TietoEVRY's Interim Report 3/2020: Solid third quarter – guidance restored
- Adjusted operating margin 14%, supported by resilient business mix
- Organic revenue growth -4% – impacted by Covid-19
- Industry Software profitability over 20%
- Integration on schedule and synergy contribution to profit EUR 11 million as planned
- Guidance restored as announced on 20 October
The full interim report with tables is available at the end of this release.
About this report
Tieto’s and EVRY’s merger was concluded on 5 December 2019. This report is based on the official financial figures of TietoEVRY, with EVRY being consolidated as from 5 December 2019.
COMPARABLE FINANCIAL INFORMATION for illustrative purposes
The new operating model became effective on 1 January 2020 and financial reporting has been prepared in accordance with the new structure as from the second-quarter interim report. As additional information, the report includes comparable financial information for TietoEVRY with figures for 2019 restated to account for the current segments.
| 7–9/2020 | 7–9/2019 | |||
| Revenue, EUR million | 643.8 | 639.2 | ||
| Change, % | -7.1 | - | ||
| Organic growth1), % | -4.3 | - | ||
| Operating profit (EBIT), EUR million | 28.6 | 67.6 | ||
| Operating margin (EBIT), % | 4.4 | 9.7 | ||
| Adjusted2) operating profit (EBIT), EUR million | 90.2 | 91.2 | ||
| Adjusted2) operating margin (EBIT), % | 14.0 | 13.2 | ||
| One-time items, EUR million | 61.5 | 23.6 | ||
| Order backlog, EUR million | 3 197 | - | ||
| Net debt/EBITDA3) | 2.9 | - | ||
1) Adjusted for currency effects and impact from acquisitions and divestments
2) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
3) EBITDA is 12-month average including the full period for both Tieto and EVRY. This is in line with the additional debt due to the merger being included in net debt.
Full-year outlook for 2020
TietoEVRY expects its comparable full-year adjusted1) operating profit (EBIT) to increase from the previous year's level (Tieto's and EVRY's adjusted operating profit combined amounted to a total of EUR 341.7 million in 2019).
1) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“I’m pleased to share that we have made strong progress in terms of overall performance and the integration of TietoEVRY. As Covid-19 has continued to create uncertainty across society, our markets and businesses, we have been able to provide continuity for our customers and have demonstrated good business resilience.
While Covid-19 had a higher negative impact on revenue in the third quarter than in previous quarters, we achieved strong adjusted operating profit of 14%. Our integration continues to progress at a fast pace and synergy realization is contributing to business performance, as communicated earlier. We are well on our way to realizing the value creation potential of the ongoing merger for the benefit of our customers, employees and shareholders.
Of our businesses, we are most delighted with the positive development of our Industry Software, which reached over 20% profitability as a result of systematic long-term transformation. Positive momentum also continues in our Financial Services Solutions business with several new wins in both the Nordics and international markets. Covid-19's impact on revenue was most visible in our Digital Consulting and Product Development Service businesses. The infrastructure business is continuing to transform its delivery and partnership model and temporarily delivering lower profitability.
We are pleased to have reinstated our annual guidance, as announced on 20 October 2020, with the expectation of improving our profitability (combined adjusted EBIT) from the previous year’s level.
I would like to thank all TietoEVRY colleagues for their continued adaptation to the implications of the global pandemic. We have a great opportunity to accelerate digitalization of enterprises and the public sector – to create higher value for society, our customers, employees and shareholders."
Comparable financial information for illustrative purposes
This section includes comparable financial information with comparison figures restated to account for the new segment structure.
Financial performance
| Revenue, EUR million | Revenue, EUR million | Growth, % | Organic growth, %2) | Adjusted1) operating profit, EUR million | Adjusted1) operating profit, EUR million | Adjusted1) operating margin, % | Adjusted1) operating margin % | |
| 7–9/2020 | 7–9/2019 | 7–9/2020 | 7–9/2019 | 7–9/2020 | 7–9/2019 | |||
| Digital Consulting | 143.0 | 162.6 | -12 | -9 | 21.1 | 18.5 | 14.7 | 11.4 |
| Cloud & Infra | 219.3 | 244.7 | -10 | -9 | 24.0 | 36.0 | 10.9 | 14.7 |
| Industry Software | 115.1 | 118.6 | -3 | -1 | 25.0 | 19.5 | 21.7 | 16.4 |
| Financial Services Solutions | 101.2 | 103.4 | -2 | 3 | 15.4 | 15.7 | 15.2 | 15.2 |
| Product Development Services | 33.3 | 34.3 | -3 | -4 | 4.1 | 3.1 | 12.3 | 9.0 |
| Other | 31.9 | 29.7 | 7 | 16 | 0.6 | -1.6 | — | — |
| Total | 643.8 | 693.2 | -7 | -4 | 90.2 | 91.2 | 14.0 | 13.2 |
1) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
2) Adjusted for currency effects and impact from acquisitions and divestments
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 27 October 2020 at 10.00 am EEST (9.00 am CET, 8.00 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
Conference code: 96660772#
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 Börs. www.tietoevry.com
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