Tieto’s Interim Report 1/2017 – Strong growth contributing to good performance
- Sales growth of 7% – all businesses performing well
- Good profitability and strong cash flow
- Next phase of the automation and efficiency improvement programme started
The full interim report with tables is available at the end of this release.
Key figures for the first quarter
IT services
- Sales growth totalled 6.8%, sales in local currencies up by 6.5%
- Adjusted operating profit amounted to EUR 31.1 (29.1) million, 8.6% (8.6) of sales
The Group
- Sales growth totalled 7.0%, sales in local currencies up by 6.9%
- Adjusted operating profit amounted to EUR 35.4 (31.5) million, 9.0% (8.6) of sales
- Order intake (Total Contract Value) at EUR 389 (325) million – book-to-bill 1.0 (0.9)
| 1–3/2017 | 1–3/2016 | |
| Net sales, EUR million | 393.2 | 367.5 |
| Change, % | 7.0 | 0.5 |
| Change in local currencies, % | 6.9 | 1.4 |
| Operating profit (EBITA), EUR million | 25.6 | 31.6 |
| Operating margin (EBITA), % | 6.5 | 8.6 |
| Operating profit (EBIT), EUR million[1] | 21.9 | 28.3 |
| Operating margin (EBIT), % | 5.6 | 7.7 |
| Adjusted[1] [2]operating profit (EBIT), EUR million | 35.4 | 31.5 |
| Adjusted[1]operating margin (EBIT), % | 9.0 | 8.6 |
| Profit after taxes, EUR million | 15.7 | 21.5 |
| EPS, EUR | 0.21 | 0.29 |
| Net cash flow from operations, EUR million | 79.7 | 46.9 |
| Return on equity, 12-month rolling, % | 25.3 | 25.7 |
| Return on capital employed, 12-month rolling, % | 25.8 | 27.2 |
| Capital expenditure, EUR million | 9.3 | 9.4 |
| Interest-bearing net debt, EUR million | 38.0 | -21.3 |
| Net debt/EBITDA | 0.2 | -0.1 |
| Book-to-bill | 1.0 | 0.9 |
| Order backlog | 1 864 | 1 907 |
| Personnel on 31 March | 13 822 | 13 200 |
[1] includes EUR 1.1 (0.7) million in amortization of acquisition-related intangible assets
[2] adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items
Full-year outlook for 2017 unchanged
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 had a strong start to the year with sales growth of 7% for the Group and improved profitability – all of our businesses performed solidly. During the first quarter, we were also able to increase our growth rate in Sweden to 10%. Our recent customer wins are encouraging as we have been able to expand our operations with new services across the Nordics.
Our investments, in terms of both new services and competencies, play a fundamental role in our long-term renewal. Given the global nature of our business, continued attention on innovation, competitiveness and efficiency remain important to our future success. During the first quarter, we continued to increase investments in Industry Solutions and started the next phase of our automation programme which is a key element in efficiency improvement. One of the highlights in our investment portfolio is the recently launched OneCloud, a highly competitive solution that allows customers to efficiently manage both private and public cloud services.
In 2017 Tieto is taking part in Finland's centennial celebration. We honour our Finnish heritage by activating a discussion on the impacts of technology on the future of work. As digitalization accelerates, learning as a lifestyle is increasingly important for both our employees and Tieto’s competitiveness.”
Financial performance by service line
| EUR million | Customer sales 1–3/ 2017 |
Customer sales 1–3/ 2016 |
Change % |
Opera- ting profit 1–3/ 2017 |
Opera- ting profit 1–3/ 2016 |
| Technology Services and Modernization |
198 | 190 | 4 | 14.5 | 17.7 |
| Business Consulting and Implementation |
39 | 35 | 13 | 2.2 | 1.1 |
| Industry Solutions | 125 | 113 | 10 | 6.3 | 11.5 |
| Product Development Services | 32 | 29 | 10 | 4.2 | 2.6 |
| Support Functions and Global Management |
-5.3 | -4.6 | |||
| Total | 393 | 367 | 7 | 21.9 | 28.3 |
Operating margin by service line
| % | Operating margin 1–3/2017 |
Operating margin 1–3/2016 |
Adjusted[1] operating margin 1–3/2017 |
Adjusted[1] operating margin 1–3/2016 |
| Technology Services and Modernization | 7.3 | 9.4 | 10.9 | 10.2 |
| Business Consulting and Implementation | 5.7 | 3.2 | 7.1 | 3.7 |
| Industry Solutions | 5.0 | 10.1 | 8.0 | 10.4 |
| Product Development Services | 13.1 | 9.0 | 13.6 | 8.4 |
| Total | 5.6 | 7.7 | 9.0 | 8.6 |
| [1] adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items | ||||
Customer sales by industry group
| EUR million | Customer sales 1–3/2017 |
Customer sales 1–3/2016 |
Change, % |
| Financial Services | 96 | 88 | 9 |
| Public, Healthcare and Welfare | 128 | 118 | 8 |
| Industrial and Consumer Services | 138 | 132 | 5 |
| IT services | 361 | 338 | 7 |
| Product Development Services | 32 | 29 | 10 |
| Total | 393 | 367 | 7 |
M&A impact by service line
| Growth, % (in local currencies) 1–3/2017 |
Organic growth, % (in local currencies) 1–3/2017 |
|
| Technology Services and Modernization | 4.6 | 4.6 |
| Business Consulting and Implementation | 13.1 | 13.1 |
| Industry Solutions | 8.3 | 3.8 |
| IT services | 6.5 | 5.0 |
| Product Development Services | 11.1 | 11.1 |
| Total | 6.9 | 5.5 |
M&A impact by industry group
| Growth, % (in local currencies) 1–3/2017 |
Organic growth, % (in local currencies) 1–3/2017 |
|
| Financial Services | 8.0 | 2.9 |
| Public, Healthcare and Welfare | 7.9 | 7.9 |
| Industrial and Consumer Services | 3.9 | 3.6 |
| IT services | 6.5 | 5.0 |
| Product Development Services | 11.1 | 11.1 |
| Total | 6.9 | 5.5 |
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
A teleconference for analysts and media will be held on Thursday 27 April 2017 at 10.00 am EET (9.00 am CET, 8.00 am UK time). Analysts and media are also welcome to participate in the conference at Tieto’s office in Stockholm, address: Fjärde Bassängvägen 15.
Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO, will present the results online in English. The presentation can be followed on Tieto's website, for which attendees need Adobe Flash plugin version 10.1.0 or newer. The teleconference details can be found below.
Teleconference 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. The teleconference is recorded and it will be available on demand later during the day.
Tieto publishes its financial information in English and Finnish.
TIETO CORPORATION
DISTRIBUTION
NASDAQ Helsinki
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
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