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Interim Report 2/2014 - Positive development in IT services continues(OMX Via Acquire Media NewsEdge) Tieto Corporation INTERIM REPORT 18 July 2014, 8.00 am EET -- IT services organic growth in local currencies close to 3% -- Profitability continued to improve despite costs related to exceptional project termination -- Customer insourcing results in lower volumes in Product Development Services 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 1.3% -- In IT services, organic growth in local currencies was 2.6% -- Second-quarter operating profit excl. one-off items amounted to EUR 30.0 (30.6) million, margin increased to 7.8% (7.3) 4–6/ 4–6/ 1–6/ 1–6/ 2014 20132) 2014 20132) -------------------------------------------------------------------------------- Net sales, EUR million 386.4 416.7 773.4 840.6 -------------------------------------------------------------------------------- Change, % -7.3 n/a -8.0 n/a -------------------------------------------------------------------------------- Organic change in local currencies, % -1.3 n/a -1.3 n/a -------------------------------------------------------------------------------- Operating profit (EBITA), EUR million 21.7 15.6 56.1 45.9 -------------------------------------------------------------------------------- Operating margin (EBITA), % 5.6 3.7 7.3 5.5 -------------------------------------------------------------------------------- Operating profit (EBIT), EUR million 21.5 14.8 55.5 44.1 -------------------------------------------------------------------------------- Operating margin (EBIT), % 5.6 3.5 7.2 5.2 -------------------------------------------------------------------------------- Operating profit (EBIT) excl. one-off items1), 30.0 30.6 64.5 61.7 EUR million -------------------------------------------------------------------------------- Operating margin (EBIT) excl. one-off items1), % 7.8 7.3 8.3 7.3 -------------------------------------------------------------------------------- Profit after taxes, EUR million 16.5 7.4 41.1 28.8 -------------------------------------------------------------------------------- EPS, EUR 0.23 0.10 0.56 0.40 -------------------------------------------------------------------------------- Net cash flow from operations, EUR million 16.6 10.7 66.6 60.7 -------------------------------------------------------------------------------- Return on equity, 12-month rolling, % 15.3 6.6 15.3 6.6 -------------------------------------------------------------------------------- Return on capital employed, 12-month rolling, % 14.8 10.3 14.8 10.3 3) -------------------------------------------------------------------------------- Investments, EUR million 7.1 15.3 20.5 32.6 -------------------------------------------------------------------------------- Interest-bearing net debt, EUR million 30.3 81.1 30.3 81.1 -------------------------------------------------------------------------------- Net debt/EBITDA 0.2 0.4 0.2 0.4 -------------------------------------------------------------------------------- Book-to-bill 1.0 1.4 1.1 1.1 -------------------------------------------------------------------------------- Order backlog 1 550 1 469 1 550 1 469 -------------------------------------------------------------------------------- Personnel on 30 June 14 126 14 933 14 126 14 933 -------------------------------------------------------------------------------- 1) Excl. capital gains, impairments 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: “Our second quarter demonstrated continued good performance in our IT services business as a result of longer-term improvement in businesses across the company. The market remains attractive, providing a combination of opportunities for new growth investments and for modernization of old IT systems. Our position as the leader in Nordic Enterprise Cloud services has further strengthened in the second quarter, as proven by our accelerated growth in this business. I’m also glad to see continued improvement in customer confidence towards Tieto – demonstrated by multiple wins for new contracts across the financial services, public and manufacturing sectors. We continue to take actions in our Product Development Services business where volumes are negatively impacted by customer insourcing and the market environment is changing. We will drive renewal of competencies and swiftly manage capacity to improve the business’ competitiveness and profitability. Tieto has experienced an extended period of strategy and culture renewal and I want to express my gratitude to our employees for achieving the improved level of competitiveness and performance. I expect the speed of change in the market to remain high and continue to provide attractive new opportunities for Tieto.” Financial performance by service line EUR million Custome Custome Change, Operatin Operatin r r % g g sales sales profit profit 4–6/201 4–6/201 4–6/2014 4–6/2013 4 3 -------------------------------------------------------------------------------- Managed Services 132 125 5 7.6 5.4 -------------------------------------------------------------------------------- Consulting and System Integration 97 108 -10 6.1 2.8 -------------------------------------------------------------------------------- Industry Products 97 105 -7 15.0 15.4 -------------------------------------------------------------------------------- Product Development Services 60 79 -24 -2.3 -2.6 -------------------------------------------------------------------------------- Support Functions and Global -4.8 -6.1 Management -------------------------------------------------------------------------------- Total 386 417 -7 21.5 14.8 -------------------------------------------------------------------------------- Operating margin by service line % Operatin Operatin Operating Operating g g margin excl. margin excl. margin margin one-off one-off 4–6/2014 4–6/2013 items1) items1) 4–6/2014 4–6/2013 -------------------------------------------------------------------------------- Managed Services 5.8 4.3 5.8 4.6 -------------------------------------------------------------------------------- Consulting and System 6.3 2.6 7.4 8.9 Integration -------------------------------------------------------------------------------- Industry Products 15.3 14.7 15.6 15.8 -------------------------------------------------------------------------------- Product Development Services -3.8 -3.4 6.1 2.6 -------------------------------------------------------------------------------- Total 5.6 3.5 7.8 7.3 -------------------------------------------------------------------------------- 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 4–6/2013 4–6/2014 -------------------------------------------------------------------------------- Managed Services 136 125 9 -------------------------------------------------------------------------------- Consulting and System 97 101 -4 Integration -------------------------------------------------------------------------------- Industry Products 102 100 2 -------------------------------------------------------------------------------- IT services 335 327 3 -------------------------------------------------------------------------------- Product Development 57 71 -19 Services -------------------------------------------------------------------------------- Total 393 398 -1 -------------------------------------------------------------------------------- The following divestments affected second-quarter sales: local businesses in Germany and the Netherlands and 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, % 4–6/2014 4–6/2013 ------------------------------------------------------------------------------ Financial Services 84 84 0 ------------------------------------------------------------------------------ Manufacturing, Retail and Logistics 78 78 0 ------------------------------------------------------------------------------ Public, Healthcare and Welfare 104 102 3 ------------------------------------------------------------------------------ Telecom, Media and Energy 60 74 -19 ------------------------------------------------------------------------------ Product Development Services 60 79 -24 ------------------------------------------------------------------------------ Total 386 417 -7 ------------------------------------------------------------------------------ Organic change in local currency by industry group EUR million Customer Customer Change, sales adj. for sales adj. for % acquisitions and currency divestments 4–6/2014 4–6/2013 -------------------------------------------------------------------------------- Financial Services 86 83 3 -------------------------------------------------------------------------------- Manufacturing, Retail 79 76 3 and Logistics -------------------------------------------------------------------------------- Public, Healthcare and 108 97 11 Welfare -------------------------------------------------------------------------------- Telecom, Media and 63 70 -10 Energy -------------------------------------------------------------------------------- IT services 335 327 3 -------------------------------------------------------------------------------- Product Development 57 71 -19 Services -------------------------------------------------------------------------------- Total 393 398 -1 -------------------------------------------------------------------------------- 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 Helsinki, address: Aku Korhosen tie 2–6, on 18 July 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. As from the second-quarter conference, Tieto provides only Adobe Flash -based webcast. 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 [email protected]. 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 0503 US: +1212 444 0895 Conference code: 7353033 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. Copyright © 2014 OMX AB (publ). Copyright © 2014 OMX AB (publ) |