Tieto's Interim Report 2/2016 – Growth of 5% – profit improvement continues

Tieto Corporation          INTERIM REPORT        22 July 2016, 8.00 am EET

  • Group sales growing by 5% driven by 12% growth in software-based Industry Products
  • Adjusted operating margin improves to above 9%
  • Healthy profitability in Product Development Services

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 6.1%, sales in local currencies up by 7.3%
  • Adjusted operating profit amounted to EUR 32.4 (26.9) million, 9.3% (8.1) of sales

The Group

  • Sales growth totalled 4.7%, sales in local currencies up by 5.9%
  • Adjusted operating profit amounted to EUR 35.8 (30.1) million, 9.4% (8.3) of sales
  • Order intake (Total Contract Value) at EUR 326 (340) million, order backlog at EUR 1 757 (1 737) million – stronger order intake expected for the second half
4–6/2016 4–6/2015 1–6/2016 1–6/2015
Net sales, EUR million 381.0   363.8   748.5   729.4  
   Change, % 4.7    -5.8   2.6   -5.7  
   Change in local currencies, % 5.9    -4.5   3.6   -3.6  
Operating profit (EBITA), EUR million 1) 35.7   26.2   67.3   43.4  
Operating margin (EBITA), % 9.4   7.2   9.0   5.9  
Operating profit (EBIT), EUR million 32.3    23.1   60.6   37.0  
Operating margin (EBIT), % 8.5    6.3   8.1   5.1  
Adjusted 2) operating profit (EBIT), EUR million 35.8    30.1   67.3   60.8  
Adjusted 2)  operating margin (EBIT), % 9.4    8.3   9.0   8.3  
Profit after taxes, EUR million 24.2    17.4   45.7   26.5  
EPS, EUR 0.33   0.24   0.62   0.36  
Net cash flow from operations, EUR million -13.7    12.4   33.2   49.1  
Return on equity, 12-month rolling, % 26.2   4.5   26.2   4.5  
Return on capital employed, 12-month rolling, % 25.9   7.5   25.9   7.5  
Capital expenditure and acquisitions, EUR million 11.8    10.6   21.2   22.2  
Interest-bearing net debt, EUR million 103.3   5.3    103.3   5.3  
Net debt/EBITDA 0.5    0.0   0.5   0.0  
Book-to-bill 0.9    0.9    0.9   1.1  
Order backlog 1 757 1 737   1 757  1 737 
Personnel on 30 June  13 381  12 949 13 381 12 949

1) includes amortization of all intangible items; previously, only acquisition-related intangible items included
2) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

Full-year outlook for 2016 unchanged

Tieto expects its adjusted1) full-year operating profit (EBIT) to increase from the previous year’s level (EUR 150.8 million in 2015).

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:

“It is gratifying to see good growth of 5% for the company, and somewhat higher growth for our IT services business. Simultaneously, our profitability development continued on a positive trend line and we achieved an adjusted operating margin level of over 9%. During the second quarter, our software-based industry solutions and Consulting and System Integration delivered especially strong results. Also Financial Services has consistently performed well.

I’m pleased to see our business strengthening based on continued investments in future innovation and growth businesses. We are maintaining our investment agenda in areas such as cloud computing, Customer Experience Management, Industrial Internet, and new Security Services. In addition, we invest in software-based industry solutions to increase value for our customers and support our growth ambitions.

It is encouraging to see the good engagement we have been able to create among our stakeholders after the launch of our new strategy. We are building on this positive momentum and look forward to a good second half of the year.”


Financial performance by service line

EUR million  Customer
sales
4–6/2016
 Customer
sales
4–6/2015
Change, % Operating
profit
4–6/2016
Operating
profit
4–6/2015
Managed Services 134  131 9.8 3.1
Consulting and System Integration 107 101 6 10.9 8.5
Industry Products 110 98 12 12.5 10.8
Product Development Services 31 33 -9 3.3 5.7
Support Functions and Global Management -4.2 -5.0
Total 381  364 5  32.3 23.1


Operating margin by service line

% Operating
margin
4–6/2016
Operating
margin
4–6/2015
Adjusted1)  operating
margin
4–6/2016
Adjusted1)  operating
margin
4–6/2015
Managed Services 7.4  2.4 7.4 7.6
Consulting and System Integration 10.2 8.4 10.6 8.6
Industry Products 11.4 11.0 12.9 12.2
Product Development Services 10.7 17.1 11.1 9.6
Total 8.5 6.3 9.4 8.3

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


Customer sales by industry group

EUR million Customer sales
4–6/2016
Customer sales
4–6/2015
Change, %
Financial Services 93 88 5
Manufacturing, Retail and Logistics 82 77 6
Public, Healthcare and Welfare 120 107 13
Telecom, Media and Energy 56 58 -3
IT services  350 330 6
Product Development Services 31  33 -9
Total 381 364 5


M&A impact by service line

Growth, %
(in local currencies)
4–6/2016
Organic growth, %
(in local currencies)
4–6/2016
Managed Services 2.7 2.7
Consulting and System Integration  6.1  1.1 
Industry Products   15.4  6.5 
IT services  7.3  3.1 
Product Development Services  -8.3  -8.3 
Total  5.9  2.1 


M&A impact by industry group

Growth, %
(in local currencies)
4–6/2016
Organic growth, %
(in local currencies)
4–6/2016
Financial Services  7.1  6.8 
Manufacturing, Retail and Logistics  5.9  2.3 
Public, Healthcare and Welfare  13.3  5.5 
Telecom, Media and Energy  -0.9  -5.2 
IT services  7.3  3.1 
Product Development Services  -8.3  -8.3 
Total  5.9  2.1 


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 on Friday 22 July at Tieto’s premises in Helsinki, address: Aku Korhosen tie 2-6 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. 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 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0)203 043 2002
US: +1 719 325 2131
Conference code: 6304748

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 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 

About Us

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

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