Tieto Corporation · OMXHEX:TIETO
Tieto — TietoEVRY — Q1 2020 Earnings Presentation
26 slides from Tieto's earnings presentation, 2020
Slide 1: Q1 2020 Solid performance – integration on schedule
Q1 2020 Solid performance – integration on schedule Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Outline
2 Outline • CEO summary • Q1 financial performance • CFO report • Merger and integration update • Guidance and performance drivers
Slide 3: Q1 in brief
3 Q1 in brief Solid performance – integration on schedule Organic growth of 3% Adjusted operating Measures in place to Integration proceeding driven by software margin improvement to mitigate potential well and end-of-year business and cloud 10.5% driven especially Covid-19 impact synergy run-rate s
Slide 4: Adapting to Covid-19
4 Adapting to Covid-19 Initiated Current market Short-term cost Resilience Adapting to a new measures to indicators imply a savings to towards Covid-19 normal through secure health and 2-5% negative mitigate potential supported by digital services safety of full-year revenue financial impact industr
Slide 5: TietoEVRY supporting society and the healthcare sector
5 TietoEVRY supporting society and the healthcare sector Increasing Covid-19 testing Detecting Covid-19 on x- Providing intensive care capacity rays data for healthcare professionals A joint project among major Artificial Intelligence to companies to expand the analyse lung x-rays and Benchmarking d
Slide 6: IT market outlook
6 IT market outlook New digital services, business Covid-19 expected to have negative continuity and cost optimization impact on IT market in 2020 continue to be a driver for Industry analysts market growth investments estimates range from --3% to -7%
Slide 7: Q1 financial performance
Q1 financial performance va
Slide 8: TietoEVRY
8 TietoEVRY Q119 Q120 -1% Revenue Business highlights EBIT Adj.** • 3% organic* growth EBIT Adj. %** • Software business, cloud services and strong 749 744 performance in Norway contributed to growth • Negative currency impact of 3% points on growth 10.0% 10.5% • Adjusted EBIT 10.5% (10.0%) – improv
Slide 9: Digital Experience
9 Digital Experience Q119 Q120 -5% Revenue Business highlights EBIT Adj.** • -4% organic* growth EBIT Adj. %** • Revenue impacted by one large-scale customer insourcing in application services (as in Q4’19) 130 123 • Contract transfer to a joint venture had a negative impact of over 1%-point on grow
Slide 10: Hybrid Infra
10 Hybrid Infra Q119 Q120 4% Revenue Business highlights EBIT Adj.** • 6% organic* growth driven by infrastructure cloud, up by 19% EBIT Adj. %** • Revenue from traditional infrastructure at Q119 129 135 level • Adjusted EBIT 11.8% (6.9%) – clear improvement 11.8% supported by strong growth and the
Slide 11: Industry Software
11 Industry Software Q119 Q120 4% Revenue Business highlights EBIT Adj.** • 7% organic* growth EBIT Adj. %** • Strong growth in Payments and Oil & Gas solutions, revenue up by over 20% 113 117 • Good growth in healthcare and welfare solutions continued, up by 6% 12.5% 10.3% • Adjusted EBIT 10.3% (12
Slide 12: Product Development Services
12 Product Development Services Q119 Q120 3% Revenue Business highlights EBIT Adj.** • 5% organic* growth EBIT Adj. %** • Strong volume development with the largest key customers focused on Radio and 5G technologies 37 38 • Good development continued in the automotive segment with new key customers
Slide 13: EVRY
13 EVRY Q119 Q120 -3% Revenue Business highlights EBIT Adj.** • 3% organic* growth and solid margin EBIT Adj. %** • 8% organic* growth in Norway, driven by digital 341 331 consulting • Adjusted EBIT 10.5% (9.9%) – improvement both in 9.9% 10.5% Norway and Sweden EVRY Subsegment details 34 35 Organic
Slide 14: CFO report
tales. pi wie Hie ses. bt CFO report —
Slide 15: CFO highlights
15 CFO highlights • Solid financial performance – 1st quarter as a combined company • Covid-19 impact actively being mitigated • Merger integration progressing as planned, synergy execution ahead of schedule • Significant FX headwind from NOK and SEK • New segments from Q2 2020 according to the new
Slide 16: Parallel programs to address short-term impact of Covid-19 and deliver merger efficiencies
16 Parallel programs to address short-term impact of Covid-19 and to deliver on merger efficiencies Temporary cost reductions • Dynamic scope reflecting market development due to Covid-19 • Short-term perspective Execution: 2020-TBD • Cost categories that allow immediate cost savings Merger efficien
Slide 17: Covid-19 impact continuously being evaluated through multiple scenarios
17 Covid-19 impact continuously being evaluated through multiple scenarios • EUR 250 million RCF available for short-term liquidity • Long-term debt obligations mainly mature in 2024 Financing and liquidity • Bridge loan EUR 300 million maturing in Sept 2020 - 6 months extension option available • N
Slide 18: EUR 75 million of merger efficiencies confirmed – 2020 execution ahead of schedule
18 EUR 75 million of merger efficiencies confirmed – 2020 execution ahead of schedule EUR 75 million merger efficiencies achieved within three years • Merger efficiency run rate increased to EUR 45-55 Merger efficiency run-rate at end of year (MEUR) million (up from EUR 30-40 million) by end of 2020
Slide 19: Estimated impact by 2022
19 Estimated impact by 2022 Efficiency area Examples of main efficiency levers Estimated efficiency • Consolidate managerial, sales and administrative roles Services and go-to- • Adopt proven global delivery model and common processes EUR 30-40 million market • Rationalize offering portfolio • Captu
Slide 20: Merger and integration update
20 Merger and integration update
Slide 21: Integration well on schedule
21 Integration well on schedule • Several important integration milestones completed • New organization and operating model in place • Leadership appointments across all businesses and functions • Active common collaboration tools/platform • Actions taken to drive competitiveness through merger effi
Slide 22: Integration progressing as planned
22 Integration progressing as planned Integration focus area Current status Integrated structure and • Organization established leadership • Leadership nominated at all levels Common processes and • Interoperating collaboration tools in place systems • Active development of reporting and forecasting
Slide 23: Guidance and performance drivers
Guidance and performance drivers
Slide 24: Guidance 2020 withdrawn
24 Guidance 2020 withdrawn Full-year guidance Given the uncertainties Further guidance issued withdrawn on 27 March in the market outlook, it as soon as visibility to is not possible to the market outlook has estimate the potential improved and significant impact of Covid-19 on uncertainties are cle
Slide 25: Key performance drivers
25 Key performance drivers 2020 Covid-19 Merger-specific FX impact Current market indicators imply a Run-rate of EUR 45-55 million Depreciation of SEK and NOK in cost synergies expected at impacting financial results 2-5% negative full-year revenue year end impact FX impact* on revenue around One-ti
Slide 26: tieto fey
tieto fey