TietoEVRY's Interim Report 2/2021: Turning to growth – solid profitability
- Organic growth 2% – adjusted operating margin 12.2%
- Strong performance in software businesses – growth of 13% in Industry Software and 9% in Financial Services Solutions
- Significant wins demonstrating competitiveness – top 5 contracts represent value of EUR 300 million
- Objective for leverage achieved – net debt/EBITDA below 2
The full interim report with tables is available at the end of this release.
| 4–6/2021 | 4–6/2020 | |||
| Revenue, EUR million | 721.7 | 686.4 | ||
| Change, % | 5.1 | 70.2 | ||
| Organic growth1), % | 1.5 | -1.0 | ||
| Operating profit (EBIT), EUR million | 139.7 | -9.8 | ||
| Operating margin (EBIT), % | 19.4 | -1.4 | ||
| Operating profit (EBITA3)), EUR million | 151.5 | 1.5 | ||
| Operating margin (EBITA3)), % | 21.0 | 0.2 | ||
| Adjusted2) operating profit (EBITA3)), EUR million | 88.3 | 80.4 | ||
| Adjusted2) operating margin (EBITA3)), % | 12.2 | 11.7 | ||
| Adjustment items2), EUR million | -63.2 | 78.9 | ||
| Order backlog, EUR million | 3 275 | 3 310 | ||
| Net debt/EBITDA | 1.6 | 2.9 | ||
1) Adjusted for currency effects and impact from acquisitions and divestments.
2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability.
3) Profit before interests, taxes and amortization of acquisition-related intangible assets.
Full-year outlook for 2021 unchanged
TietoEVRY expects its organic1) growth to be -1% to +2%2) (revenue in 2020: EUR 2 786.4 million). The company estimates its full-year adjusted operating margin (adjusted EBITA)3) to increase to 13–14% (12.7% in 2020).
1) Adjusted for currency effects, acquisitions and divestments.
2) Highly dependent on the development of the Covid-19 pandemic. Assumes that the business environment will return to normal as from the third quarter of 2021.
3) Adjusted EBITA is fully comparable with the previous definition of adjusted EBIT. According to both definitions, amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, impairment charges and other items affecting comparability are excluded – whereas amortization of other intangible assets is included.
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“We are pleased to see that our focused growth agenda materialized during the second quarter while delivering solid profitability. Overall second-quarter performance supports our outlook for the second half of the year. Performance was strongest in our software businesses, with revenue up by over 13% in Industry Software and by 9% in Financial Services Solutions. International Operations continued to deliver close to 20% growth, while revenue in Cloud & Infra was still down, as expected.
High contract-closing activities characterize our second quarter and support our revenue ambitions. We were able to deliver strong order intake in our Cloud & Infra business. Significant wins demonstrate our competitiveness – the top 5 contracts contribute around EUR 300 million to future revenues.
Our adjusted operating margin in the second quarter was solid at 12.2%, supported especially by the Industry Software business with its 23.1% margin and Financial Services Solutions with a margin of 13.7%. Turnaround in the Cloud & Infra business is ongoing, with its margin improving from 4% in the first quarter to 6%. Activities to drive growth and competitiveness continue and are expected to improve profitability during the second half of 2021.
Market activity continued to develop towards more normalized levels as the business impact from the pandemic decreases. At the same time, the demand for talent is increasing. We are consequently increasing our recruitment capacity to support our growth ambitions and continue to globally attract talent at a healthy pace by providing exciting careers and interesting projects with leading customers – and by creating a flexible working environment with a culture that promotes openness, trust and diversity.
During the summer period we are actively participating in public dialogues promoting opportunities in the technology sector with an emphasis on diversity, equal opportunity and sustainability. Through our active engagement, we also aim to tangibly contribute to common sustainability objectives with our customers.”
Financial performance by segment
| Revenue, EUR million |
Revenue, EUR million |
Growth, % | Organic growth, %3) |
Adjusted1) operating profit2), EUR |
Adjusted1) operating profit2), EUR |
Adjusted1) operating margin2), % |
Adjusted1) operating margin2), % |
|||||||
| 4–6/2021 | 4–6/2020 | 4–6/2021 | 4–6/2020 | 4–6/2021 | 4–6/2020 | |||||||||
| Digital Consulting | 172.2 | 162.7 | 6 | 1 | 23.0 | 17.8 | 13.4 | 11.0 | ||||||
| Cloud & Infra | 218.5 | 232.0 | -6 | -10 | 13.2 | 26.6 | 6.0 | 11.5 | ||||||
| Industry Software | 139.1 | 122.0 | 14 | 13 | 32.2 | 18.4 | 23.1 | 15.0 | ||||||
| Financial Services Solutions | 118.7 | 101.9 | 17 | 9 | 16.3 | 12.0 | 13.7 | 11.8 | ||||||
| Product Development | 36.1 | 34.4 | 5 | 2 | 3.7 | 4.0 | 10.4 | 11.5 | ||||||
| Other4) | 37.0 | 33.4 | 11 | 19 | 0.0 | 1.6 | — | — | ||||||
| Total | 721.7 | 686.4 | 5 | 2 | 88.3 | 80.4 | 12.2 | 11.7 | ||||||
1) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability.
2) Profit before interests, taxes and amortization of acquisition-related intangible assets.
3) Adjusted for currency effects and impact from acquisitions and divestments.
4) "Other" consists of International Operations, including digital consulting services for markets outside the Nordics. "Other" also includes unallocated Group costs.
For further information, please contact:
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com
Kjell Arne Hansen, Head of Investor Relations, tel. +47 9504 0372, kjell.hansen (at) tietoevry.com
A teleconference for analysts and media will be held on Tuesday 20 July 2021 at 10.00 am EEST (09.00 am CEST, 08.00 am UK time). Kimmo Alkio, President and CEO, and Tomi Hyryläinen, CFO, will present the results online in English. The presentation can be followed on TietoEVRY's website.
Teleconference numbers
Finland: +358 981 710 310
Sweden: +46 856 642 651
Norway: +47 235 002 43
United Kingdom: +44 333 300 0804
United States: +1 631 913 1422
PIN: 15126207#
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.
TietoEVRY publishes its financial information in English and Finnish.
TIETOEVRY CORPORATION
DISTRIBUTION
Nasdaq Helsinki
Oslo Børs
Principal Media
TietoEVRY creates digital advantage for businesses and society. We are a leading digital services and software company with local presence and global capabilities. Our Nordic values and heritage steer our success. Headquartered in Finland, TietoEVRY employs around 24 000 experts globally. The company serves thousands of enterprise and public sector customers in more than 90 countries. TietoEVRY’s annual turnover is approximately EUR 3 billion and its shares are listed on the NASDAQ in Helsinki and Stockholm as well as on the Oslo Børs. www.tietoevry.com
Tags: