Slide 1: Q3 2020 Solid third quarter – guidance restored
Q3 2020 Solid third quarter – guidance restored Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Q3 in brief
2 Q3 in brief Solid third quarter – guidance restored Integration on Adjusted Organic schedule and operating Industry Guidance revenue synergy margin 14%, Software restored as growth -4%, contribution to supported by profitability announced on impacted by profit EUR 11 resilient over 20% 20 October
Slide 3: Covid-19 implications
3 Covid-19 implications Negative profit Future of work Industry analysts For TietoEVRY impact fully continuously being estimate -3% to impact in Q3 appr. mitigated through developed – -7% decline in IT -4% and Q4 short term savings employee safety market due to expected to be at and productivity Cov
Slide 4: Key priorities in a changing environment
4 Key priorities in a changing environment Year of integration Cultural foundation Sources of innovation and future growth • Build customer trust • Nordic heritage and • Investing into Cloud, • Common processes value base automation, AI/Data • Deliver synergies • Culture Code science • Covid mitigat
Slide 5: Integration progressing with high engagement
5 Integration progressing with high engagement Integration focus area Current status Integrated structure • Integrated businesses and functions globally and leadership • Establishing integrated structures for Financial Services as planned Common processes • Common system implementation (e.g. HR, CRM
Slide 6: Supporting City of Västerås in their digital transformation journey
6 Supporting City of Västerås in their digital transformation journey TietoEVRY supporting City of Västerås, as a new customer, in their digital transformation by delivering workplace, infrastructure and security services 4 (+1) year agreement with TCV of SEK 300 million Strong momentum in public se
Slide 7: Supporting K Group's strategic ambitions
7 Supporting K Group’s strategic ambitions with new technologies and automation TietoEVRY to boost productivity and cost-efficiency with automation and new technologies – and enable efficient use of data Service scope incl. next-generation application services, analytics and data services, DigiOps,
Slide 8: Q3 financial performance
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Slide 9: TietoEVRY
9 TietoEVRY Q319 Q320 -7% Revenue Business highlights Adj. EBIT ** • Revenue EUR 644 million, organic growth* -4.3% • Reported growth -7%, currency impact EUR -16 million Adj. EBIT %** 693 644 • Adjusted EBIT EUR 90.2 (91.2) million, 14.0% (13.2) • Currency impact EUR -3 million 14.0% 13.2% • Report
Slide 10: Digital Consulting
10 Digital Consulting Q319 Q320 -12% Revenue Business highlights Adj. EBIT ** • Revenue EUR 143 million, organic growth* -8.9% Adj. EBIT %** • Adjusted EBIT EUR 21.1 (18.5) million, 14.7% (11.4) • Several new agreements won during the quarter 163 143 • Covid-19 impact appr. -7% on revenues and expec
Slide 11: Cloud & Infra
11 Cloud & Infra Q319 Q320 -10% Revenue Business highlights Adj. EBIT ** • Revenue EUR 220 million, organic growth* -8.6% • Adjusted EBIT EUR 23.9 (36.0) million, 10.9% (14.7) Adj. EBIT %** • Covid-19 impact appr. -1% on revenue – anticipated to increase in 245 220 Q4 as impacting add-on volumes • R
Slide 12: Industry Software
12 Industry Software Q319 Q320 -3% Revenue Business highlights Adj. EBIT ** • Revenue EUR 115 million, organic growth* -1.4% Adj. EBIT %** • Adjusted EBIT EUR 25.0 (19.5) million, 21.7% (16.4) 119 115 • Covid-19 impact appr. -3%, primarily in industrial sector • Healthy growth in solutions for Welfa
Slide 13: Financial Services Solutions
13 Financial Services Solutions Q319 Q320 -2% Revenue Business highlights Adj. EBIT ** • Revenue EUR 101 million, organic growth* 3.1% Adj. EBIT %** • Adjusted EBIT EUR 15.4 (15.7) million, 15.2% (15.2) 103 101 • Covid-19 impact appr. -3% • Organic growth driven especially by Cards services 15.2% 15
Slide 14: Product Development Services
14 Product Development Services Q319 Q320 -3% Revenue Business highlights Adj. EBIT ** • Revenue EUR 33 million, organic growth* -4.0% Adj. EBIT %** • Adjusted EBIT EUR 4.1 (3.1) million, 12.3% (9.0) • Covid-19 impact appr. -6% mostly affecting the automotive 34 33 industry • High market activity an
Slide 15: CFO report
CFO report
Slide 16: CFO highlights
16 CFO highlights • Strong profitability driven by synergy contribution and Industry Software • Synergy execution progressing well with continued focus on building a competitive and sustainable cost structure • Rigid cost management mitigating Covid-19 profit impact • FX headwinds continuing with EU
Slide 17: Rigid cost management mitigating Covid-19 profit impact
17 Rigid cost management mitigating Covid-19 profit impact • Delivery cost optimization by managing external Delivery cost consultants, subcontractors and temporary layoffs management of personnel • Covid-19 revenue impact • Strict travel restrictions to safeguard employee of appr. -4% health and co
Slide 18: Merger efficiency realization on track to achieve EUR 100 million
18 Merger efficiency realization on track to achieve EUR 100 million, with EUR 70-80 million executed by end of 2020 • Target merger efficiencies unchanged at EUR 100 EUR 100 million merger efficiencies achieved within three years million, with merger efficiency run-rate of EUR 70-80 Merger efficien
Slide 19: Large one-time items in 2020 – significantly lower in 2021
19 Large one-time items in 2020 – significantly lower in 2021 One-time items (EUR million) Q3 2020 actual Q4 2020 estimate FY2020 estimate FY2021 estimate Integration cost 42 5-10 80-85 30-40 IBM transition of services 9 8 17 6 IBM old agreement items 0 0 19 0 Tieto SmartUtilities (TSU) 0 0 41 0 Amo
Slide 20: Solid cash flow with good receivables collection
20 Solid cash flow with good receivables collection Net cash flow from operations 140 Tieto stand-alone TietoEVRY • EUR 108.4 million cash flow from operations 120 100 • Working capital decreased by EUR 31.5 million as a 80 result of favorable development in AR and AP 60 • No visible delays due to C
Slide 21: Guidance and performance drivers
Guidance and performance drivers
Slide 22: Performance drivers – Q4 2020
22 Performance drivers – Q4 2020 • Q3 revenue impact appr. -4%, Q4 impact at a similar level Covid-19 impact • Profit impact being mitigated through active cost saving measures • Estimated full-year synergies EUR 25-30 million, of which EUR 11 million Accelerated synergies in Q3 • Anticipated year-e
Slide 23: Guidance 2020 reinstated
23 Guidance 2020 reinstated TietoEVRY expects its comparable full-year adjusted* operating profit (EBIT) to increase from the previous year's level (Tieto's and EVRY's adjusted operating profit combined amounted to a total of EUR 341.7 million in 2019). *) Adjusted for amortization of acquisition-re
Slide 24: CMD – outlining future strategic and financial ambitions
25 CMD – outlining future strategic and financial ambitions Long-term ambition, merger progress and CEO & CFO combination of growth, profitability and CMD set for 3 December capital allocation objectives Virtual event with broadcast from Helsinki, Oslo and Stockholm Market opportunity, business obje
Slide 25: Q3 in brief
26 Q3 in brief Solid third quarter – guidance restored Integration on Adjusted Organic schedule and operating Industry Guidance revenue synergy margin 14%, Software restored as growth -4%, contribution to supported by profitability announced on impacted by profit EUR 11 resilient over 20% 20 October
Slide 26: tieto fey
tieto fey