Tieto Corporation · OMXHEX:TIETO
Tieto — Q2 2014 Earnings Presentation
28 slides from Tieto's earnings presentation, Jul 18, 2014
Slide 1: Tieto Q2/2014
Tieto Q2/2014 Positive development in IT services continues 18 July 2014 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR
Slide 2: Q2 2014 in brief
Q2 2014 in brief Positive development in IT services continues • IT services organic growth in local currencies close to 3% • Profitability continued to improve despite costs related to exceptional project termination • Customer insourcing results in lower volumes in Product Development Services 2 ©
Slide 3: Nordic IT services market expected to grow
Nordic IT services market expected to grow In R&D, insourcing has resulted in reduced external R&D spending • Tieto expects the Nordic IT services market to grow by around 2% in 2014 • Double-digit growth for customer experience management, mobility and cloud services while the traditional IT servic
Slide 4: New services contributing to growth
New services contributing to growth Tieto’s growth drivers in Q2 CAGR • CSI growth areas posting double-digit growth 2-5% • Customer experience management (CEM) – Over also CEM related consulting 20% • Transformation consulting • Cloud services growing by 58% q-on-q, Emerging or 126% y-on-y services
Slide 5: Financial development
Financial development 5 ©Tieto Corporation
Slide 6: Q2 2014 key figures
Q2 2014 key figures Net sales • EUR 386 (417) million, -7.3%, organic growth in local currency -1.3% • Divestments EUR 19.2 million • Currency EUR -12 million MEUR % • In IT services, organic growth in local currencies up by 500 12 2.6% 10.4 10.4 21 2 1 10 400 19 6 EBIT 2 8.9 8 • EBIT EUR 21.5 (14.8
Slide 7: Quarterly development
Quarterly development MEUR Net sales Net debt/EBITDA 500 2.0 400 21 19 2 1 6 1.5 2 300 1.0 200 0.5 100 0.1 0.4 0.2 0.0 -0.1 0.2 0.0 403 398 359 403 386 380 0 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 -0.5 Adjusted for divestments and acquisitions Net of divestments and
Slide 8: Organic growth in local currencies by Service Lines and Industry Groups
Organic growth in local currencies by Service Lines and Industry Groups 9%*) -4% 2% 150 125 -19% 100 Service 75 Q2/13 Lines 50 Q2/14 25 125 136 101 97 100 102 71 57 0 Managed Services Consulting and Industry Products Product *)Sales of equipment System Integration Development contributed close to ha
Slide 9: Service Lines
Service Lines Financial Manufacturing, Public, Telecom, Product Services Retail and Healthcare Media and Development Logistics and Welfare Energy Services Industry Products Consulting and System Integration Managed Services 9 ©Tieto Corporation
Slide 10: Managed Services
Managed Services Customer sales • EUR 132 (125) million, up by 5% MEUR % • Organic growth in local currencies 9% 150 10 EBIT 8.4 • EBIT EUR 7.6 (5.4) million, 5.8% (4.3) 8 6.9 • EBIT excluding one-off items* 100 EUR 7.6 (5.7) million, 5.8% (4.6) 5.8 5.1 6 4.6 Q2 highlights • The market for transform
Slide 11: Consulting and System Integration
Consulting and System Integration Customer sales • EUR 97 (108) million, down by 10% MEUR % • Organic growth in local currencies -4% 150 15 EBIT 11.2 • EBIT EUR 6.1 (2.8) million, 6.3% (2.6) 10.4 • EBIT excluding one-off items* 7 7 100 8.9 2 1 10 EUR 7.2 (9.6) million, 7.4% (8.9) 2 1 7.6 7.4 Q2 high
Slide 12: Industry Products
Industry Products Customer sales • EUR 97 (105) million, down by 7% MEUR % • Organic growth in local currencies 2% 150 30 25.7 25 EBIT 22.1 • EBIT EUR 15.0 (15.4) million, 15.3% (14.7) 5 100 5 20 • EBIT excluding one-off items* 16.1 15.8 15.4 15.6 EUR 15.2 (16.6) million, 15.6% (15.8) 15 Q2 highligh
Slide 13: Product Development Services
Product Development Services Customer sales • EUR 60 (79) million, down by 24% MEUR % • Organic growth in local currencies -19% 100 14 11.6 EBIT 12 • EBIT EUR -2.3 (-2.6) million, -3.8% (-3.4) 9 75 8 • EBIT excluding one-off items* 10 EUR 3.7 (2.0) million, 6.1% (2.6) 7.9 5 8 50 Q2 highlights 6.1 6
Slide 14: Industry Groups
Industry Groups Financial Manufacturing, Public, Telecom, Product Services Retail and Healthcare Media and Development Logistics and Welfare Energy Services Industry Products Consulting and System Integration Managed Services 14 ©Tieto Corporation
Slide 15: Financial Services
Financial Services Customer sales • EUR 84 (84) million, at the previous year’s level MEUR • Organic growth in local currencies 3% 100 Sales split by service line 1 1 1 1 2 1 75 Q2/14 Q2/13 MS 48% 46% CSI 20% 16% 50 IP 32% 38% Q2 highlights 25 • In the small and medium sized business segment increas
Slide 16: Manufacturing, Retail and Logistics
Manufacturing, Retail and Logistics Customer sales • EUR 78 (78) million, at the previous year’s level MEUR • Organic growth in local currencies 3% 100 Sales split by service line 1 75 1 2 Q2/14 Q2/13 1 MS 52% 47% CSI 38% 42% 50 IP 10% 11% Q2 highlights 25 • Market is active – incremental demand in
Slide 17: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales • EUR 104 (102) million, up by 3% MEUR • Organic growth in local currencies 11% 150 Sales split by service line 125 Q2/14 Q2/13 5 100 5 MS 38% 38% CSI 24% 25% IP 38% 37% 75 Q2 highlights 50 • Strong growth in healthcare and welfare segment and the Swedis
Slide 18: Telecom, Media and Energy
Telecom, Media and Energy Customer sales • EUR 60 (74) million, down by 19% MEUR • Organic growth in local currencies -10% 100 Sales split by service line 75 5 4 Q2/14 Q2/13 MS 19% 18% CSI 43% 46% 50 IP 38% 36% Q2 highlights 25 • In both telecom and media segments, expiring projects affect volumes a
Slide 19: Basics are in place and ready for next chapter while managing volatility remains
Basics are in place and ready for next chapter while managing volatility remains 2016+ Expand 2015 markets Accelerate growth portfolio • Expand proven growth bets beyond the Nordics 2014 • New growth bets e.g. IPR Reorienting for growth • Scale growth businesses – CEM, 2013 Industrial internet, MS c
Slide 20: Efficiency drive and competence renewal will continue
Efficiency drive and competence renewal will continue • 2013 programme concluded: Traditional IT Emerging, cloud annualized savings of over EUR 50 based IT 100% million 34% 73% • 1 200 redundancies of which 880 New roles 80% materialized in 2013 and over 300 in 60% H1/2014 Traditional roles 66% 40%
Slide 21: Investing in offerings and innovation
Investing in offerings and innovation €3m of the estimated €10m increase in offering development materialized (YTD) Big and high growth market in the Nordics by 2020 CAGR ~20%, EUR >5B CAGR ~50%, EUR >5B CAGR >4%, EUR ~1B Customer Industrial Experience Lifecare Internet Management Creating competiti
Slide 22: Performance improvement in 2014
Performance improvement in 2014 • In IT services, the company aims to organically grow in line with the market • In Product Development Services, sales anticipated to decline in the full year • Based on the estimate for 2014, restructuring costs anticipated to be around half of the previous year’s l
Slide 23: Guidance for 2014 unchanged
Guidance for 2014 unchanged Tieto expects its full-year operating profit (EBIT) excluding one-off items to increase from the previous year’s level (EUR 141.2 million in 2013). 23 ©Tieto Corporation
Slide 24: Q2 2014 in brief
Q2 2014 in brief Positive development in IT services continues • IT services organic growth in local currencies close to 3% • Profitability continued to improve despite costs related to exceptional project termination • Customer insourcing results in lower volumes in Product Development Services 24
Slide 25: Changing perspectives
Changing perspectives 25 ©Tieto Corporation
Slide 26: Appendix
Appendix
Slide 27: Top customers 2014
Top 10 customers 2014 • City of Stockholm • Ericsson • Finnish Tax Administration • IF Insurance • Kesko • Nordea • NSN • OP-Pohjola Group • S-Group • TeliaSonera Top 10 customers based on sales in alphabetical order 27 ©Tieto Corporation
Slide 28: Financial Calendar 2014
Financial Calendar 2014 23 October Interim report 3/2014 28 ©Tieto Corporation