Tieto Corporation · OMXHEX:TIETO
Tieto — Investor Day (November 2010)
12 slides from Tieto's investor day presentation, Nov 25, 2010
Slide 1: Towards better profitability
Towards better profitability Capital Market Day 25 November 2010 Helsinki, Finland Seppo Haapalainen – CFO © 2010 Tieto Corporation
Slide 2: Content
Content • Operating environment • Measures to boost profitability • Insights into • Tieto International • Offerings • Offshoring © 2010 Tieto Corporation
Slide 3: Challenging operating environment
Challenging operating environment Globalization of IT Salary increases • Intensified competition EUR • Price pressure Economic slowdown million % 2000 12 10 1500 8 Net sales 1000 6 EBIT margin excl. OTI 4 EBIT margin incl. OTI 500 2 0 0 2002 2003 2004 2005 2006 2007 2008 2009 Tieto starts Performanc
Slide 4: EBIT target of 10% still valid
EBIT target of 10% still valid 2000 EUR 12 % million 10 1500 8 1000 6 Net sales EBIT margin excl. OTI 4 500 Long-term EBIT target of 10% 2 EBIT consensus 0 0 estimate 2002 2003 2004 2005 2006 2007 2008 2009 2010E2011E2012E Analysts’ …but requires consensus • better market environment estimates • suc
Slide 5: Prices and personnel costs have had a major impact on EBIT
Prices and personnel costs have had a major impact on EBIT EUR million EBIT bridge 1–9/2009 to 1–9/2010 80 70 60 Onsite unit 50 price 40 30 Higher usage 20 of offshore 10 0 Nine-month Decrease in Currency effect Volume growth Price erosion Offshoring Other items, e.g Investments, Nine-month EBIT 200
Slide 6: Measures to boost profitability
Measures to boost profitability Track 1 • Continue to reshape International • Back to organic growth with stronger offering-based approach Track 2 • The impact of ITaaS business model still modest in 2011 • Offshore ratio target at 40% Track 3 • Enhanced benefits Productivity improvements • Potentia
Slide 7: Sensitivity analysis: Track 1 International businesses
Sensitivity analysis Track 1 Impact of potential actions on profitability Tieto Annual Current International net sales EBIT-level Note businesses classified into Impact on the Group’s EBIT margin Around Loss-making Close to EUR 60 million Around 0–5% X EUR 30–50 + 1%-point million EUR 270 million 5–
Slide 8: Offerings and profit improvement
Track 2 Offerings and profit improvement Profit improvement based on Quality & Service/Product leadership Industry-specific solutions and services Offering quality and competitiveness higher income per FTE grow the share of high-value-added offerings Specialized but highly competed services, e.g. cu
Slide 9: Sensitivity analysis: Impact of offshoring
Sensitivity analysis Track 3 Impact of offshoring - 3%-points impact on the Group’s net sales + 5%-points in the + 1%-point impact on the Group’s EBIT margin offshore ratio A positive EUR 10–20 million impact on the Group’s EBIT The figures are indicative and they are based on calculatory analysis i
Slide 10: Sensitivity analysis: How to eliminate cost inflation
Sensitivity analysis How to eliminate cost inflation + 2% in onsite costs and + 2% in volumes needed + 6% in offshore costs to maintain the EBIT margin level The figures are indicative and they are based on calculatory analysis in which other profitability affecting parameters were held constant. 10
Slide 11: Various factors impact profitability
Various factors impact profitability Volumes Onsite Business and develop- offshore ment prices Profitability improvement = Offshore Track 1 + Track 2 Exchange ratio rates + Track 3 Cost Efficiency manage- ment 11 © 2010 Tieto Corporation
Slide 12: Knowledge. Passion. Results.
Knowledge. Passion. Results. § = 5 8 5 3 2 3 iz 2 & °