Tieto’s Interim Report 2/2017 – Solid business performance continues

  • Encouraging order intake with new customer wins in all businesses, especially in Sweden
  • Healthy profitability driven by Technology Services and Modernization
  • Automation programme and targeted investments in software businesses support further profit improvement

The full interim report with tables is available at the end of this release.

Key figures for the second quarter

IT services

  • Sales growth totalled 1.0%, sales in local currencies up by 2.5%
  • Adjusted operating profit amounted to EUR 33.0 (32.4) million, 9.3% (9.3) of sales

The Group

  • Sales growth totalled 1.2%, sales in local currencies up by 2.8%
  • Adjusted operating profit amounted to EUR 35.6 (35.8) million, 9.2% (9.4) of sales
  • Order intake (Total Contract Value) at EUR 371 (326) million – book-to-bill 1.0 (0.9)
4–6/
2017
4–6/
2016
1–6/
2017
1–6/
2016
Net sales, EUR million 385.5   381.0   778.7   748.5  
   Change, % 1.2    4.7   4.0   2.6  
   Change in local currencies, % 2.8    5.9   4.8   3.6  
Operating profit (EBITA), EUR million 32.0   35.7   57.6   67.3  
Operating margin (EBITA), % 8.3   9.4   7.4   9.0  
Operating profit (EBIT), EUR million 1) 28.2    32.3   50.1   60.6  
Operating margin (EBIT), % 1) 7.3    8.5   6.4   8.1  
Adjusted 1) 2) operating profit (EBIT), EUR million 35.6    35.8   71.0   67.3  
Adjusted 1) 2) operating margin (EBIT), % 9.2    9.4   9.1   9.0  
Profit after taxes, EUR million 21.0    24.2   36.7   45.7  
EPS, EUR 0.28   0.33   0.50   0.62  
Net cash flow from operations, EUR million -6.1    -13.7   73.6   33.2  
Return on equity, 12-month rolling, % 23.6   26.2   23.6   26.2  
Return on capital employed, 12-month rolling, % 21.0   25.9   21.0   25.9  
Capital expenditure, EUR million 21.0    11.8   30.3   21.2  
Interest-bearing net debt, EUR million 164.6   103.3    164.6   103.3  
Net debt/EBITDA 0.9    0.5   0.9   0.5  
Book-to-bill 1.0    0.9    1.0   0.9  
Order backlog 1 817 1 757 1 817   1 757  
Personnel on 30 June   13 754   13 381 13 754   13 381  

1) the second quarter includes EUR 1.0 (0.7) million and the first half EUR 2.1 (1.4) million in amortization of acquisition-related intangible assets
2) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items (see page 15)

Full-year outlook for 2017 unchanged

Tieto expects its adjusted1) full-year operating profit (EBIT) to increase from the previous year’s level (EUR 152.2 million in 2016).

1) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

CEO’s comment

Comment regarding the interim report by Kimmo Alkio, President and CEO:

“We had another solid quarter with good underlying growth in all the service lines. Our adjusted profit was healthy at 9% level while growth and profitability were somewhat affected by negative currency impacts and the shorter quarter. Highlights in the second quarter included several important customer wins across all key markets, especially in Sweden. I am pleased to see that we are actively contributing to the digitalization of Nordic society – across all our markets.

We continue to foresee exciting business and innovation opportunities through co-innovation with our customers. We maintain our total investment level with an increased focus on software-centric industry solutions – and foresee strong opportunities particularly in the financial services, healthcare and welfare, and energy sectors. These investments will also support our competitiveness and performance objectives in the second half of this year.

We are participating in a number of exciting initiatives to leverage the use of data in an intelligent way to improve wellbeing and the quality of everyday life through personalized predictive healthcare and social inclusion. Tieto will continue to focus on attractive opportunities to participate in the creation of new data-centric ecosystems.”

Financial performance by service line

EUR million Customer
sales
4–6/2017
Customer
sales
4–6/2016
Change, % Operating
profit
4–6/2017
Operating
profit
4–6/2016
Technology Services and Modernization 194 196  -1 20.5 20.9
Business Consulting and Implementation 38 37  2 2.6 1.2
Industry Solutions 122 117  4 9.3 11.1
Product Development Services 31  31  3 2.4 3.3
Support Functions and Global Management -6.6 -4.2
Total 386 381  1  28.2 32.3


Operating margin by service line
 

% Operating
margin
4–6/2017
Operating
margin
4–6/2016
Adjusted1)
operating
margin
4–6/2017
Adjusted1) operating
margin
4–6/2016
Technology Services and Modernization 10.5  10.6 11.9 10.8
Business Consulting and Implementation 7.0 3.3 4.0 3.3
Industry Solutions 7.6 9.5 9.0 10.9
Product Development Services 7.6 10.7 8.3 11.1
Total 7.3 8.5 9.2 9.4
1) adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items


Customer sales by industry group

EUR million Customer sales
4–6/2017
Customer
sales
4–6/2016
Change, %
Financial Services 97 93 4
Public, Healthcare and Welfare 127 120 5
Industrial and Consumer Services 132 138 -5
IT services  355  350 1
Product Development Services 31  31 3
Total 386 381 1


M&A impact by service line

Growth, %
(in local currencies)
4–6/2017 
Organic growth, %
(in local currencies)
4–6/2017 
Technology Services and Modernization 0.4 0.4
Business Consulting and Implementation  3.1  3.1 
Industry Solutions  5.9  1.8 
IT services  2.5  1.1 
Product Development Services  6.3  6.3 
Total  2.8  1.6 


M&A impact by industry group

Growth, %
(in local currencies)
4–6/2017 
Organic growth, %
(in local currencies)
4–6/2017 
Financial Services  5.6  0.9 
Public, Healthcare and Welfare  7.3  7.3 
Industrial and Consumer Services  -3.2  -3.5 
IT services  2.5  1.1 
Product Development Services  6.3  6.3 
Total  2.8  1.6 

 
For further information, please contact:

Lasse Heinonen, CFO, tel.+358 2072 66329, +358 50 393 4950, lasse.heinonen (at) tieto.com
Tanja Lounevirta, Head of Investor Relations,  tel.+358 2072 71725, +358 50 321 7510, tanja.lounevirta (at) tieto.com

A teleconference for analysts and media will be held on Friday 21 July 2017 at 10.00 am EET (9.00 am CET, 8.00 am UK time). Analysts and media are also welcome to participate in the conference at Tieto’s office in Espoo, address: Keilalahdentie 2-4.

Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO, will present the results online in English. The presentation can be followed on Tieto's website, for which attendees need Adobe Flash plugin version 10.1.0 or newer. The teleconference details can be found below.

Teleconference numbers
Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0)330 336 9105
US: +1 719 457 1036
Conference code: 4404154

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.

TIETO CORPORATION

DISTRIBUTION
NASDAQ Helsinki
Principal Media

Tieto aims to capture the significant opportunities of the data-driven world and turn them into lifelong value for people, business and society. We aim to be customers’ first choice for business renewal by combining our software and services capabilities with a strong drive for co-innovation and ecosystems.

Headquartered in Finland, Tieto has over 13 000 experts in close to 20 countries. Tieto’s turnover is approximately EUR 1.5 billion and shares listed on NASDAQ in Helsinki and Stockholm. www.tieto.com 

Published on: 
21 July 2017
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