Tieto Corporation · OMXHEX:TIETO
Tieto — Q4 2015 Earnings Presentation
29 slides from Tieto's earnings presentation, Feb 4, 2016
Slide 1: Tieto Q4/2015
Tieto Q4/2015 Strong fourth-quarter results – all businesses performing well 4 February 2016 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR
Slide 2: Q4 2015 in brief
Q4 2015 in brief Strong fourth-quarter results – all businesses performing well • Organic growth of 3% in IT services driven by Industry Products • Reported operating margin of 12% driven by healthy business mix and Managed Services automation programme • Product Development Services business well s
Slide 3: Outlook in the Nordics remains similar to 2015
Outlook in the Nordics remains similar to 2015 Weakness in Finland continues IT market affected by economic outlook 5% GDP growth, % • Positive outlook in the Sweden • Finnish economy remains sluggish 4% • Tieto expects the Nordic IT services market to 3% grow by around 2% in 2016 • IT services mark
Slide 4: Tieto's growth businesses up by ~20% in 2015
Tieto’s growth businesses up by ~ 20% in 2015 IT services market development Tieto’s business mix 2–5% (CAGR) Growth businesses • Customer Experience Management Over • Industrial Internet 20% Emerging services • Lifecare 20% (CAGR) • Cloud growth* In 2015 sales over EUR 260 million 20% of IT service
Slide 5: Capability renewal to take advantage of market changes
Capability renewal to take advantage of market changes Competence mix evolving in line Investing in competence with market change Over 100 renewal in 2015 consultants Close to 200 recruited in software Emerging services Nordics 140 new developers CX experts recruited in CEM globally Traditional serv
Slide 6: New start-up added to growth investment areas
New start-up added to growth investment areas Cloud Services Lifecare Customer Industrial Security Experience Internet Services Management • Currently around • Good growth and • Smilehouse • A number of solutions • New start-up 17% of Managed order inflow acquisition to drive introduced during the l
Slide 7: Accelerating growth
Accelerating growth Acquisitions Recruitments • Software Innovation Around 500 • Smilehouse additional roles New • Imano partnerships Annual sales close to • Temenos EUR 60 million Growth • Workday initiatives in • Salesforce.com 2015 Investments in offering Growth businesses development delivering
Slide 8: Financial development
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Slide 9: Q4 2015 key figures
Q4 2015 key figures Net sales MEUR % • EUR 396 (403) million, -1.8%, organic growth in local 500 13,0 14 currency -2.9% • Acquisitions added EUR 14 million 11,9 11,5 • Currency EUR -4 million 11,0 12 400 13 • In IT services, organic growth in local currencies 2.8% 1 6 5 8,9 3 1 10 6 8,4 8,3 5 EBIT 3
Slide 10: Favourable long-term financial development
Favourable long-term financial development Annual investments in offerings up by 20 mEUR during the past two years MEUR % Net sales • EUR 1 460 (1 523) million, -4.1%, organic growth in local EBIT 160 15 currency -2.6% 9,9 10,3 • Currency EUR -28 million 120 8,8 • In IT services, organic growth in l
Slide 11: Quarterly development
Quarterly development MEUR Net Sales 500 10% 1 Net debt/EBITDA 387 387 403 396 400 346 365 364 335 8% 0,5 0,4 300 6% 0,2 0,2 0,1 0,0 200 4% 0 100 2% -0,1 -0,4 -0,5 -0,6 0 0% Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 PDS -1 IT services Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Q3/15 Q4/15 IT services
Slide 12: Organic growth in local currencies by Service Line and Industry Group
Organic growth in local currencies by Service Line and Industry Group 150 1% 2% 6% 125 -39% 100 Service 75 Q4/14 Lines 50 Q4/15 25 131 133 107 108 105 112 54 33 0 Managed Services Consulting and System Industry Products Product Development Integration Services 150 6% 125 4% -3% 100 2% 75 Q4/14 Indus
Slide 13: 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 13 © Tieto Corporation
Slide 14: Managed Services
Managed Services Customer sales Q4 MEUR % • EUR 132 (131) million, up by 1% 150 16 • Organic growth in local currencies 1% 13,8 13,0 EBIT 14 • EBIT EUR 18.4 (8.2) million, 13.9% (6.2) 12 • EBIT excluding one-off items* 100 9,1 8,4 10 EUR 17.2 (9.0) million, 13.0% (6.9) 7,6 6,9 8 5,8 Q4 highlights 6
Slide 15: Consulting and System Integration
Consulting and System Integration Customer sales Q4 • EUR 109 (107) million, up by 2% • Organic growth in local currencies 2% MEUR % EBIT 150 14 • EBIT EUR 8.8 (10.4) million, 8.1% (9.7) 11,2 11,6 10,8 10,4 12 • EBIT excluding one-off items* EUR 11.3 (10.2) million, 10.4% (9.5) 9,5 7,4 8,6 1 10 100
Slide 16: Industry Products
Industry Products Customer sales Q4 • EUR 121 (107) million, up by 13% • Organic growth in local currencies 6% MEUR % EBIT 150 22,3 25 21,3 • EBIT EUR 25.2 (19.2) million, 20.8% (18.0) 18,3 18,7 • EBIT excluding one-off items* 12 20 EUR 25.8 (19.6) million, 21.4% (18.3) 15,4 15,6 100 1 13,4 1 1 1 1
Slide 17: Product Development Services
Product Development Services Customer sales Q4 • EUR 33 (58) million, down by 43% • Organic growth in local currencies -39% MEUR % 100 25 EBIT 20,5 • EBIT EUR 2.8 (-4.4) million, 8.4% (-7.5) 20 • EBIT excluding one-off items* EUR 3.1 (11.9) million, 9.4% (20.5) 14,0 5 15 4 Q4 highlights 50 5 9,6 9,4
Slide 18: Industry Groups
Industry Groups Product Financial Manufacturing, Public, Telecom, Development Services Retail and Healthcare Media and Services Logistics and Welfare Energy Industry Products Consulting and System Integration Managed Services 18 © Tieto Corporation
Slide 19: Financial Services
Financial Services Customer sales Q4 MEUR • EUR 92 (90) million, up by 2% • Organic growth in local currencies 4% 100 Sales split by service line 75 Q4/2015 Q4/2014 MS 44% 44% CSI 20% 23% 50 IP 36% 33% Q4 highlights 25 • Good demand all across the banking and insurance 83 84 77 90 84 88 83 92 segmen
Slide 20: Manufacturing, Retail and Logistics
Manufacturing, Retail and Logistics Customer sales Q4 MEUR • EUR 78 (82) million, down by 4% • Sales in local currencies down by 3% 100 Sales split by service line 1 1 75 1 1 1 1 1 1 Q4/2015 Q4/2014 MS 52% 51% CSI 39% 38% 50 IP 9% 11% Q4 highlights 25 • Positive development continued in the manufact
Slide 21: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q4 MEUR • EUR 133 (115) million, up by 16% • Organic growth in local currencies 6% 135 12 120 Sales split by service line 105 3 Q4/2015 Q4/2014 90 MS 32% 35% 75 CSI 24% 26% IP 44% 39% 60 45 Q4 highlights 30 • In Public, Healthcare and Welfare, sales in l
Slide 22: Telecom, Media and Energy
Telecom, Media and Energy Customer sales Q4 MEUR • EUR 59 (59) million, at the previous year’s level • Organic growth in local currencies 2% 100 Sales split by service line 75 Q4/2015 Q4/2014 MS 14% 17% CSI 49% 44% 50 IP 37% 39% Q4 highlights 25 • Positive development in the telecom and energy utili
Slide 23: Summary of 2015 profit drivers
Summary of 2015 profit drivers Automation as a basis for efficient delivery and customer experience Performance drivers in IT services 2015 IT services delivered good results while investments Impact on increased profitability1) • Sales organically up by 3%, growing faster than the Sales growth mark
Slide 24: Performance drivers in 2016
Performance drivers in 2016 IT services • We aim to grow faster than the market, supported by strong order backlog • Productivity gains will carry to 2016 while Q1 seasonally weaker • Growth initiatives supported by recruitments and higher offering development • Anticipated restructuring less than 2
Slide 25: Guidance for 2016
Guidance for 2016 Tieto expects its full-year adjusted operating profit*) (EBIT) to increase from the previous year’s level (EUR 150.8 million in 2015). Based on European Securities and Markets Authority (ESMA) regulation, Tieto will report adjusted operating profit in 2016 *) Adjusted for restructu
Slide 26: Solid strategy execution
Solid strategy execution Transformation as a foundation for next steps 2016+ 2015 Expand markets Accelerate growth portfolio 2014 2016 Reorienting • Drive for scale and 2013 for growth expansion Execute the • New growth areas, e.g. • Growth initiatives industry-specific software 2012 structure and i
Slide 27: Opportunities related to market disruption as a basis for our strategy evolution
Opportunities related to market disruption as a basis for our strategy evolution Our opportunity Successes to build on Differentiating industry solutions Successful internal start-ups Support renewal of customers business Growth in line with market models using leading industry insights and assets N
Slide 28: Q4 2015 in brief
Q4 2015 in brief Strong fourth-quarter results – all businesses performing well • Organic growth of 3% in IT services driven by Industry Products • Reported operating margin of 12% driven by healthy business mix and Managed Services automation programme • Product Development Services business well s
Slide 29: Changing perspectives
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