Tieto Corporation · OMXHEX:TIETO
Tieto — TietoEVRY — Q4 2020 Earnings Presentation
28 slides from Tieto's earnings presentation, 2021
Slide 1: Q4 2020: Strong profitability and cash flow
Q4 2020 Strong profitability and cash flow Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO
Slide 2: Q4 in brief
2 Q4 in brief Strong profitability and cash flow Fourth-quarter Fourth-quarter adjusted operating revenue down by Run-rate of EUR 80 Strong operative 6% organically – million achieved in cash flow of EUR margin 15% driven Dividend EUR 1.32 affected by Covid-19 merger synergies – 355 million in the f
Slide 3: 2020 key financial figures – strong performance in a year of integration and Covid-19
3 2020 key financial figures – strong performance in a year of integration and Covid-19 EBIT Adj.** Operating cash Revenue € 355m flow € 2.786m 12.7% € 355m Strong profitability and cash flow enabling deleveraging and Revenue growth EBIT attractive dividends Net debt / EBITDA Reported -6% € 146.9m O
Slide 4: Key highlights in 2020
4 Key highlights in 2020 Integration Performance Competitiveness • Key integration actions • Mitigation of Covid-19 • Increased competitiveness on schedule impact operationally and through combined • Customer trust creation financially capabilities • Employee engagement • Continued strength in • Sig
Slide 5: Major customer wins across all Service Lines and countries during 2020
5 Major customer wins cross all Service Lines and countries during 2020 Norway Finland Sweden
Slide 6: Integration fully on schedule and consistently realizing merger benefits
6 Integration fully on schedule and consistently realizing merger benefits Integration focus area Current status Integrated structure • 2020: Integrated structure, roles and businesses globally and leadership • 2021: Leadership and organization focused on growth Common processes • 2020: Common syste
Slide 7: TietoEVRY signed a definitive agreement to sell its Oil & Gas software business
As announced on Monday 15 February 7 TietoEVRY signed a definitive agreement with Aucerna, a Quorum Software affiliate to sell its Oil & Gas software business Background Drivers & rationale TietoEVRY Oil & Gas software TietoEVRY’s strategy to drive focus and • Globally leading software for Hydrocarb
Slide 8: Q4 financial performance
8 Q4 financial performance
Slide 9: TietoEVRY
9 TietoEVRY Q419 Q420 -9% Business highlights Revenue • Revenue EUR 712 million, organic growth* -6.3% Adj. EBIT ** • Reported growth -8.5%, currency impact EUR -12.6 million /1.8% Adj. EBIT %** 778 712 • Adjusted EBIT** EUR 106.4 (105.2) million, 14.9% (13.5) • Currency impact EUR -2.0 million 14.9
Slide 10: Digital Consulting
10 Digital Consulting Q419 Q420 -8% Business highlights Revenue • Revenue EUR 173 million, organic growth* -5.7% Adj. EBIT ** • Adjusted EBIT** EUR 29.9 (24.0) million, 17.3% (12.7) Adj. EBIT %** • Covid-19 impact appr. -6% on revenues • Revenue level temporarily impacted by integration and project
Slide 11: Cloud & Infra
11 Cloud & Infra Q419 Q420 Business highlights -14% Revenue • Revenue EUR 227 million, organic growth* -13.4% Adj. EBIT ** • Adjusted EBIT** EUR 19.3 (34.7) million, 8.5% (13.1) Adj. EBIT %** • Revenue decline caused by: • Lost customers during 2019 – impact appr. 7% 265 • High comparative in Q4’19
Slide 12: Industry Software
12 Industry Software Q419 Q420 -2% Business highlights Revenue • Revenue EUR 134 million, organic growth* -0.6% Adj. EBIT ** • Adjusted EBIT** EUR 35.1 (25.8) million, 26.2% (18.9) Adj. EBIT %** • Covid-19 impact appr. -3%, primarily in industrial sector 137 134 • Continuing strong growth in Welfare
Slide 13: Financial Services Solutions
13 Financial Services Solutions Q419 Q420 -7% Business highlights Revenue • Revenue EUR 109 million, organic growth* -2.9% Adj. EBIT ** • Adjusted EBIT** EUR 15.2 (17.2) million, 14.0% (14.7) Adj. EBIT %** • Significant large new customer wins (Nordea, Eika Bank) supporting growth agenda 117 109 • R
Slide 14: Product Development Services
14 Product Development Services Q419 Q420 -8% Business highlights Revenue • Revenue EUR 36 million, organic growth* -9.7% Adj. EBIT ** • Adjusted EBIT** EUR 5.0 (4.4) million, 13.8% (11.1) Adj. EBIT %** • Covid-19 impact appr. -6% mostly affecting the automotive industry 39 36 • High market activity
Slide 15: CFO report
15 CFO report
Slide 16: CFO highlights Q4
16 CFO highlights Q4 • Strong profitability driven by synergy contribution, Digital Consulting and Industry Software • Continuing strict cost discipline to offset Covid-19 impact • One-time items on planned level and estimated to be significantly lower in 2021 • Synergy execution progressing well -
Slide 17: CFO summary of 2020
17 CFO summary of 2020 Revenue - impacted by • Covid impact of appr. -3%, FX impact of appr. -3% (primarily NOK and SEK) exceptional events • Cloud & Iinfra lost customers prior to the merger, impact appr. -1% for the company Profitability – strong • Synergy contribution P&L EUR 30 million, run-rate
Slide 18: One-time items in accordance with plan – significantly lower in 2021
18 One-time items in accordance with plan – significantly lower in 2021 One-time items (EUR million) Q4 2020 actual FY2020 actual FY2021 estimate Integration cost 9 84 26-36 • Q4 and FY2020 one-time IBM transition of services 8 17 6(1) items in line with prior IBM old agreement items 0 19 0 estimate
Slide 19: Merger efficiencies of EUR 100 million – on track
19 Merger efficiencies of EUR 80 million executed at end of 2020 – on track to achieve EUR 100 million EUR 100 million merger efficiencies achieved within three years • Target merger efficiencies unchanged at EUR 100 Merger efficiency run-rate at end of year (EUR million) million, merger efficiency
Slide 20: Strong cash flow driven by improved profitability
20 Strong cash flow driven by improved profitability Net cash flow from operations 140 Tieto stand-alone TietoEVRY • EUR 125.2 million cash flow from operations driven by 120 strong profitability 100 80 • Working capital decreased by EUR 17.8 million mainly 60 due to favorable receivables developmen
Slide 21: 2021 agenda
21 2021 agenda
Slide 22: Shifting to a growth agenda in 2021
22 Shifting to a growth agenda in 2021 Drivers Market driven by Cloud first strategies and data richness in customers’ operations TietoEVRY expects market to grow 0–2%, reflecting the impact from pandemic All Service Lines expected to grow in 2021, Covid-19 negatively impacting market growth in H1,
Slide 23: Accelerating growth in 2021
23 Accelerating growth in 2021 H1 2021 H2 2021 Industry Software • Resilient and strong software businesses – Financial Services Financial Services Solutions supported by Solutions recent strong wins • Growth choices with Cloud, Data and Devops Product Development to drive scale H2’21 – impacting Di
Slide 24: Guidance and performance drivers
24 Guidance and performance drivers
Slide 25: Performance drivers – Q1 2021
25 Performance drivers – Q1 2021 • Revenue impact appr. -4% Covid-19 impact • Profit impact being mitigated through active cost saving measures • Anticipated year-end synergy run-rate EUR 90-95 million, up from EUR 80 Synergy impact million run-rate at year end 2020 FX impact • Estimated positive re
Slide 26: Guidance 2021
26 Guidance 2021 TietoEVRY expects its organic1) growth to be -1% to +2% 2) (Revenue in 2020: EUR 2 786.4 million) The company estimates its full-year adjusted operating margin (adjusted EBITA) 3) to increase to 13–14% (12.7% in 2020) 1) Adjusted for currency effects, acquisitions and divestments 2)
Slide 27: Solid foundation for the future
27 Solid foundation for the future Strong integration Financial Market opportunity, business strength objectives Growth agenda and drivers of competitiveness
Slide 28: tieto fizy
tieto fizy