Slide 1: Tieto Q4 2016
Public Tieto Q4 2016 Year of increased investments ends with solid performance 2 February 2017 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR © Tieto Corporation
Slide 2: Q4 2016 in brief
Q4 2016 in brief Year of increased investments ends with solid performance • Strong order intake with fourth-quarter book-to-bill 1.5 • Sales growth 2% in the fourth quarter, IT services up by 3% • Adjusted operating margin over 12% • Increased competitiveness driven by investments, continued automa
Slide 3: Outlook in the Nordic IT market remains solid
Outlook in the Nordic IT market remains solid Somewhat improved economic outlook in Finland IT market affected by economic outlook 5% GDP growth, % 4% • Positive outlook in Sweden continues • Somewhat improved outlook in Finland 3% Tieto expects the Nordic IT services market 2% to grow by 2–3% in 20
Slide 4: Business mix shifting towards high-growth services
Business mix shifting towards high-growth services Tieto's growth ambition for IT services: Sales growth in Development Faster than the market** (CAGR 2015-2020) 2016–2020 (CAGR) 1–12/ 2016 High-growth businesses*) Industry solutions • ~EUR 330 million, 24% Cloud and modernization of IT services sal
Slide 5: Our long-term renewal supported by evolving competence mix
Our long-term renewal supported by evolving competence mix Investing in competence renewal in 2016 Over 130 consultants recruited in Nordics Close to 900 software developers Emerging services recruited globally Close to 100 architects Net Traditional services Gross recruitments in Sweden 370, increa
Slide 6: Strong solution foundation to accelerate performance – offering investments up to 75 mEUR
Strong solution foundation to accelerate performance – offering investments up to 75 mEUR Customer Data-driven Security Cloud & Experience businesse services orchestration High-growth businesses as from 2014 - Cross-industry solutions ~40 mEUR Started in ~10 mEUR ~ 110 mEUR 34% growth*) H2/2016 16%
Slide 7: Q4 2016 key figures
Q4 2016 key figures Net sales MEUR % • EUR 404 (396) million, +2.0%, growth in local currencies +3.5% 12,3 • Acquisitions added EUR 8.3 million 500 13,0 14 • Currency impact EUR -6 million 11,5 • In IT services, sales growth 2.7%, or 3.9% in local currencies 12 400 10,4 8 • Organic growth in local c
Slide 8: Long-term financial development favorable
Long-term financial development favorable MEUR Net sales and EBIT % Full-year net sales • EUR 1 493 (1 460) million, +2.2%, growth in local 2000 15 currency +3.2% 9,9 10,3 10,2 1500 8,8 • IT services growth 4.3%, growth in local 7,6 9,4 10 8,6 currency +5.3% 1000 3,5 5,3 5 500 4 Full-year EBIT 1825
Slide 9: Consistent performance improvement while having increased investments
Consistent performance improvement while having increased investments IT services sustainably driving growth MEUR Net sales, EBIT and offering development % Increased investments in offering development 2000 15 • Annual offering investments up to EUR 75 million from EUR 40 million in 2013 1500 • Off
Slide 10: Quarterly development
Quarterly development 1 Net debt/EBITDA MEUR 0,7 500 0,5 0,6 0,5 0,4 400 2 2 15 8 2 16 11 0,1 300 0,0 200 0 100 362 363 330 396 352 366 330 396 -0,1 0 -0,5 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Q3/16 Q4/16 -0,6 -1 Net of divestment and acquisitions Customer sales adjusted Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Slide 11: Growth in local currencies by Service Line and Industry Group
Growth in local currencies by Service Line and Industry Group MEUR 2% 225 200 5%/ 1%* 175 150 Service 125 Q4/15 100 12% / 2%* -1% Lines 75 Q4/16 50 25 196 200 34 38 133 139 33 33 0 Technology Services Business Consulting and Industry Solutions Product Development and Modernization Integration Servic
Slide 12: 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 12 © Tieto Corporation *)Reported in Industry Solu
Slide 13: Technology Services and Modernization
Technology Services and Modernization Customer sales in Q4 MEUR % • EUR 197 (196) million, +1%, growth of 2% in local currencies 250 15,8 18,0 14,1 16,0 EBIT 200 13,2 13,4 14,0 • EBIT EUR 26.2 (30.3) million, 13.3% (15.5) 10,8 • Adjusted* EBIT EUR 27.7 (30.9) million, 14.1% (15.8) 10,2 12,0 150 8,7
Slide 14: Business Consulting & Implementation
Business Consulting & Implementation Customer sales Q4 • EUR 38 (34) million, +10%, growth of 12% in local MEUR currencies % • Organic growth in local currencies 2% 50 8 5,7 EBIT 6 40 3,7 3,3 • EBIT EUR 2.0 (1.3) million, 5.3% (3.7) • Adjusted* EBIT EUR 0.7 (2.0) million, 1.8% (5.7) 5 4 4 1,8 4 1,8
Slide 15: Industry Solutions
Industry Solutions Customer sales Q4 MEUR % • EUR 138 (132) million, +4%, growth of +5% in local currencies 150 16,4 16,2 15,5 18 • Organic growth in local currencies 1% 5 16 11,0 12,5 14 EBIT 11 10 100 2 2 2 8 12 • EBIT EUR 19.7 (20.8) million, 14.3% (15.7) • Adjusted* EBIT EUR 21.5 (21.5) million,
Slide 16: Product Development Services
Product Development Services Customer sales Q4 MEUR % • EUR 31 (33) million, -5%, decline of 1% in local currencies 50 14,0 16,0 14,0 EBIT 40 11,1 11,3 • EBIT EUR 3.3 (2.8) million, 10.6% (8.4) 12,0 9,6 9,4 • Adjusted* EBIT EUR 3.5 (3.1) million, 11.3% (9.4) 8,4 10,0 30 Q4 highlights 6,2 6,5 8,0 20
Slide 17: 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 17 © Tieto Corporation *)Reported in Industry So
Slide 18: Financial Services
Financial Services Customer sales Q4 MEUR • EUR 101 (92) million, +10%, growth of 11% in local currencies 100 5 • Organic growth in local currencies 6% 2 Sales split by service line 75 Q4/2016 Q4/2015 TSM 56% 58% 50 BCI 5% 4% IS 39% 38% 25 Q4 highlights 85 88 83 92 89 92 86 96 • Acquisition of Emric
Slide 19: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q4 MEUR • EUR 135 (133) million, +1%, growth of 3% in local currencies 135 120 8 Sales split by service line 11 105 4 Q4/2016 Q4/2015 90 TSM 44% 43% 75 BCI 8% 8% IS 48% 49% 60 45 Q4 highlights 30 15 • Growth was strongest in industry-specific 101 107 98
Slide 20: Industrial and Consumer Services
Industrial and Consumer Services Customer sales Q4 MEUR • EUR 137 (137) million, remained at the previous year’s level 150 • Organic growth in local currencies -2% 2 2 7 3 125 2 4 5 Sales split by service line 100 Q4/2016 Q4/2015 TSM 59% 62% 75 BCI 17% 15% IS 24% 23% 50 Q4 highlights 25 134 134 124
Slide 21: Way forward
Way forward tieto
Slide 22: We continue to drive growth and efficiency – for our customers and us
We continue to drive growth and efficiency – for our customers and us Innovation Accelerate investments in innovation and growth New opportunities to support customers Duality Duality in their business renewal Continuously optimize Efficiency operations for scale and efficiency © Tieto Corporation
Slide 23: Our prime objectives for 2017
Public Our prime objectives for 2017 Accelerate growth and innovation Quality & customer experience Learning Customer as a experience Lifestyle Drive productivity Develop skills for the future © Tieto Corporation
Slide 24: Performance drivers
Performance drivers 2017 – IT services We aim to grow faster than the market, growth supported by acquisitions Efficiency programme: impact of over 20 mEUR, annualized gross savings close to 40 mEUR Offering development costs remain at the 2016 level and around 5% of Group sales Restructuring costs
Slide 25: Guidance for 2017
Guidance for 2017 Tieto expects its full-year adjusted*) operating profit (EBIT) to increase from the previous year’s level (EUR 152.2 million in 2016). *) Adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items © Tieto Corporation
Slide 26: Q4 2016 in brief
Q4 2016 in brief Year of increased investments ends with solid performance • Strong order intake with fourth-quarter book-to-bill 1.5 • Sales growth 2% in the fourth quarter, IT services up by 3% • Adjusted operating margin over 12% • Increased competitiveness driven by investments, continued automa
Slide 27: - tieto
- tieto