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Tieto’s Interim Report 1/2017 – Strong growth contributing to good performance

27 April 2017

  • Sales growth of 7% – all businesses performing well
  • Good profitability and strong cash flow
  • Next phase of the automation and efficiency improvement programme started

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 6.8%, sales in local currencies up by 6.5%
  • Adjusted operating profit amounted to EUR 31.1 (29.1) million, 8.6% (8.6) of sales

The Group

  • Sales growth totalled 7.0%, sales in local currencies up by 6.9%
  • Adjusted operating profit amounted to EUR 35.4 (31.5) million, 9.0% (8.6) of sales
  • Order intake (Total Contract Value) at EUR 389 (325) million – book-to-bill 1.0 (0.9)
1–3/2017 1–3/2016
Net sales, EUR million 393.2   367.5  
   Change, % 7.0   0.5  
   Change in local currencies, % 6.9   1.4  
Operating profit (EBITA), EUR million 25.6   31.6  
Operating margin (EBITA), % 6.5   8.6  
Operating profit (EBIT), EUR million[1] 21.9   28.3  
Operating margin (EBIT), % 5.6   7.7  
Adjusted[1] [2]operating profit (EBIT), EUR million 35.4   31.5  
Adjusted[1]operating margin (EBIT), % 9.0   8.6  
Profit after taxes, EUR million 15.7   21.5  
EPS, EUR 0.21   0.29  
Net cash flow from operations, EUR million 79.7   46.9  
Return on equity, 12-month rolling, % 25.3   25.7  
Return on capital employed, 12-month rolling, % 25.8   27.2  
Capital expenditure, EUR million 9.3   9.4  
Interest-bearing net debt, EUR million 38.0   -21.3  
Net debt/EBITDA 0.2   -0.1  
Book-to-bill 1.0   0.9  
Order backlog 1 864 1 907
Personnel on 31 March    13 822   13 200

[1] includes EUR 1.1 (0.7) million in amortization of acquisition-related intangible assets
[2] adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

Full-year outlook for 2017 unchanged

Tieto expects its adjusted[1] 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 a strong start to the year with sales growth of 7% for the Group and improved profitability – all of our businesses performed solidly. During the first quarter, we were also able to increase our growth rate in Sweden to 10%. Our recent customer wins are encouraging as we have been able to expand our operations with new services across the Nordics.

Our investments, in terms of both new services and competencies, play a fundamental role in our long-term renewal. Given the global nature of our business, continued attention on innovation, competitiveness and efficiency remain important to our future success. During the first quarter, we continued to increase investments in Industry Solutions and started the next phase of our automation programme which is a key element in efficiency improvement. One of the highlights in our investment portfolio is the recently launched OneCloud, a highly competitive solution that allows customers to efficiently manage both private and public cloud services.

In 2017 Tieto is taking part in Finland's centennial celebration. We honour our Finnish heritage by activating a discussion on the impacts of technology on the future of work. As digitalization accelerates, learning as a lifestyle is increasingly important for both our employees and Tieto’s competitiveness.”

Financial performance by service line

EUR million Customer
sales

1–3/
2017
 Customer
sales
1–3/
2016
Change
%
Opera-
ting
profit
1–3/

2017
Opera-
ting
profit
1–3/

2016
Technology Services and
Modernization
198 190 4 14.5 17.7
Business Consulting and
Implementation
39 35 13 2.2 1.1
Industry Solutions 125 113 10 6.3 11.5
Product Development Services 32 29 10 4.2 2.6
Support Functions and Global
Management
-5.3 -4.6
Total 393 367 7 21.9 28.3

Operating margin by service line

% Operating
margin
1–3/2017
Operating
margin
1–3/2016
Adjusted[1] 
operating
margin
1–3/2017
Adjusted[1] 
operating
margin
1–3/2016
Technology Services and Modernization 7.3 9.4 10.9 10.2
Business Consulting and Implementation 5.7 3.2 7.1 3.7
Industry Solutions 5.0 10.1 8.0 10.4
Product Development Services 13.1 9.0 13.6 8.4
Total 5.6 7.7 9.0 8.6
[1] adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items

Customer sales by industry group

EUR million Customer
sales
1–3/2017
Customer
sales
1–3/2016
Change, %
Financial Services 96 88 9
Public, Healthcare and Welfare 128 118 8
Industrial and Consumer Services 138 132 5
IT services 361 338 7
Product Development Services 32 29 10
Total 393 367 7

M&A impact by service line

Growth, %
(in local
currencies)
1–3/2017
Organic
growth, %
(in local
currencies)
1–3/2017
Technology Services and Modernization 4.6 4.6
Business Consulting and Implementation 13.1 13.1
Industry Solutions 8.3 3.8
IT services 6.5 5.0
Product Development Services 11.1 11.1
Total 6.9 5.5

M&A impact by industry group

Growth, %
(in local
currencies)
1–3/2017
Organic
growth, %
(in local
currencies)
1–3/2017
Financial Services 8.0 2.9
Public, Healthcare and Welfare 7.9 7.9
Industrial and Consumer Services 3.9 3.6
IT services 6.5 5.0
Product Development Services 11.1 11.1
Total 6.9 5.5

 
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 Thursday 27 April 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 Stockholm, address: Fjärde Bassängvägen 15.

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

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