2014-10-23 07:00:00 CEST
2014-10-23 07:00:05 CEST
REGULATED INFORMATION
Tieto Oyj - Interim report (Q1 and Q3)
TIETO's Interim Report 3/2014 – Strong underlying operating profit and IT services order intake
Tieto Corporation INTERIM REPORT 23 October 2014, 8.00 am EET
-- Underlying operating margin close to 12% mainly due to continued efficiency
improvement
-- Strong order intake driven by the manufacturing and retail industries as
well as continued strong performance in Managed Services
-- In Product Development Services, capacity adjustments initiated due to the
insourcing decision taken by one key customer - one-off goodwill impairment
charges impacting operating profit
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 2.6%
-- In IT services, organic growth in local currencies was 1.0%
-- Order intake (Total Contract Value) amounted to EUR 395 (299) million and
order backlog was EUR 1 558 (1 421) million
-- Third-quarter operating profit excl. one-off items rose to EUR 41.3 (37.5)
million, margin increased to 11.9% (10.4)
-- Operating profit includes goodwill impairment charges of EUR 40 million
7-9/201 7-9/2013 1-9/201 1-9/2013
4 2) 4 2)
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Net sales, EUR million 346.2 361.1 1 119.6 1 201.7
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Change, % -4.1 n/a -6.8 n/a
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Organic change in local currencies, % -2.6 n/a -1.7 n/a
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Operating profit (EBITA), EUR million -3.7 25.2 52.4 71.2
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Operating margin (EBITA), % -1.1 7.0 4.7 5.9
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Operating profit (EBIT), EUR million -3.9 24.3 51.6 68.4
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Operating margin (EBIT), % -1.1 6.7 4.6 5.7
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Operating profit (EBIT) excl. one-off 41.3 37.5 105.8 99.1
items1), EUR million
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Operating margin (EBIT) excl. one-off 11.9 10.4 9.5 8.2
items1), %
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Profit after taxes, EUR million -12.8 18.4 28.3 47.2
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EPS, EUR -0.17 0.25 0.39 0.65
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Net cash flow from operations, EUR million 11.1 40.8 77.7 101.5
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Return on equity, 12-month rolling, % 8.7 5.4 8.7 5.4
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Return on capital employed, 12-month 10.4 9.0 10.4 9.0
rolling, % 3)
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Investments, EUR million 10.1 15.5 30.6 48.1
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Interest-bearing net debt, EUR million 25.7 52.6 25.7 52.6
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Net debt/EBITDA 0.2 0.2 0.2 0.2
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Book-to-bill 1.1 0.8 1.1 1.0
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Order backlog 1 558 1 421 1 558 1 421
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Personnel on 30 Sep 13 878 14 778 13 878 14 778
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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 2014 unchanged
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:
“We are pleased to see the continued performance improvement in both our core
IT services business and the underlying profitability of the Group. I'm also
satisfied with the healthy order intake in many of our businesses, especially
in the manufacturing and retail industries as well as the Managed Services
business as a whole.
The market environment for our Product Development Services business remains
challenging due to the recent insourcing decision made by one of our large
customers. Consequently, we have initiated actions to reduce the cost base and
to improve our performance in this area within our existing customer base.
Additionally, we continue to seek growth for Product Development Services
through new customers globally.
At Tieto, we continue to invest in several business areas that are expected to
drive future growth of the company. Cloud services have been successful for our
customers and have delivered over 100% cloud services growth for Tieto during
the last nine months. Momentum remains high in our start-up operations for both
Industrial Internet and Customer Experience Management. I remain optimistic
that our investments will continue to deliver double-digit growth in the chosen
areas.”
Financial performance by service line
EUR million Custome Custome Change, Operatin Operatin
r r % g g
sales sales profit profit
7-9/201 7-9/201 7-9/2014 7-9/2013
4 3
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Managed Services 121 117 3 11.0 3.7
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Consulting and System Integration 84 92 -9 7.2 4.0
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Industry Products 91 91 0 20.3 19.9
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Product Development Services 51 60 -15 -37.4 3.0
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Support Functions and Global -5.0 -6.3
Management
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Total 346 361 -4 -3.9 24.3
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Operating margin by service line
% Operatin Operatin Operating Operating
g g margin excl. margin excl.
margin margin one-off one-off
7-9/2014 7-9/2013 items1) items1)
7-9/2014 7-9/2013
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Managed Services 9.0 3.2 9.1 5.1
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Consulting and System 8.6 4.3 11.6 10.4
Integration
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Industry Products 22.4 21.9 22.3 22.1
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Product Development Services -73.0 5.0 8.9 7.9
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Total -1.1 6.7 11.9 10.4
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1) Excl. capital gains, impairments and
restructuring costs
Organic change in local currency by service line
EUR million Customer Customer Change,
sales adj. for sales adj. for %
acquisitions and divestments
currency 7-9/2013
7-9/2014
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Managed Services 125 117 7
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Consulting and System 85 91 -7
Integration
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Industry Products 94 91 4
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IT services 303 300 1
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Product Development 48 60 -21
Services
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Total 351 360 -3
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Third-quarter sales were affected by the divestment of the security solutions
business in Denmark. Additionally, the acquisitions of Canvisa Consulting and
part of Siemens Convergence Creators' business are eliminated.
Customer sales by industry group
EUR million Customer sales Customer sales Change, %
7-9/2014 7-9/2013
------------------------------------------------------------------------------
Financial Services 77 77 0
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Manufacturing, Retail and Logistics 73 70 5
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Public, Healthcare and Welfare 91 90 1
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Telecom, Media and Energy 54 63 -14
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IT services 295 300 -2
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Product Development Services 51 60 -15
------------------------------------------------------------------------------
Total 346 361 -4
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Organic change in local currency by industry group
EUR million Customer Customer Change,
sales adj. for sales adj. for %
acquisitions and currency divestments
7-9/2014 7-9/2013
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Financial Services 79 77 3
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Manufacturing, Retail 74 69 7
and Logistics
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Public, Healthcare and 94 90 4
Welfare
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Telecom, Media and 56 63 -11
Energy
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IT services 303 300 1
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Product Development 48 60 -21
Services
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Total 351 360 -3
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Third-quarter sales were affected by the divestment of the security solutions
business in Denmark. Additionally, the acquisitions of Canvisa Consulting and
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, +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, on Thursday 23 October 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.
Tieto currently provides only Adobe Flash -based webcast and to join the
conference, attendees need Adobe Flash plugin version 10.1.0 or newer. In order
to ensure access, attendees are requested to test compatibility beforehand. In
case problems exist, please contact tieto@reloadmedia.fi.
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, Finnish and Swedish. The full
interim report with tables is available only in English and Finnish.
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.
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