TietoEVRY's Interim Report 4/2019: Strong fourth-quarter performance – integration of TietoEVRY progressing well
- Merger to create a leading Nordic digital services company completed in the fourth quarter
- Tieto stand-alone: revenue growth 2%, adjusted operating margin over 13% – healthy performance driven by Hybrid Infra
- EVRY stand-alone: revenue growth 4%, adjusted operating margin over 13% and strong order backlog in Financial Services
- Dividend proposal EUR 1.27 per share
The full interim report with tables is available at the end of this release
About this report
To give an understanding of performance comparable with prior reporting of both Tieto and EVRY, this report includes the following sections:
- Stand-alone financial information for illustrative purposes on pages 6-10 in the attached Financial Statements Release
- In stand-alone financial information for EVRY, the full year and fourth quarter of 2019 are reported in accordance with EVRY's accounting policies, except for the period subsequent to the merger, which has been reported in accordance with TietoEVRY's accounting policies. There are no material differences between EVRY's and TietoEVRY's accounting policies.
- All other sections in this report are based on the official financial figures of TietoEVRY with EVRY being consolidated to TietoEVRY as from 5 December. Comparison figures have not been restated for the merger.
| 10–12/2019 | 10–12/2018 | 1–12/2019 | 1–12/2018 | |||||
| Net sales, EUR million | 542.8 | 421.9 | 1 734.0 | 1 599.5 | ||||
| Change, % | 28.7 | 3.0 | 8.4 | 3.6 | ||||
| Operating profit (EBIT), EUR million | 31.5 | 45.7 | 124.2 | 154.7 | ||||
| Operating margin (EBIT), % | 5.8 | 10.8 | 7.2 | 9.7 | ||||
| Adjusted1) operating profit (EBIT), EUR million | 71.4 | 51.0 | 196.4 | 168.0 | ||||
| Adjusted1) operating margin (EBIT), % | 13.1 | 12.1 | 11.3 | 10.5 | ||||
| Profit after taxes, EUR million | 12.0 | 35.6 | 79.1 | 123.2 | ||||
| EPS, EUR | 0.14 | 0.48 | 1.02 | 1.67 | ||||
| Net cash flow from operations, EUR million | 128.3 | 81.7 | 278.4 | 174.2 | ||||
| Return on equity, 12-month rolling, % | 7.3 | 25.7 | 7.3 | 25.7 | ||||
| Return on capital employed, 12-month rolling, % | 6.8 | 20.9 | 6.8 | 20.9 | ||||
| Capital expenditure, EUR million | 17.9 | 16.7 | 51.4 | 45.0 | ||||
| Acquisitions, EUR million | 175.0 | 4.3 | 175.7 | 14.5 | ||||
| Interest-bearing net debt, EUR million | 1 070.0 | 137.4 | 1 070.0 | 137.4 | ||||
| Personnel on 31 December | 23 996 | 15 190 | 23 996 | 15 190 | ||||
1) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
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 343.1 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 am proud of the good performance TietoEVRY delivered in the fourth quarter – ending this year of major transformation with a strong operating margin. The major event of the year was the merger between EVRY and Tieto, which was completed on 5 December 2019. The merger yields attractive benefits and the integration programme is well on schedule.
In 2019, EVRY delivered solid performance with growth in strategic areas. During the year, EVRY implemented a number of strategic initiatives to improve profitable organic growth and I am happy to see that the choices have turned out to be successful. The year ended with a strong order backlog, especially in the Financial Services area.
Tieto’s performance accelerated throughout the second half of 2019 with strong profit contribution in the fourth quarter. Tieto’s strategic and operational renewal during the second quarter of 2019 was successfully carried out, enabling good performance at the Group level and especially in the Hybrid Infra business. We are also pleased with improved growth in the Industry Software business.
As TietoEVRY, we were able to accelerate the integration process during the fourth quarter with leadership nominations taking place in October. As anticipated, the pace of integration accelerated in December after the formal merger approvals. Implementation of the integrated TietoEVRY operating model and structures began in January 2020. We expect that we will complete the majority of the structural integrations during the first half of the new year.
We continue to be committed to delivering the anticipated synergy benefits of EUR 75 million and expect the synergy run-rate to be EUR 35-40 million at the year end. Our joint innovation capabilities and combined solution portfolio provide us with a strong position at the forefront of digitalization and in improving our customers' competitiveness. This also provides TietoEVRY with stronger growth potential in the longer term.
I am excited about the commitment and hard work of our employees in making this merger a success. During the integration process we have already experienced the strength of our common values, which promote openness, transparency, diversity and continuous learning. Several recognitions testify to our ability to attract and retain the best talent. Our recognitions in the Nordics include Tieto’s ranking in the top three global tech companies in Equileap's Global Gender Equality Ranking, Tieto Sweden’s EDGE Assessment Certificate, and EVRY’s listing as Norway’s best technology company for women by the SHE Index.
Based on the combination of good business performance in the past quarter coupled with Tieto and EVRY joining forces, we look forward to a very exciting 2020 - we will realize digital advantage for businesses and society.”
Stand-alone financial information for illustrative purposes – Tieto
Tieto posted revenue growth of 2% in local currencies.
Financial performance of Tieto in October-December
| Revenue, EUR million | Revenue, EUR million | Growth, % | Adjusted1) operating profit, EUR million | Adjusted1) operating profit, EUR million | Adjusted1) operating margin, % | Adjusted1) operating margin, % | ||||||||
| 10–12/2019 | 10–12/2018 | 10–12/2019 | 10–12/2018 | 10–12/2019 | 10–12/2018 | |||||||||
| Digital Experience | 122.6 | 129.8 | -6 | 15.5 | 19.0 | 12.7 | 14.6 | |||||||
| Hybrid Infra | 137.5 | 132.8 | 3 | 21.8 | 12.9 | 15.8 | 9.7 | |||||||
| Industry Software | 124.6 | 122.2 | 2 | 20.6 | 22.0 | 16.5 | 18.0 | |||||||
| Product Development Services | 37.9 | 36.2 | 4 | 3.8 | 3.7 | 10.1 | 10.1 | |||||||
| Segments total | 422.5 | 421.1 | 0 | 61.7 | 57.5 | 14.6 | 13.6 | |||||||
| Other operations | 0.4 | 0.8 | -48 | -4.4 | -6.5 | — | — | |||||||
| Total | 423.0 | 421.9 | 0 | 57.2 | 51.0 | 13.5 | 12.1 | |||||||
Stand-alone financial information for illustrative purposes – EVRY
Figures for EVRY’s key performance measures include the full period.
Financial performance of EVRY in October-December
| Revenue, EUR million1) | Revenue, EUR million | Organic growth2 ), % | Adjusted3) operating profit, EUR million | Adjusted3) operating profit, EUR million | Adjusted3) operating margin, % | Adjusted3) operating margin % | ||
| 10–12/2019 | 10–12/2018 | 10–12/2019 | 10–12/2018 | 10–12/2019 | 10–12/2018 | |||
| EVRY Financial Services | 97.5 | 94.7 | 7.3 | 13.0 | 12.7 | 13.4 | 13.4 | |
| EVRY Sweden | 82.6 | 91.9 | -4.6 | 5.9 | 5.7 | 7.1 | 6.3 | |
| EVRY Norway | 139.5 | 134.6 | 8.3 | 16.0 | 16.3 | 11.4 | 12.1 | |
| Other | 35.6 | 33.2 | - | 12.8 | 14.5 | 35.9 | 43.6 | |
| Total | 355.2 | 354.5 | 3.9 | 47.7 | 49.2 | 13.4 | 13.9 | |
2) Adjusted for currency effects and impacts from acquisitions and divestments to provide figures comparable with EVRY's prior reporting
For further information, please contact:
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tieto.com
Kjell Arne Hansen, Investor Relations, tel. +47 9504 0372, kjell.hansen (at) evry.com
A teleconference for analysts and media will be held on Friday 14 February 2020 at 10.00 am EET (9.00 am CET, 8.00 am UK time). Kimmo Alkio, President and CEO, Per Hove, former CEO of EVRY, 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 08 04
United States: +1 631 913 14 22
Conference code: 69530517#
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.
TIETOEVRY CORPORATION
DISTRIBUTION
NASDAQ Helsinki
Oslo Börs
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.tieto.com.
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