Tieto Oyj: Tieto's Interim Report 1/2016 – Healthy growth in IT services and continued profitability improvement

HELSINKI, Finland--()--Regulatory News:

  • Industry Products driving growth – in line with the ambition to expand software businesses
  • Product Development Services performing well
  • New strategy to accelerate innovation and growth launched

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

Key figures for the first quarter

IT services

  • Sales growth totalled 6.0%, sales in local currencies up by 7.0%
  • Adjusted operating profit amounted to EUR 29.1 (24.2) million, 8.6% (7.6) of sales

The Group

  • Sales growth totalled 0.5%, sales in local currencies up by 1.4%
  • Adjusted operating profit amounted to EUR 31.5 (30.7) million, 8.6% (8.4) of sales
  • Order intake (Total Contract Value) at an anticipated level of EUR 325 (430) million, down due to the timing of new agreements – order backlog at EUR 1 907 (1 819) million
1–3/2016 1–3/2015
Net sales, EUR million 367.5 365.6
Change, % 0.5 -5.5
Change in local currencies, % 1.4 -3.2
Operating profit (EBITA), EUR million 1) 31.6 17.2
Operating margin (EBITA), % 8.6 4.7
Operating profit (EBIT), EUR million 28.3 13.9
Operating margin (EBIT), % 7.7 3.8
Adjusted 2) operating profit (EBIT), EUR million 31.5 30.7
Adjusted 2) operating margin (EBIT), % 8.6 8.4
Profit after taxes, EUR million 21.5 9.1
EPS, EUR 0.29 0.12
Net cash flow from operations, EUR million 46.9 36.7
Return on equity, 12-month rolling, % 25.7 4.5
Return on capital employed, 12-month rolling, % 27.2 7.7
Capital expenditure and acquisitions, EUR million 9.4 11.6
Interest-bearing net debt, EUR million -21.3 -85.9
Net debt/EBITDA -0.1 -0.6
Book-to-bill 0.9 1.2
Order backlog 1 907 1 819
Personnel on 31 March 13 200 13 456

1) includes amortization of all intangible items; previously, only acquisition-related intangible items included

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

Full-year outlook for 2016

Tieto expects its adjusted 1) full-year operating profit (EBIT) to increase from the previous year’s level (EUR 150.8 million in 2015).

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 a good start for the year with accelerated growth and improved profitability in IT services – with growth supported by our recent acquisitions. It is very encouraging to see a number of our businesses outperforming the market. Of the industries, Financial Services and Public, Healthcare and Welfare had a really strong quarter. This success was also visible in Industry Products, which delivered strong growth of 13%. In addition, our cloud services’ competitiveness is demonstrated by revenue growth of 72%.

I’m pleased to see that our performance in the past quarter is well in line with the main choices made in our recently launched strategy. Our ambition is to be customers’ first choice in their business renewal – the dynamic marketplace with its digitalization initiatives opens up new opportunities for both our customers and us. The combination of software-centric industry solutions with our growth investments and high availability cloud services provides us with attractive growth opportunities. While continuing to invest in new technologies and new growth opportunities, we maintain our commitment to continued profitability improvement and an attractive dividend policy.

While we aim to be customers’ first choice for business renewal, it is highly inspiring for all of us at Tieto to take an active role in the creation of open ecosystems in pursuit of new sources of innovation and growth.”

Financial performance by service line

EUR million Customer sales
1–3 /2016
Customer sales
1–3/2015
Change, % Operating profit
1–3/2016
Operating profit
1–3/2015
Managed Services 129 126 2 10.8 -8.3
Consulting and System Integration 102 99 3 5.6 8.2
Industry Products 107 94 13 13.8 12.6
Product Development Services 29 47 -37 2.6 6.5
Support Functions and Global Management -4.7 -5.0
Total 367 366 1 28.3 13.9

Operating margin by service line

% Operating
margin
1–3 /2016
Operating
margin
1–3/2015
Adjusted 1)
operating
margin
1–3 /2016
Adjusted 1)
operating
margin
1–3/2015
Managed Services 8.4 -6.6 8.7 3.6
Consulting and System Integration 5.5 8.3 6.8 10.8
Industry Products 13.0 13.3 13.3 13.4
Product Development Services 9.0 14.0 8.4 14.0
Total 7.7 3.8 8.6 8.4

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

Customer sales by industry group

EUR million Customer sales
1–3 /2016
Customer sales
1–3 /2015
Change, %
Financial Services 88 84 5
Manufacturing, Retail and Logistics 79 78 2
Public, Healthcare and Welfare 118 101 17
Telecom, Media and Energy 53 57 -7
IT services 338 319 6
Product Development Services 29 47 -37
Total 367 366 1

M&A impact by service line

Growth, %
(in local currencies)
1–3 /2016
Organic growth, %
(in local currencies)
1–3 /2016
Managed Services 2.4 2.4
Consulting and System Integration 3.2 -1.3
Industry Products 15.8 5.8
IT services 7.0 2.6
Product Development Services 37.5 37.5
Total 1.4 -2.5

M&A impact by industry group

Growth, %
(in local currencies)
1–3 /2016
Organic growth, %
(in local currencies)
1–3 /2016
Financial Services 6.3 6.3
Manufacturing, Retail and Logistics 1.8 0.1
Public, Healthcare and Welfare 17.7 6.5
Telecom, Media and Energy -4.4 -6.8
IT services 7.0 2.6
Product Development Services -37.5 -37.5
Total 1.4 -2.5

Press conference for analysts and media will be held on Tuesday, April 26, at Tieto’s premises in Stockholm, address: Fjärde Bassängvägen 15, at 11.00 am EET (10.00 am CET, 9.00 am UK time). The results will be presented in English by Kimmo Alkio, President and CEO, and Lasse Heinonen, CFO.

The conference will be webcasted (http://webcast.tieto.com/quarterlyreport/?q=260416) and can be viewed live on Tieto's website (http://www.tieto.com/investors). To join the conference, attendees need Adobe Flash plugin version 10.1.0 or newer. The meeting participants can also join a telephone conference that will be held at the same time. The telephone conference details can be found below.

Telephone conference numbers

Finland: +358 (0)9 7479 0361 Sweden: +46 (0)8 5033 6574 UK: +44 (0)203 043 2002 US: +1 719 325 2131 Conference code: 6304748

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. An on-demand video will be available after the conference.

Tieto publishes financial information in English and Finnish.

TIETO CORPORATION

DISTRIBUTION NASDAQ Helsinki NASDAQ Stockholm 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

This information was brought to you by Cision http://news.cision.com

Contacts

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

Contacts

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