TietoEVRY's Interim Report 3/2021: Solid profitability – strong performance in software businesses
| TietoEVRY Corporation | INTERIM REPORT | 26 October 2021, 8.00 a.m. EET |
- Adjusted operating margin 14.5% – organic growth 1%
- Strong growth and profitability in software businesses – growth of 10% in Industry Software and 7% in Financial Services Solutions
- Over 1 600 new recruitments demonstrating strong employer attractiveness
- New strategy announced – specialized businesses driving growth and expansion
The full interim report with tables is available at the end of this release.
|
|
7–9/2021 |
7–9/2020 |
||
|
Revenue, EUR million |
648.1 |
|
643.8 |
|
|
Change, % |
0.7 |
|
69.6 |
|
|
Organic growth1), % |
0.6 |
|
-4.3 |
|
|
Operating profit (EBIT), EUR million |
72.2 |
|
28.6 |
|
|
Operating margin (EBIT), % |
11.1 |
|
4.4 |
|
|
Operating profit (EBITA3)), EUR million |
84.0 |
|
40.0 |
|
|
Operating margin (EBITA3)), % |
13.0 |
|
6.2 |
|
|
Adjusted2) operating profit (EBITA3)), EUR million |
94.0 |
|
90.2 |
|
|
Adjusted2) operating margin (EBITA3)), % |
14.5 |
|
14.0 |
|
|
Adjustment items2), EUR million |
10.1 |
|
50.1 |
|
|
Order backlog, EUR million |
3 153 |
|
3 197 |
|
|
Net debt/EBITDA |
1.4 |
|
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:
"Our third quarter was a very dynamic and exciting one, with continued performance improvement – and the announcement of a very transformative future direction for the company. We delivered strong profitability of over 14%, while organic revenue growth was 1%. Our software businesses had good overall performance, especially Industry Software with organic growth of 10% and a 28% margin. We also saw strong growth in the consulting-driven International and Product Development Services businesses, with organic growth of 22% and 7%, respectively. In Cloud & Infra, activities to drive performance improvement continued, with adjusted operating margin increasing to 9% from 6% in the second quarter. Digital Consulting revenue was down by 1%, impacted by traditional application services and continued high attrition.
We are pleased to have over 1 600 new professionals joining the company during the past quarter to support our growth
agenda. We provide highly attractive and meaningful career opportunities across our businesses to continuously elevate our attractiveness as a global employer.
I strongly believe our recently announced strategy effectively addresses the future opportunities in our rapidly changing global industry and is timely considering our integration programme is coming to its end. In our growth and expansion-oriented strategy, we expect to become more competitive and faster in the era of cloud and data-enabled services, and in parallel drive active enterprise renewal for our current and new customers. The new strategy, business choices and structure will allow our specialized businesses to explore alternative means to accelerate growth and expansion. We expect our prioritized investments to drive growth and profit improvement in line with our long-term financial ambitions. Performance improvement coupled with continued attractive dividend levels is anticipated to provide a solid foundation for improved shareholder returns.
I trust that this new era will offer inspiring opportunities for our employees through enhanced learning and a sense of personal contribution to customer success and achievements for sustainable societies. The commitment of our employees was demonstrated by the latest engagement scores, which continued to develop favourably during the autumn. With our global team of 24 000 professionals and their advanced skills and creativity, we will continue to deliver greater value for the benefit of people, businesses and society."
Financial performance by segment
| Revenue, EUR million | Revenue, EUR million | Growth, % | Organic growth, %3) | Adjusted1) operating profit2), EUR million |
Adjusted1) operating profit2), EUR million |
Adjusted1) operating margin2), % |
Adjusted1) operating margin2), % |
|||||||
| 7–9/2021 | 7–9/2020 | 7–9/2021 | 7–9/2020 | 7–9/2021 | 7–9/2020 | |||||||||
| Digital Consulting | 144.0 | 143.0 | 1 | -1 | 18.7 | 21.1 | 13.0 | 14.7 | ||||||
| Cloud & Infra | 201.3 | 219.3 | -8 | -10 | 18.5 | 24.0 | 9.2 | 10.9 | ||||||
| Industry Software | 116.1 | 115.1 | 1 | 10 | 32.2 | 25.0 | 27.8 | 21.7 | ||||||
| Financial Services Solutions | 111.2 | 101.2 | 10 | 7 | 18.1 | 15.4 | 16.3 | 15.2 | ||||||
| Product Development Services | 36.4 | 33.3 | 9 | 7 | 4.1 | 4.1 | 11.3 | 12.3 | ||||||
| Other4) | 39.1 | 31.9 | 23 | 22 | 2.2 | 0.6 | — | — | ||||||
| Total | 648.1 | 643.8 | 1 | 1 | 94.0 | 90.2 | 14.5 | 14.0 | ||||||
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 26 October 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: 62840414#
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
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