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Solid profitability driven by Industry Software and Digital Consulting

29 April 2021

 

TietoEVRY's first-quarter results: Solid profitability driven by Industry Software and Digital Consulting  

  • Revenue organically down by 6% as anticipated – growth outlook for H2 2021 maintained
  • Adjusted operating margin 11.5%
  • Cloud & Infra transformation continues – efficiency measures initiated
  • Continued healthy cash flow  

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

  1–3/2021 1–3/2020
Revenue, EUR million 711.5    744.2   
Change, % -4.4    82.2   
Organic growth1), % -5.6    2.7   
Operating profit (EBIT), EUR million 56.7    50.0   
Operating margin (EBIT), % 8.0    6.7   
Operating profit (EBITA3)), EUR million 68.5    61.6   
Operating margin (EBITA3)), % 9.6    8.3   
Adjusted2) operating profit (EBITA3)), EUR million 82.1    78.2   
Adjusted2) operating margin (EBITA3)), % 11.5    10.5   
Adjustment items2), EUR million 13.6    16.6   
Order backlog, EUR million 3 217    3 353   
Net debt/EBITDA 2.3    2.7   

1) Adjusted for currency effects and impact from acquisitions and divestments.
2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability.
3) Profit before interests, taxes and amortization of acquisition-related intangible assets.

Full-year outlook for 2021 unchanged

TietoEVRY expects its organic1) growth to be -1% to +2%2) (revenue in 2020: EUR 2 786.4 million). The company estimates its full-year adjusted operating margin (adjusted EBITA)3) to increase to 13–14% (12.7% in 2020).

1) Adjusted for currency effects, acquisitions and divestments.
2) Highly dependent on the development of the Covid-19 pandemic. Assumes that the business environment will return to normal as from the third quarter of 2021.
3) Adjusted EBITA is fully comparable with the previous definition of adjusted EBIT. According to both definitions, amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, impairment charges and other items affecting comparability are excluded – whereas amortization of other intangible assets is included.

CEO’s comment

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

“We are pleased to start the year with healthy profitability and cash flow, while revenue development remained negative as we had anticipated. In light of the pandemic, we anticipate the business environment to normalize in the second half of the year. Several businesses ended the quarter with strong order intake – supporting our growth ambition for the second half of this year. Our software businesses delivered organic growth of 3% and we expect the positive trend in this business to continue. We also experienced attractive development in our international businesses. First-quarter profitability development continued to be favourable at the Group level – supported by integration-related synergy realization. Profitability improvement was driven by a strong 20% margin in Industry Software and continued positive development in Digital Consulting with a margin of 15%. The Cloud & Infra business continues to undergo significant operational and technology partner-related transformation. To accelerate improvement in performance, further efficiency measures have been initiated.

In the first quarter, we announced significant contracts in IT modernization and multi-cloud services demonstrating our capabilities in cloud advisory and complex enterprise transformations. In line with market opportunities, we are making further targeted investments to support our growth plan. Investments are visible specifically in Financial Services Solutions, supported by a significant order backlog. 

We are inspired by the high level of engagement continuing across our teams. Our culture journey continues and we have started gearing our thoughts to life after the pandemic, engaging our teams to co-create our future ways of working, combining remote and office work in a flexible and sustainable way. During the quarter, we had a high focus on personal development through the implementation of individual learning paths, as well as activating our learning communities. Curiosity and appetite for learning is a continuous necessity in our dynamic industry – for the benefit of our customers.”

Financial performance by segment

  Revenue, EUR million Revenue, EUR million Growth, % Organic growth, %3) Adjusted1) operating
profit2),
EUR million
Adjusted1) operating
profit2),
EUR million
Adjusted1) operating
margin2),
%
Adjusted1) operating
margin2),
%
  1–3/2021 1–3/2020 1–3/2021 1–3/2020 1–3/2021 1–3/2020
Digital Consulting 174.9    183.5 -5    -5   26.5    23.9 15.1    13.0   
Cloud & Infra 216.2    253.0 -15    -17 8.6    23.7 4.0    9.4   
Industry Software 136.0    129.7   3 27.3    13.1 20.1    10.1   
Financial Services Solutions 112.1    106.9   3 12.3    11.7 10.9    11.0   
Product Development Services 36.8    38.7 -5    -8 4.4    5.0 12.0    12.9   
Other4) 35.6    32.4 10    22 3.1    0.7 —   
Total 711.5    744.2 -4   -6 82.1    78.2 11.5    10.5   

1) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability.
2) Profit before interests, taxes and amortization of acquisition-related intangible assets.
3) Adjusted for currency effects and impact from acquisitions and divestments.  
4) "Other" consists of International Operations, including digital consulting services for markets outside the Nordics. "Other" also includes unallocated Group costs.

For further information, please contact: 
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com
Kjell Arne Hansen, Head of Investor Relations, tel. +47 9504 0372, kjell.hansen (at) tietoevry.com

A teleconference for analysts and media will be held on Thursday 29 April 2021 at 09.30 am EET (08.30 am CET, 07.30 am UK time). Kimmo Alkio, President and CEO, 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 0804
United States: +1 631 913 1422
PIN: 75106535#

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.
TietoEVRY publishes its financial information in English and Finnish.

TIETOEVRY CORPORATION

DISTRIBUTION
Nasdaq Helsinki
Oslo Børs
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 Børs. www.tietoevry.com

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