Slide 1: Q2 2019: Major transformation initiated in the quarter
Q2 2019 Major transformation initiated in the quarter Kimmo Alkio, President and CEO Tomi Hyryläinen, CFO Tanja Lounevirta, Head of IR
Slide 2: Q2 2019 in brief
Q2 2019 in brief Major transformation initiated in the quarter › Strategy implementation progressing as planned – transition to a new operating model completed › Complementary merger with EVRY announced › Revenue up by 1% in local currencies › Adjusted EBIT margin at 8.4% – impact of a shorter quart
Slide 3: The Nordic IT market remains dynamic
The Nordic IT market remains dynamic Increasing investments for new Hybrid infrastructure and cloud as data-rich services and a foundation in customers’ differentiating experiences business continuity and renewal Uncertainty in macroeconomic Tieto expects the Nordic IT trends continue services marke
Slide 4: Q2 2019 key figures
Q2 2019 key figures MEUR % Net sales at the 2018 level › EUR 403.2 (404.1) million, up by 1% in local 500 15 currencies › Negative impact of the shorter quarter and 400 currencies ~EUR 9 million, 2 percentage point 9,3 12,1 10,0 9,0 8,4 10 300 11,7 Adjusted EBIT margin 8.4% (9.0%) 200 › EBIT EUR 18.
Slide 5: Quarterly development
Quarterly development 2 Net debt/EBITDA MEUR Net sales 1,5 1,5 500 1,1 400 1,0 1,0 300 1 0,7 200 0,5 100 406 404 367 422 408 403 0,5 0 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 0 Customer sales Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Employees Number of full-time employees and offshore ratio Net cash flow fro
Slide 6: Healthy development in a number of growth businesses
Healthy development in a number of growth businesses Growth1) in Q2 (H1) Annual sales in 2018 Internal Digital Experience › Customer Experience Management +13% (24%) ~ EUR 60 million Hybrid Infra › Cloud services +10% (8%) ~ EUR 125 million › Security services +29% (41%) ~ EUR 12 million Industry So
Slide 7: New reporting segments starting Q2 2019
New reporting segments starting Q2 2019 Primary reporting segments Digital Industry Hybrid Infra Product Experience Software Development Services Q2 revenue Q2 revenue Q2 revenue Q2 revenue 123 m€ 111 m€ 134 m€ 35 m€ Finland – Q2 revenue 178 m€ Revenue Sweden – Q2 revenue 152 m€ by Norway – Q2 reven
Slide 8: Digital Experience
Digital Experience MEUR % Customer sales Q2 150 20 › EUR 123 (127) million › Down by 3%, or 2% in local currencies 13,7 15 EBIT 12,8 100 10,9 › Adjusted1) EBIT EUR 10.6 (16.2) million, 8.6% (12.8) 14,6 14,9 8,6 10 Q2 highlights › Sales decline attributable to continued currency 50 headwinds and a sh
Slide 9: Hybrid Infra
Hybrid Infra Customer sales in Q2 MEUR % › EUR 134 (131) million › Up by 2%%, or 3% in local currencies 150 15 12,5 EBIT 10,8 10,8 › Adjusted1) EBIT EUR 14.5 (14.1) million, 10.8% (10.8) 9,7 100 10 7,5 Q2 highlights › Infrastructure cloud +10% and Security Services 6,9 +29% in local currencies 50 5
Slide 10: Industry Software
Industry Software Customer sales Q2 MEUR % › EUR 111 (113) million, down by 1% 150 18,0 20 › Organic growth in local currencies 1% 16,9 EBIT 15 › Adjusted1) EBIT EUR 12.2 (8.4) million, 10.9% (7.5) 12,5 100 10,9 10,3 Q2 highlights 10 › Strong growth in Payments solutions 7,5 › In Lifecare, customer
Slide 11: Product Development Services
Product Development Services MEUR % Customer sales Q2 › EUR 35 (34) million 50 15 12,7 12,3 › Up by 3%, or 5% in local currencies 9,9 10,1 EBIT 8,7 › Adjusted1) EBIT EUR 2.7 (2.9) million, 7.9% (8.7) 10 7,9 25 Q2 highlights › Growth affected by continued currency headwinds 5 and a shorter quarter ›
Slide 12: Customer sales by country
Customer sales by country1) Finland country growth 1% Internal › Industry Software growth of 10% driven by Healthcare solutions › Infrastructure services demand continued strong › Application Service within Digital Experience affected by a large customer insourcing – good overall DX growth in Public
Slide 13: Creating great everyday experiences, making customers more competitive
Creating great Making customers everyday experiences more competitive 13
Slide 14: Strategy implementation progressing as planned
Strategy implementation progressing as planned Strategic choices Progress against ambition Key achievements during Q2/19 Services enabling customers’ competitiveness Digital Experience 250+ people joined Tieto in Digital Experience Hybrid Infra Key customer wins to drive cloud transformation, ration
Slide 15: Performance drivers in 2019
Performance drivers in 2019 › Aim to grow faster than the market in local currencies › Productivity improvement measures, incl. automation, optimized subcontracting, offshoring, management of competence pyramid › Salary inflation over EUR 30 million › Operational simplification anticipated to result
Slide 16: Guidance for 2019 unchanged
Guidance for 2019 unchanged Internal › Tieto expects its full-year adjusted operating profit (EBIT) to 1) increase from the previous year’s level (EUR 168.0 million in 2018) added by the impact of IFRS 16 2) to maintain the comparability after the adoption of the new standard 1) adjusted for amortiz
Slide 17: Q2 2019 in brief
Q2 2019 in brief Major transformation initiated in the quarter › Strategy implementation progressing as planned – transition to a new operating model completed › Complementary merger with EVRY announced › Revenue up by 1% in local currencies › Adjusted EBIT margin at 8.4% – impact of a shorter quart
Slide 18: Digital Advantage for Nordic Enterprises and Societies
Digital Advantage for Nordic Enterprises and Societies © Tieto Corporation NOT FOR PUBLICATION, DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN OR ANY JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OF THE LOCAL SECURITIES L
Slide 19: Creating a leading Nordic digital services company
Creating a leading Nordic digital services company • One of the leading digital services and software companies in the Nordics serving key industries across Sweden, Norway and Finland • Stronger combined position in Sweden • Significant employer in digital services and software in Sweden, Finland an
Slide 20: Complementary markets and services
Complementary markets and services Other Other Complementary market presence 8% Norway 8% 10% • Solid market positions in Norway and Finland Sweden based on respective strengths of EVRY and Tieto (incl. 31% €1.3bn €1.6bn 43% Finland Finland) 61% • High complementarity and scale in Sweden, 39% positi
Slide 21: Strategic rationale
Strategic rationale 1 Creation of a leading Nordic digital services company 2 Complementary markets and services 3 Delivering customers’ digital success and experience 4 Opportunity for employees to shape the future today 5 Strong value creation for shareholders 6 Common values and innovation as a f
Slide 22: Indicative timeline for the merger
Indicative timeline for the merger H2/2019 • Targeted publication of prospectus in mid-August 2019 • Tieto’s and EVRY’s EGMs to be held in September 2019 at the latest • Closing expected in Q4 2019 or Q1 2020 at the latest (subject to approval by EGMs in Tieto and EVRY as well as obtaining necessary
Slide 23: - tieto
- tieto