650
Average 361 650 531 760 403 945
Income statement, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Net sales 438.0 468.3 -6 1 865.7
Other operating income 2.9 4.5 -36 10.8
Employee benefit expenses 266.9 277.0 -4 1 056.0
Depreciation and amortization 17.3 16.3 6 66.1
Other operating expenses 151.8 154.9 -2 642.8
Operating profit (EBIT) 4.9 24.6 -80 111.6
Net interest expenses -1.8 -2.3 -22 -9.3
Net exchange losses/gains -1.3 -1.4 -7 -21.2
Other financial income and expenses 0.3 0.8 -63 1.3
Profit before taxes 2.1 21.7 -90 82.4
Income taxes -1.1 -5.4 -80 -21.9
Net profit for the period 1.0 16.3 -94 60.5
Net profit for the period attributable to
Shareholders of the Parent company 0.8 16.2 -95 59.9
Minority interest 0.2 0.1 100 0.6
1.0 16.3 -94 60.5
Earnings attributable to the shareholders of the Parent company per
share, EUR
Basic 0.01 0.23 -96 0.83
Diluted 0.01 0.23 -96 0.83
Statement of comprehensive income, EUR million
Net profit for the period 1.0 16.3 -94 60.5
Translation difference (net of tax) 2.4 -6.9 -135 -21.5
Total comprehensive income 3.4 9.4 -64 39.0
Total comprehensive income attributable to
Shareholders of the parent company 3.2 9.3 -66 38.4
Minority interest 0.2 0.1 100 0.6
3.4 9.4 -64 39.0
Balance sheet, EUR million 2009 2008 Change 2008
31 March 31 March % 31 Dec
Goodwill 391.4 415.9 -6 389.3
Other intangible assets 49.2 62.5 -21 53.1
Property, plant and equipment 103.2 92.2 12 100.5
Deferred tax assets 67.3 64.2 5 67.8
Investments in associated
companies 0.0 1.7 -100 0.0
Other non-current assets 1.4 1.5 -7 1.5
Total non-current assets 612.5 638.0 -4 612.2
Trade and other receivables 488.3 558.8 -13 498.5
Current income tax receivables 16.3 9.7 68 13.9
Interest-bearing current assets 9.5 11.2 -15 9.7
Cash and cash equivalents 94.6 85.0 11 120.2
Total current assets 608.7 664.7 -8 642.3
Total assets 1 221.2 1 302.7 -6 1 254.5
Share capital, share issue
premiums and other reserves 108.9 115.6 -6 109.0
Retained earnings 341.5 332.5 3 373.0
Parent shareholders' equity 450.4 448.1 1 482.0
Minority interest 1.7 3.0 -43 1.6
Total equity 452.1 451.1 0 483.6
Finance lease liability 13.2 16.1 -18 14.5
Other interest-bearing loans 150.0 150.1 0 150.0
Deferred tax liabilities 22.6 22.2 2 29.2
Pension obligations 18.3 21.9 -16 17.2
Provisions 37.2 38.7 -4 28.6
Other non-current liabilities 1.6 1.8 -11 1.6
Total non-current liabilities 242.9 250.8 -3 241.1
Trade and other payables 486.9 514.4 -5 447.5
Current income tax liabilities 19.2 16.7 15 15.6
Interest-bearing loans 20.1 69.7 -71 66.7
Total current liabilities 526.2 600.8 -12 529.8
Total equity and liabilities 1 221.2 1 302.7 -6 1 254.5
Trade and other payables at the end of March include EUR 35.8 (35.8)
million in unpaid dividends.
Net working capital in the balance sheet, EUR million
2009 2008 Change 2008
31 March 31 March % 31 Dec
Accounts receivable 336.4 353.4 -5 357.7
Other working capital receivables 151.3 204.1 -26 140.3
Working capital receivables included
in assets 487.7 557.5 -13 498.0
Operative accruals 197.1 230.0 -14 191.1
Other working capital liabilities 250.5 244.6 2 250.6
Pension obligations and provisions 55.5 60.6 -8 45.7
Working capital liabilities included
in current liabilities 503.1 535.2 -6 487.4
Net working capital in the balance
sheet -15.4 22.3 -169 10.6
Cash flow, EUR million 2009 2008 2008
1-3 1-3 1-12
Cash flow from operations
Net profit 1.0 16.3 60.5
Adjustments
Depreciation, amortization and impairment 17.3 16.3 66.1
Share-based payments 1.0 0.8 4.1
Profit/loss on sale of fixed assets and shares 0.0 0.0 0.2
Other adjustments 0.1 0.0 -1.3
Net financial expenses 2.8 2.9 29.2
Income taxes 1.1 5.4 21.9
Change in net working capital 28.1 21.7 30.3
Cash generated from operations 51.4 63.4 211.0
Net financial expenses paid -3.0 -0.2 -6.0
Income taxes paid -6.4 1.4 -14.0
Net cash flow from operations 42.0 64.6 191.0
Cash flow from investing activities
Acquisition of Group companies and business
operations, net of cash acquired -2.4 -8.0 -8.0
Capital expenditures -15.9 -14.5 -68.5
Change in loan receivables 0.1 0.0 -1.4
Sales of fixed assets 0.0 0.1 3.0
Net cash used in investing activities from
operations -18.2 -22.4 -74.9
Cash flow from financing activities
Dividends paid - - -36.0
Repurchase of own shares - - -
Payment of finance lease liabilities 1.3 -0.9 -2.6
Change in interest-bearing liabilities -46.6 -27.5 -27.5
Net cash used in other financing activities - -1.4 0.0
Net cash used in financing activities from
operations -45.3 -29.8 -66.1
Change in cash and cash equivalents -21.5 12.4 50.0
Cash and cash equivalents at beginning of period -120.2 -72.9 -72.9
Foreign exchange differences 4.1 0.3 2.7
Cash and cash equivalents at end of period 94.6 85.0 120.2 -21.5 12.4 50.0
Statement of changes in shareholders' equity
Parent shareholders' equity Minority Total
interest equity
Share
issue
premiums
and
Share other Own Retained
EUR million capital reserves shares earnings Total
Balance at 31
Dec 2007 75.8 39.6 -41.1 399.3 473.6 4.0 477.6
Minority
interest -1.0 -1.0
Cancellation
of own shares 32.1 -32.1 0.0 0.0
Share-based
payments
recognized
against
equity 1.0 1.0 1.0
Dividend -35.8 -35.8 -35.8
Total
comprehensive
income 0.2 9.1 9.3 0.0 9.3
At 31 March
2008 75.8 39.8 -9.0 341.5 448.1 3.0 451.1
Balance at 31
Dec 2008 75.8 33.2 -9.0 382.0 482.0 1.6 483.6
Minority
interest 0.0
Share based
payments
recognized
against
equity 1.0 1.0 1.0
Dividend -35.8 -35.8 -35.8
Total
comprehensive
income -0.1 3.3 3.2 0.1 3.3
At 31 March
2009 75.8 33.1 -9.0 350.5 450.4 1.7 452.1
Net sales by country, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 227 232 -2 905
Sweden 119 141 -16 548
International 141 135 4 571
Group elimination -48 -40 21 -158
Group total 438 468 -6 1 866
Internal sales by country, EUR million 2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 18 15 22 57
Sweden 10 6 83 26
International 21 20 4 76
Group total 48 40 21 158
Net sales according to customer location, EUR million
2009 Change Share 2008 Share 2008 Change
1-3 % % 1-3 % 1-12 %
Finland 207 -5 47 218 46 853 6
Sweden 107 -19 24 131 28 506 2
Other 124 4 28 119 25 506 6
Group total 438 -6 100 468 100 1 866 5
Net sales by customer sector, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Telecom 153 167 -9 648
Finance 89 104 -14 402
Industry sectors 197 198 0 816
Group total 438 468 -6 1 866
Operating profit (EBIT) by country, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 22.1 30.0 - 26.4 117.6
Sweden - 8.7 9.7 - 190.0 48.7
International - 4.0 - 2.7 50.1 3.8
Countries total 9.4 37.0 -74.6 170.2
Group Operations - 4.5 - 12.4 - 63.8 - 58.6
Operating profit (EBIT) 4.9 24.6 - 80.0 111.6
Operating margin (EBIT) by country, %
2009 2008 Change 2008
1-3 1-3 1-12
Finland 9.7 12.9 -3.2 13.0
Sweden -7.3 6.9 -14.2 8.9
International -2.8 -2.0 -0.9 0.7
Countries total 2.1 7.9 -5.8 9.1
Operating margin (EBIT) 1.1 5.3 -4.1 6.0
Personnel by End of period Average
country
2009 Change Share 2008 2008 2009 2008
1-3 % % 1-3 1-12 1-3 1-3
Finland 5 730 -5 34 6 048 5 832 5 732 6 108
Sweden 3 141 -2 19 3 206 3 166 3 166 3 222
International 7 108 7 43 6 654 7 102 7 162 6 617
Group Operations 659 49 4 443 518 658 444
Group total 16 638 2 100 16 351 16 618 16 718 16 391
Total assets by country, EUR million
2009 2008 Change 2008
31 Mar 31 Mar % 31 Dec
Finland 462.1 478.4 - 3 453.4
Sweden 264.0 314.6 - 16 291.3
International 351.0 386.0 - 9 335.7
Group elimination - 15.4 - 21.9 - 30 - 27.3
Countries total 1 061.7 1 157.1 - 8 1 053.2
Group Operations 159.5 145.6 10 201.3
Total assets 1 221.2 1 302.7 - 6 1 254.5
Non-current assets according to asset location, EUR
million
2009 2008 Change 2008
31 Mar 31 Mar % 31 Dec
Finland 256.5 252.7 2 254.3
Sweden 131.6 153.5 - 14 132.7
Other 155.7 164.4 - 5 155.9
Total non-current assets 543.8 570.6 - 5 542.9
Capital expenditure by country, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 12.8 22.9 - 44 58.0
Sweden 2.4 3.2 - 25 9.5
International 0.0 3.4 - 100 10,7
Group Operations 0.7 0.6 17 5.0
Group total 15.9 30.1 - 47 83.2
Depreciation by country, EUR million
2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 10.9 9.0 22 36.9
Sweden 2.1 2.4 - 13 8,5
International 1.7 1.5 8 6.4
Group Operations 0.2 1.0 - 76 4.1
Group total 14.9 13.8 8 56.0
Amortization on allocated intangible assets from acquisitions, EUR
million
2009 2008 Change 2008
1-3 1-3 % 1-12
Finland 0.1 0.7 - 81 0.5
Sweden 0.8 0.7 4 3.5
International 1.5 0.9 69 6.0
Group Operations 0.0 0.2 - 100 0.0
Group total 2.4 2.5 - 5 10.0
Commitments and contingencies, EUR million
2009 2008
31 March 31 Dec Change %
For TietoEnator obligations
Pledges - -
On behalf of joint ventures
Guarantees 2.2 0.0 pos
Other TietoEnator obligations
Rent commitments due in one year 49.4 54.4 -9
Rent commitments due in 1-5 years 90.9 102.2 -11
Rent commitments due after 5 years 19.5 19.5 0
Operating lease commitments due in one
year 13.5 14.4 -7
Operating lease commitments due in 1-5
years 10.7 13.5 -20
Operating lease commitments due after 5
years 0.0 0.0
Other commitments 15.1 13.9 9
Operating lease commitments are principally three-year lease
agreements that do not include buyout clauses.
Notional amounts of derivative
financial 2009 2008
instruments, EUR million 31 March 31 Dec
Foreign exchange contracts 121.0 252.0
Interest rate swaps 150.0 100.0
Includes the gross amount of all notional values for contracts that
have not yet been settled or closed. The amount of notional value
outstanding is not necessarily a measure or indication of market
risk, as the exposure of certain contracts may be offset by that of
other contracts.
Fair values of derivatives, EUR million
The net fair values of derivative financial
instruments at the balance sheet date were: 2009 2008
31 March 31 Dec
Foreign exchange contracts -3.1 -6.1
Interest rate swaps 0.0 0.6
Derivatives are used for hedging purposes only.
Contingent assets
The Finnish tax authorities have confirmed an additional loss EUR
41.0 million (of which a deferred tax asset EUR 10.7 million could be
recognized) on the loss incurred by the Parent company in connection
with the intra-group transaction carried out in April 2004, but the
decision has been contested.
QUARTERLY FIGURES
Key figures 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Earnings per share, EUR
- basic 0.01 0.02 0.33 0.26 0.23
- diluted 0.01 0.02 0.33 0.26 0.23
Equity per share, EUR 6.31 6.75 6.90 6.58 6.29
Return on equity rolling 12 month, % 10.2 12.6 -2.4 -4.9 -7.7
Return on capital employed rolling 12
month, % 25.3 25.2 8.9 8.8 7.2
Equity ratio % 40.0 41.1 42.0 38.8 38.0
Net interest-bearing liabilities, EUR
million 79.2 101.4 169.7 138.1 139.7
Gearing, % 17.5 21.0 34.3 29.3 31.0
Investments, EUR million 16.1 12.8 25.7 23.2 36.2
Income statement, EUR million 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Net sales 438.0 492.0 425.3 480.1 468.3
Other operating income 2.9 2.4 2.2 1.7 4.5
Employee benefit expenses 266.9 278.8 227.1 273.1 277.0
Depreciation and amortization 17.3 16.8 16.7 16.3 16.3
Other operating expenses 151.8 175.2 149.9 162.8 154.9
Operating profit (EBIT) 4.9 23.6 33.8 29.6 24.6
Financial income and expenses -2.8 -17.0 -3.5 -5.8 -2.9
Profit before taxes 2.1 6.6 30.3 23.8 21.7
Income taxes -1.1 -4.8 -6.6 -5.1 -5.4
Net profit for the period 1.0 1.8 23.7 18.7 16.3
Balance sheet, EUR million 2009 2008 2008 2008 2008
31 March 31 Dec 30 Sep 30 June 31 March
Goodwill 391.4 389.3 412.9 414.7 415.9
Other intangible assets 49.2 53.1 59.3 62.3 62.5
Property, plant and
equipment 103.2 100.5 102.2 94.4 92.2
Other non-current assets 68.7 69.3 67.9 69.0 67.4
Total non-current assets 612.5 612.2 642.3 640.4 638.0
Trade receivables and other
current assets 514.1 522.1 579.3 583.5 579.7
Cash and cash equivalents 94.6 120.2 58.2 93.4 85.0
Total current assets 608.7 642.3 637.5 676.9 664.7
Total assets 1 221.2 1 254.5 1 279.8 1 317.3 1 302.7
Total equity 452.1 483.6 494.5 471.3 451.1
Non-current
interest-bearing loans 163.2 164.5 164.8 165.4 166.2
Provisions 37.2 28.6 27.5 35.9 38.7
Other non-current
liabilities 42.5 48.0 53.7 53.1 45.9
Total non-current
liabilities 242.9 241.1 246.0 254.4 250.8
Trade payables and other
current liabilities 506.1 463.1 465.9 515.1 531.1
Current interest-bearing
loans 20.1 66.7 73.4 76.5 69.7
Total current liabilities 526.2 529.8 539.3 591.6 600.8
Total equity and
liabilities 1 221.2 1 254.5 1 279.8 1 317.3 1 302.7
Cash flow, EUR million 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Cash flow from operations
Net profit 1.0 1.8 23.7 18.7 16.3
Adjustments 22.3 39.5 28.1 27.2 25.4
Change in net working capital 28.1 35.6 -46.5 19.5 21.7
Cash generated from operations 51.4 76.9 5.3 65.4 63.4
Net financial expenses paid -3.0 -1.0 -4.2 -0.6 -0.2
Income taxes paid -6.4 2.3 -6.8 -10.9 1.4
Net cash flow from operations 42.0 78.2 -5.7 53.9 64.6
Net cash used in investing activities
from operations -18.2 -14.3 -25.4 -12.8 -22.4
Net cash used in financing activities
from operations -45.3 0.7 -4.1 -32.9 -29.8
Change in cash and cash equivalents -21.5 64.6 -35.2 8.2 12.4
Cash and cash equivalents at beginning
of period -120.2 -58.2 -93.4 -85.0 -72.9
Foreign exchange differences 4.1 2.6 0.0 -0.2 0.3
Cash and cash equivalents at end of
period 94.6 120.2 58.2 93.4 85.0
-21.5 64.6 -35.2 8.2 12.4
Net sales by country, EUR million 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Finland 227 244 198 230 232
Sweden 119 141 123 144 141
International 141 152 140 144 135
Group elimination -48 -45 -36 -37 -40
Group total 438 492 425 480 468
Net sales by customer sector, EUR million 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Telecom 153 162 147 172 167
Finance 89 104 92 102 104
Industry sectors 197 226 186 206 198
Group total 438 492 425 480 468
Operating profit (EBIT) by country, EUR million
2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Finland 22.1 28.7 26.3 32.6 30.0
Sweden - 8.7 17.6 14.1 7.4 9.7
International - 4.0 - 0.9 5.2 2.1 - 2.7
Countries total 9.4 45.4 45.6 42.1 37.0
Group operations - 4.5 - 21.9 - 11.7 - 12.6 - 12.4
Operating profit (EBIT) 4.9 23.6 33.9 29.6 24.6
Operating margin (EBIT) by country, % 2009 2008 2008 2008 2008
1-3 10-12 7-9 4-6 1-3
Finland 9.7 11.8 13.3 14.2 12.9
Sweden -7.3 12.5 11.5 5.2 6.9
International -2.8 -0.6 3.7 1.4 -2.0
Countries total 2.1 9.2 10.7 8.8 7.9
Operating margin (EBIT) 1.1 4.8 8.0 6.2 5.3
Major shareholders 31 March 2009
Shares %
1 OP Pohjola Group 4 182 000 5.8%
2 Swedbank Robur fonder 3 629 256 5.0%
3 Didner & Gerge Aktiefond 2 630 000 3.7%
4 Ilmarinen Mutual Pension Insurance Co. 1 918 000 2.7%
5 The State Pension Fund 1 610 000 2.2%
6 Svenska Litteratursällskapet i Finland 1 504 000 2.1%
7 Varma Mutual Pension Insurance Co. 1 349 749 1.9%
8 Tapiola Pension 1 345 957 1.9%
9 Länsförsäkringar Fondförvaltning AB 707 984 1.0%
10 Pekka Viljakainen 649 447 0.9%
Nominee registered 42 138 678 58.5%
Others 10 358 102 14.4%
Total 72 023 173 100.0%
Based on the ownership records of Euroclear Finland Oy and Euroclear
Sweden AB.
For further information:
Hannu Syrjälä, President and CEO, tel. +358 2072 68729,
hannu.syrjala@tieto.com
Seppo Haapalainen, CFO, tel. +358 2072 63500, +358 400 455587,
seppo.haapalainen@tieto.com
Reeta Kaukiainen, EVP, Communications and Investor Relations, tel.
+358 2072 68711,
+358 50 522 0924, reeta.kaukiainen@tieto.com
Pasi Hiedanpää, Manager, Investor Relations, tel. +358 2072 68088,
+358 50 378 2228, pasi.hiedanpaa@tieto.com
Press conference for analysts and media will be held in Stockholm,
Scandic Anglais Hotel, cabinet cabinet Birk, Humlegårdsgatan 23, at
9.00 am CET (10.00 am EET, 8.00 am UK time). The results will be
presented in English by Hannu Syrjälä, President and CEO.
Notification of attendance to sirpa.salo@tieto.com, tel. +358 2072
68714.
The conference will be webcasted and published live on Tieto's
website www.tieto.com and there will be a possibility to present
questions on-line. An on-demand video will be available after the
conference.
Conference call hosted by the management starting at 2.30 pm CET
(3.30 pm EET, 1.30 pm UK time), will also be available as live audio
webcast at www.tieto.com. Callers may access the conference directly
at the following telephone numbers: US callers: +1 866 966 5335,
non-US callers: +44 20 3023 4402, no code. Lines are to be reserved
ten minutes before the start of conference call.
An on-demand audiocast of the conference will also be published on
Tieto's website later during the day. A replay will be available
until 1 May 2009 at the following numbers: US callers:
+1 866 583 1035, non-US callers: +44 20 8196 1998, access code:
141833#.
Tieto publishes financial information in English, Finnish and
Swedish. All releases are posted in full on Tieto's website as soon
as they are published.
TIETOENATOR CORPORATION
DISTRIBUTION
NASDAQ OMX Helsinki
NASDAQ OMX Stockholm
Principal Media
Tieto is an IT service company providing IT, R&D and consulting
services. With approximately 16 000 experts, we are among the leading
IT service companies in Northern Europe and the global leader in
selected segments. We specialize in areas where we have the deepest
understanding of our customers' businesses and needs. Our superior
customer centricity and Nordic expertise set us apart from our
competitors.
Tieto is our new brand name as of 1 December 2008. The official
registered name of the company is TietoEnator Corporation.
www.tieto.com
TietoEnator Corporation
Business ID: 0101138-5
Aku Korhosentie 2-6
PO Box 38
FI-00441 HELSINKI, FINLAND
Tel +358 207 2010
Fax +358 2072 68898
Registered office: Helsinki
Kronborgsgränd 1
SE-164 87 KISTA, SWEDEN
Tel +46 8 632 1400
Fax +46 8 632 1420
mail: info@tieto.com
www.tieto.com
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