Tieto Corporation · OMXHEX:TIETO
Tieto — Q4 2017 Earnings Presentation
26 slides from Tieto's earnings presentation, Feb 6, 2018
Slide 1: Solid performance continues in the fourth quarter – strong full year 2017
Public Q4 2017 Solid performance continues in the fourth quarter – strong full year 2017 Kimmo Alkio, President and CEO Lasse Heinonen, CFO Tanja Lounevirta, Head of IR 6 February 2018 © Tieto Corporation
Slide 2: Q4 2017 in brief
Q4 2017 in brief Solid performance continues in the fourth quarter – strong full year 2017 • Strong cash flow and good profitability • Order backlog provides healthy foundation for 2018 • Accelerated growth in Sweden – Avega acquisition completed • Dividend proposal of EUR 1.40 2 © Tieto Corporation
Slide 3: Tieto@2017! Creating value for all stakeholders
Tieto@2017! Customers All-time high NPS 2017 – Creating value for all stakeholders Shareholders Employees Strong cash flow and Strong improvement in increased dividend*) engagement *) As proposed by the Board of Directors © Tieto Corporation 3
Slide 4: Favorable financial development continues
Favorable financial development continues MEUR Net sales and EBIT % Full-year net sales • EUR 1 543 (1 493) million, +3.4%, growth in local 2000 15 9,9 10,3 10,2 10,5 currency +4.1%, organic growth in local currencies +3.0% 1500 8,8 • IT services growth 3.0%, growth in local 9,4 9,0 10 8,6 currency
Slide 5: Outlook in the Nordic IT market remains healthy
Outlook in the Nordic IT market remains healthy Growth in the Nordic economies picked up in 2017 IT market affected by economic outlook 5% GDP growth, % • Upcycle in Finland 5% • Swedish economy continues to be strong 4% 4% Tieto expects the Nordic IT services market to grow 3% by ~2% in 2018 • Mark
Slide 6: Business mix change driven by growth businesses
Business mix change driven by growth businesses Application Services’ growth 4% in 2017 while decline in traditional infrastructure 5% TIETO'S GROWTH AMBITION FOR IT SERVICES: SALES GROWTH SHARE OF IT SERVICES GROWTH FASTER THAN THE MARKET* (CAGR 2015-2020) 2016–2020 (CAGR) 2017 2017 37% Growth busi
Slide 7: Selected growth businesses up by 8%
Selected growth businesses up by 8% SERVICE LINE SERVICE LINE GROWTH Annual sales 2017 Growth 2017 BUSINESSES Annual sales 2017 Growth 2017 Selected Industry industry solutions Selected solutions* Solutions**) 5% and DDB: 6% EUR 496 million Data-Driven Businesses EUR ~ 340 million Business Consultin
Slide 8: Q4 2017 key figures
Q4 2017 key figures Net sales MEUR % • EUR 410 (404) million, +1.5%, growth in local currencies +2.4% 12,3 • Acquisitions added EUR 4 million 500 14 12,0 • Currency impact EUR -4 million 11,6 • In IT services, sales growth 0.8%, or 1.7% in local currencies 12 400 10,4 4 • Organic growth in local cur
Slide 9: Quarterly development
Quarterly development Net sales 1,5 Net debt/EBITDA MEUR 500 0,9 400 5 5 3 4 1,0 0,8 0,8 300 0,7 200 0,5 0,6 100 367 381 341 404 388 381 352 406 0,5 0 0,2 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 Q4/17 0,0 Net of divestment and acquisitions Customer sales adjusted -0,1 -0,5 Q1/16 Q2/16 Q3/16 Q4/16
Slide 10: Growth in local currencies by Service Line and Industry Group
Growth in local currencies by Service Line and Industry Group MEUR 1% 225 200 -1% 175 150 Service 125 Q4/16 100 11% / 1%* 11% Lines 75 Q4/17 50 25 197 199 38 42 138 135 31 34 0 Technology Services Business Consulting and Industry Solutions Product Development and Modernization Integration Services M
Slide 11: Service Lines
Service Lines New Financial Services Public, Healthcare Industrial and data-driven and Welfare Consumer Services businesses *) Business consulting & implementation Industry solutions Technology Services and Modernization Product Development Services 11 © Tieto Corporation *)Reported in Industry Solu
Slide 12: Technology Services and Modernization
Technology Services and Modernization Customer sales in Q4 MEUR % • EUR 199 (197) million, +1%, growth of 1% in local currencies 250 14,1 16 13,4 13,8 13,2 11,9 14 EBIT 200 10,9 • EBIT EUR 24.7 (26.2) million, 12.4% (13.3) 10,2 10,8 12 • Adjusted* EBIT EUR 26.3 (27.7) million, 13.2% (14.1) 10 150 Q4
Slide 13: Business Consulting & Implementation
Business Consulting & Implementation Customer sales Q4 MEUR • EUR 42 (38) million, +10%, growth of 11% in local % currencies 50 7,1 8 • Organic growth in local currencies 1% 4,8 6 40 3,7 3,3 4,0 4 EBIT 2,8 4 • EBIT EUR 2.4 (2.0) million, 5.7% (5.3) 1,8 • Adjusted* EBIT EUR 2.0 (0.7) million, 4.8% (1
Slide 14: Industry Solutions
Industry Solutions Customer sales Q4 • EUR 135 (138) million, -2%, growth of -1% in local currencies MEUR % • Organic growth in local currencies -1% 150 15,5 15,8 18 EBIT 14,4 16 • EBIT EUR 23.2 (19.7) million, 17.2% (14.3) 12,5 5 5 14 3 • Adjusted* EBIT EUR 21.3 (21.5) million, 15.8% (15.5) 100 12
Slide 15: Product Development Services
Product Development Services Customer sales Q4 MEUR % • EUR 34 (31) million, +10%, growth of 11% in local 40 16 currencies 13,6 35 14 EBIT 11,1 11,3 30 10,3 12 • EBIT EUR 3.5 (3.3) million, 10.3% (10.6) • Adjusted* EBIT EUR 3.5 (3.5) million, 10.3% (11.3) 25 8,4 8,3 10 7,5 20 6,5 8 Q4 highlights • S
Slide 16: Industry Groups
Industry Groups New Public, Healthcare Industrial and data-driven Financial Services and Welfare Consumer Services businesses *) Business consulting & implementation Industry solutions Technology Services and Modernization Product Development Services 16 © Tieto Corporation *)Reported in Industry So
Slide 17: Financial Services
Financial Services Customer sales Q4 MEUR • EUR 100 (101) million, -1%, growth of -1% in local currencies 100 • Organic growth in local currencies -1% 5 5 3 Sales split by service line 75 Q4/2017 Q4/2016 TSM 57% 56% 50 BCI 5% 5% IS 38% 39% 25 Q4 highlights • Positive development in Application Servi
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q4 • EUR 135 (135) million, +1%, growth of 1% in local MEUR currencies 150 • Organic growth in local currencies 1% 1 125 Sales split by service line 100 Q4/2017 Q4/2016 TSM 46% 44% 75 BCI 8% 8% IS 46% 48% 50 Q4 highlights 25 • Healthy development continu
Slide 19: Industrial and Consumer Services
Industrial and Consumer Services Customer sales Q4 MEUR • EUR 140 (137) million, 3%, growth of 4% in local currencies 150 • Organic growth in local currencies 2% 3 125 Sales split by service line 100 Q4/2017 Q4/2016 TSM 57% 59% 75 BCI 18% 17% IS 25% 24% 50 Q4 highlights 25 • Growth supported by the
Slide 20: Way forward
Way forward tieto
Slide 21: Strategy execution progressing towards 2020 strategic ambition
Strategy execution progressing towards 2020 strategic ambition Tieto 2020 management ambition (strategy 2016–2020) Customer’s first choice! 40% of sw and 100M+ from 80% shared 1–2% increase solutions data-driven businesses managed services in Nordic market share • Consistent growth of • Accelerated
Slide 22: Performance drivers
Performance drivers 2018 – IT services Quarterly dynamics We aim to grow faster than the market, growth supported by acquisitions and software product launches Q1 revenue and profitability affected by Efficiency programme: impact of around 20 mEUR, drive for • a lower number of working days producti
Slide 23: Guidance for 2018
Guidance for 2018 Tieto expects its full-year adjusted*) operating profit (EBIT) to increase from the previous year’s level (EUR 161.5 million**) in 2017). *) Adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items **) Subject to revision according to IFRS
Slide 24: Q4 2017 in brief
Q4 2017 in brief Solid performance continues in the fourth quarter – strong full year 2017 • Strong cash flow and good profitability • Order backlog provides healthy foundation for 2018 • Accelerated growth in Sweden – Avega acquisition completed • Dividend proposal of EUR 1.40 24 © Tieto Corporatio
Slide 25: © Tieto Corporation
25 © Tieto Corporation
Slide 26: - tieto
- tieto