Tieto's Interim Report 4/2015 – Strong fourth-quarter results – all businesses performing well
Tieto Corporation FINANCIAL STATEMENT BULLETIN 4 February 2016, 8.00 am EET
- Organic growth of 3% in IT services driven by Industry Products
- Reported operating margin of 12% driven by healthy business mix and Managed Services automation programme
- Product Development Services business well stabilized
- Acquisitions accelerate shift towards growth businesses
The full interim report with tables is available at the end of this release
Key figures for the fourth quarter
IT services
- Organic growth in local currencies was 2.8%
- Operating profit excl. one-off items amounted to EUR 48.3 (32.5) million, 13.3% (9.4) of sales
The Group
- Organic growth in local currencies was -2.9% – affected by lower business volumes in Product Development Services as announced in 2014
- Fourth-quarter operating profit excl. one-off items amounted to EUR 51.4 (44.4) million, 13.0% (11.0) of sales
- Order intake (Total Contract Value) amounted to EUR 641 (672) million and order backlog was EUR 2 030 (1 784) million
Key figures for the full year
IT services
- Organic growth in local currencies was 2.7%
- Operating profit excl. one-off items amounted to EUR 136.2 (128.5) million, 10.3% (9.9) of sales
The Group
- Organic growth in local currencies was -2.6% – affected by lower business volumes in Product Development Services as announced in 2014
- Full-year operating profit excl. one-off items amounted to EUR 150.8 (150.2) million, 10.3% (9.9) of sales
- Proposed dividend EUR 1.10 (1.00) per share, up by 10%, and an additional dividend of EUR 0.25 (0.30)
- Dividend yield of 5.5%, or 4.4% excluding additional dividend
| 10–12/2015 | 10–12/2014 | 1–12/2015 | 1–12/2014 | |
| Net sales, EUR million | 395.6 | 402.9 | 1 460.1 | 1 522.5 |
| Change, % | -1.8 | -0.6 | -4.1 | -5.3 |
| Organic change in local currencies, % | -2.9 | 0.9 | -2.6 | -1.1 |
| Operating profit (EBITA), EUR million | 47.4 | 9.7 | 126.4 | 62.1 |
| Operating margin (EBITA), % | 12.0 | 2.4 | 8.7 | 4.1 |
| Operating profit (EBIT), EUR million | 46.8 | 9.5 | 125.2 | 61.1 |
| Operating margin (EBIT), % | 11.8 | 2.4 | 8.6 | 4.0 |
| Operating profit (EBIT) excl. one-off items1), EUR million | 51.4 | 44.4 | 150.8 | 150.2 |
| Operating margin (EBIT) excl. one-off items1), % | 13.0 | 11.0 | 10.3 | 9.9 |
| Profit after taxes, EUR million | 34.4 | 6.7 | 90.5 | 35.0 |
| EPS, EUR | 0.47 | 0.09 | 1.23 | 0.48 |
| Net cash flow from operations, EUR million | 67.1 | 90.2 | 132.6 | 167.9 |
| Return on equity, 12-month rolling, % | 19.0 | 7.1 | 19.0 | 7.1 |
| Return on capital employed, 12-month rolling, % | 20.4 | 9.8 | 20.4 | 9.8 |
| Capital expenditure and acquisitions, EUR million | 32.7 | 12.9 | 136.7 | 43.5 |
| Interest-bearing net debt, EUR million | 13.2 | -59.2 | 13.2 | -59.2 |
| Net debt/EBITDA | 0.1 | -0.4 | 0.1 | -0.4 |
| Book-to-bill | 1.6 | 1.7 | 1.3 | 1.2 |
| Order backlog | 2 030 | 1 784 | 2 030 | 1 784 |
| Personnel on 31 December | 13 083 | 13 720 | 13 083 | 13 720 |
1) Excl. restructuring costs, capital gains/losses, goodwill impairment charges and other one-off items
Full-year outlook for 2016
Tieto expects its adjusted* full-year operating profit (EBIT) to increase from the previous year’s level (EUR 150.8 million in 2015).
*)adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other one-off items
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“The year ended with strong fourth-quarter performance in terms of profitability development and growth of IT services. All our businesses had a good quarter, demonstrating continued improvement in competitiveness. Our industry-specific software solutions experienced strong growth, accelerated by the acquisition of Software Innovation. In parallel, we substantially improved the efficiency of our operations by automating our service deliveries as evident from Managed Services double-digit margin. Furthermore, our Product Development Services business has stabilized well.
To support innovation and longer-term growth, over the last few years we have continued to increase our annual, fully expensed investments in new service development from EUR 40 million to EUR 60 million, while continuing to improve profitability in line with our long-term objectives. In addition, the three acquisitions completed during 2015 add to the speed of service and cultural renewal. Recruitments in 2015 were also high at 1 800 in total, of which around 500 were new positions to support our capability development in emerging services. The recruitment of over 400 professionals in the Nordic countries further strengthens our position as the leading advisor in our core markets.
Our industry continues to change at a rapid pace, thus opening up opportunities for growth and innovation. In light of our progress and renewal over the last few years, we look forward to an exciting 2016.”
Financial performance by service line
| EUR million | Customer sales 10–12 /2015 |
Customer sales 10–12 /2014 |
Change, % | Operating profit 10–12 /2015 |
Operating profit 10–12 /2014 |
| Managed Services | 132 | 131 | 1 | 18.4 | 8.2 |
| Consulting and System Integration | 109 | 107 | 2 | 8.8 | 10.4 |
| Industry Products | 121 | 107 | 13 | 25.2 | 17.4 |
| Product Development Services | 33 | 58 | -43 | 2.8 | -4.4 |
| Support Functions and Global Management | -8.3 | -22.1 | |||
| Total | 396 | 403 | -2 | 46.8 | 9.5 |
Operating margin by service line
| % | Operating margin 10–12 /2015 |
Operating margin 10–12 /2014 |
Operating margin excl. one-off items1) 10–12 /2015 |
Operating margin excl. one-off items1) 10–12 /2014 |
| Managed Services | 13.9 | 6.2 | 13.0 | 6.9 |
| Consulting and System Integration | 8.1 | 9.8 | 10.3 | 9.5 |
| Industry Products | 20.8 | 16.3 | 21.4 | 18.3 |
| Product Development Services | 8.4 | -7.5 | 9.4 | 20.5 |
| Total | 11.8 | 2.4 | 13.0 | 11.0 |
1)Excl. restructuring costs, capital gains/losses, goodwill impairment charges and other one-off items
Organic change in local currency by service line
| Customer sales adj. for acquisitions and currency 10–12 /2015 |
Customer sales adj. for divestments 10–12 /2014 |
Change, % | |
| Managed Services | 133 | 131 | 1 |
| Consulting and System Integration | 108 | 107 | 2 |
| Industry Products | 111 | 105 | 6 |
| IT services | 353 | 343 | 3 |
| Product Development Services | 33 | 54 | -39 |
| Total | 386 | 397 | -3 |
Customer sales by industry group
| EUR million | Customer sales 10–12 /2015 |
Customer sales 10–12 /2014 |
Change, % |
| Financial Services | 92 | 90 | 2 |
| Manufacturing, Retail and Logistics | 78 | 82 | -5 |
| Public, Healthcare and Welfare | 133 | 115 | 16 |
| Telecom, Media and Energy | 59 | 59 | -1 |
| IT services | 363 | 345 | 5 |
| Product Development Services | 33 | 58 | -43 |
| Total | 396 | 403 | -2 |
Organic change in local currency by industry group
| EUR million | Customer sales adj. for acquisitions and currency 10–12 /2015 |
Customer sales adj. for divestments 10–12 /2014 |
Change, % |
| Financial Services | 93 | 90 | 4 |
| Manufacturing, Retail and Logistics | 78 | 80 | -3 |
| Public, Healthcare and Welfare | 121 | 115 | 6 |
| Telecom, Media and Energy | 60 | 59 | 2 |
| IT services | 353 | 343 | 3 |
| Product Development Services | 33 | 54 | -39 |
| Total | 386 | 397 | -3 |
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 Thursday 4 February 2016 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 6937 9590
Sweden: +46 (0)8 5065 3937
UK: +44 (0)20 3427 1909
US: +1212 444 0896
Conference code: 7494938
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 is the largest IT services company in the Nordics providing full lifecycle IT services. We also provide global product development services for companies in the communications and embedded technologies arena. Through industry insight, technology vision, and innovative thinking, Tieto proactively strives to inspire and engage our customers in finding new ways of accelerating their business.
Building on a strong Nordic heritage, Tieto combines global capabilities with local presence. Headquartered in Helsinki, Finland, Tieto has over 13 000 experts in more than 20 countries. Turnover is approximately EUR 1.5 billion. Tieto’s shares are listed on NASDAQ in Helsinki and Stockholm. www.tieto.com