Tieto’s Interim Report 4/2016 – Year of increased investments ends with solid performance

  • Strong order intake with fourth-quarter book-to-bill 1.5
  • Sales growth 2% in the fourth quarter, IT services up by 3%
  • Adjusted operating margin over 12%
  • Increased competitiveness driven by investments, continued automation and efficiency programme
  • Dividend of EUR 1.37 proposed

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

Key figures for the fourth quarter

IT services

  • Sales growth totalled 2.7%, sales in local currencies up by 3.9%
  • Adjusted operating profit amounted to EUR 45.9 (48.6) million, 12.3% (13.4) of sales

The Group

  • Sales growth totalled 2.0%, sales in local currencies up by 3.5%
  • Adjusted operating profit amounted to EUR 49.5 (51.4) million, 12.3% (13.0) of sales
  • Order intake (Total Contract Value) at EUR 613 (641) million, order backlog at EUR 1 847 (2 030) million – book-to-bill 1.5

Key figures for the full year

IT services

  • Sales growth totalled 4.3%, sales in local currencies up by 5.3%
  • Adjusted operating profit amounted to EUR 141.1 (136.4) million, 10.3% (10.3) of sales

The Group

  • Sales growth totalled 2.2%, sales in local currencies up by 3.2%
  • Adjusted operating profit amounted to EUR 152.2 (150.8) million, 10.2% (10.3) of sales
  • Proposed dividend EUR 1.37 per share, including base dividend of EUR 1.15 (1.10) and an additional dividend of EUR 0.22 (0.25), representing dividend yield of 5.3%
10–12/
2016
10–12/
2015
1–12/
2016
1–12/
2015
Net sales, EUR million 403.6   395.6  1 492.6   1 460.1  
   Change, % 2.0   -1.8  2.2   -4.1  
   Change in local currencies, % 3.5   -2.9  3.2   -2.6  
Operating profit (EBITA), EUR million (1) 49.0   50.1  154.9   138.0  
Operating margin (EBITA), % 12.1   12.7  10.4   9.5  
Operating profit (EBIT), EUR million (2) 45.1   46.8  140.8   125.2  
Operating margin (EBIT), % 11.2   11.8  9.4   8.6  
Adjusted (2) (3) operating profit (EBIT), EUR million 49.5   51.4  152.2   150.8  
Adjusted (2) operating margin (EBIT), % 12.3   13.0  10.2   10.3  
Profit after taxes, EUR million 34.2   34.4  107.2   90.5  
EPS, EUR 0.46   0.47  1.46   1.23  
Net cash flow from operations, EUR million 50.2   67.1  97.2   132.6  
Return on equity, 12-month rolling, % 22.1   19.0  22.1   19.0  
Return on capital employed, 12-month rolling, % 21.6   20.4  21.6   20.4  
Capital expenditure and acquisitions, EUR million 24.7   32.7  99.2   136.7  
Interest-bearing net debt, EUR million 109.7   13.2  109.7   13.2  
Net debt/EBITDA 0.6   0.1  0.6   0.1  
Book-to-bill 1.5   1.6  1.1   1.3  
Order backlog 1 847 2 030 1 847 2 030
Personnel on 31 December   13 876   13 083 13 876   13 083

1) amortization of all intangible items; previously, only acquisition-related intangible items
2) includes EUR 3.3 (1.2) million in allocated acquisition-based amortization in the full year, EUR 1.1 (0.6) million in the fourth quarter
3) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

Full-year outlook for 2017

Tieto expects its adjusted (1) 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 are pleased to be back to growth and to have ended the year with solid performance also in terms of order intake and profitability. While our total revenues for the full year grew by 2% – and by 4% in IT services – our aim is to grow faster, which is supported by our investments in new services and technologies.

The IT software and services industry is continuing to undergo significant change globally, which requires a simultaneous focus on future innovation and constant productivity improvement in our operations. For example, we have increased investments in our software products, start-ups and new data-driven businesses based on artificial intelligence. To enable continued investments in innovation and growth, we have also decided to take further actions to drive our competitiveness by continuing to step up automation and growing our less labour-intensive solutions.

In this rapidly changing world of digitalization, the required skills and competences are evolving fast. We encourage all our employees to pursue personal development and actively support everyone to acquire new skills that fit the market demands. With this in mind we have recently launched a “Learning as a Lifestyle” initiative for all employees to provide insights on emerging skills and technologies in the areas of Advanced Analytics, Design Thinking and DevOps for agile development.

We are excited about the opportunities the world of digitalization brings to society and our customers, business and employees. With this in mind, we are looking forward to another exciting year in our continuous renewal and expansion.”  

Financial performance by service line

EUR million Customer
sales
10–12/
2016
Customer
sales
10–12/

2015
Change, % Operating
profit
10–12/
2016
Operating
profit
10–12/

2015
Technology Services and Modernization 197 196 1 26.2 30.3
Business Consulting and Implementation 38 34 10 2.0 1.3
Industry Solutions 138 132 4 19.7 20.8
Product Development Services 31 33 -5 3.3 2.8
Support Functions and Global Management -6.2 -8.3
Total 404 396 2 45.1 46.8

Operating margin by service line

% Operating
margin
10–12/

2016
Operating
margin
10–12/
2015
Adjusted (1)
operating
margin
10–12/
2016
Adjusted (1)
operating
margin
10–12/
2015
Technology Services and Modernization 13.3 15.5 14.1 15.8
Business Consulting and Implementation 5.3 3.7 1.8 5.7
Industry Solutions 14.3 15.7 15.5 16.2
Product Development Services 10.6 8.4 11.3 9.4
Total 11.2 11.8 12.3 13.0
1) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

Customer sales by industry group

EUR million Customer sales
10–12/

2016
Customer sales
10–12/

2015
Change, %
Financial Services 101 92 10
Public, Healthcare and Welfare 135 133 1
Industrial and Consumer Services 137 137 0
IT services 373 363 3
Product Development Services 31 33 -5
Total 404 396 2

M&A impact by service line

Growth, %
(in local currencies)
10–12 /
2016
Organic growth, %
(in local currencies)
10–12 /
2016
Technology Services and Modernization 2.2 2.2
Business Consulting and Implementation 11.9 2.0
Industry Solutions 5.0 1.2
IT services 3.9 1.6
Product Development Services -0.9 -0.9
Total 3.5 1.4

M&A impact by industry group

Growth, %
(in local currencies)
10–12 /
2016
Organic growth, %
(in local currencies)
10–12 /
2016
Financial Services 11.0 5.6
Public, Healthcare and Welfare 2.6 2.4
Industrial and Consumer Services 0.2 -2.0
IT services 3.9 1.6
Product Development Services -0.9 -0.9
Total 3.5 1.4

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 Espoo, address: Keilalahdentie 2, on 2 February 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)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. 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