Tieto to continue its cost-efficiency programme as part of its strategic renewal
STOCK EXCHANGE RELEASE 14 OCTOBER 2013 10.30 am EET
Tieto will continue with its efficiency improvements as part of its continuous renewal, seeking to improve price competitiveness and to meet its long-term financial targets. Additionally, Tieto needs to address the overcapacity caused by the longer-term decline in the telecom sector. With the actions initiated in 2013, including personnel negotiations started in May and August, Tieto aims at annualized savings of over EUR 50 million.
Tieto aims to reduce up to 770 positions globally, of which up to 455 in its service lines (up to 240 in Managed Services and up to 215 in Consulting and System Integration), up to 205 in Product Development Services and up to 110 in its industry groups and support functions.
The planned reductions affect approximately 350 employees in Finland, 180 in Sweden and 240 in other countries. The reductions are expected to be completed by the end of the first quarter of 2014.
According to local practices in Finland, personnel negotiations will be started in the Managed Services Service Line (up to 170 employees), Product Development Services (up to 90) and the Telecom, Energy and Media industry group (up to 25). The remainder of the reductions are being handled mainly through individual agreements and retirement arrangements.
“The IT industry is in the midst of rapid global change: new technologies, such as cloud computing, and changes in customer requirements drive the rapid modernization of old IT systems to standardized and less labour-intensive solutions,” says Kimmo Alkio, President and CEO for Tieto.
“Reducing the labour force is always difficult. However, this is necessary in units where we have longer-term overcapacity. While ensuring cost-efficiency and price competitiveness, we will continue to invest in new services and competences,” Kimmo Alkio continues.
With the actions initiated in 2013, including personnel negotiations started in May and August, Tieto aims at annualized savings of over EUR 50 million. Around EUR 8 million of these savings are anticipated to affect operating profit for 2013, mainly in the fourth quarter, and the full effect is expected to materialize as of the second quarter of 2014. Tieto currently estimates that it will book some EUR 45 million in restructuring costs related to the actions initiated in 2013 in its results for this year. Earlier, the company estimated that the restructuring costs would amount to about half of the 2012 level (EUR 57 million in 2012).
Further information for media:
Päivi Huuhtanen, Head of External Communications, tel. +358 40 753 7374, paivi.huuhtanen(at)tieto.com
Further information for investors:
Lasse Heinonen, CFO, tel. +358 2072 66329, lasse.heinonen(at)tieto.com
Tanja Lounevirta, Head of Investor Relations, +358 50 321 7510, tanja.lounevirta(at)tieto.com
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Tieto is the largest Nordic IT services company providing full life-cycle services for both the private and public sectors and product development services in the field of communications and embedded technologies. The company has global presence through its product development business and global delivery centres. Tieto is committed to developing enterprises and society through IT by realizing new opportunities in customers' business transformation. At Tieto, we believe in professional development and results.
Founded 1968, headquartered in Helsinki, Finland and with approximately 15 000 experts, the company operates in over 20 countries with net sales of approximately EUR 1.8 billion. Tieto's shares are listed on NASDAQ OMX in Helsinki and Stockholm. Please visit www.tieto.com for more information.