Tieto Corporation · OMXHEX:TIETO
Tieto — Q1 2015 Earnings Presentation
28 slides from Tieto's earnings presentation, Apr 28, 2015
Slide 1: Tieto Q1/2015
Tieto Q1/2015 Accelerated investments to drive growth and renewal 28 April 2015 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR
Slide 2: Q1 2015 in brief
Q1 2015 in brief Accelerated investments to drive growth and renewal • Modest growth in IT services – continued strong order intake • In IT services, investments in offering development and the Managed Services automation programme affect first-half profitability • Efficiency measures improve profit
Slide 3: Nordic IT services market expected to grow by 2%
Nordic IT services market expected to grow by 2% IT market affected by economic outlook 5% GDP growth, % • Tieto expects the Nordic IT services market to grow by around 2% in 2015 4% • Positive outlook in the Swedish economy while 3% the Finnish economy remains sluggish • IT services market stronges
Slide 4: Business transformation drives new services growth
Business transformation drives new services growth 2–5% (CAGR) ~20% Customer Experience Management Over Emerging services 20% ~50% Industrial Internet (CAGR) >4% Lifecare Traditional services Over ~30% Cloud -5% (CAGR) Market growth Tieto’s growth 2012 2015 2020 (CAGR) businesses IT becoming a strat
Slide 5: Well positioned to become the preferred digitalization partner
Well positioned to become the preferred digitalization partner Customer Expercience Management Industrial Internet • Good market momentum and fit with Tieto • Early-phase investment, with pilots services and competencies ongoing, e.g. in manufacturing and • Investments in offering development, with
Slide 6: Financial development
Financial development <a
Slide 7: Q1 2015 key figures
Q1 2015 key figures Net sales MEUR % • EUR 366 (387) million, -5.5%, organic growth in local 500 14 currency -3.2% 11.9 • Currency EUR -11 million 12 • In IT services, organic growth in local currencies 0.5% 11.0 400 4 5 8.9 2 10 EBIT 5 8.4 • EBIT EUR 13.9 (34.0) million, 3.8% (8.8%) 7.8 300 8 • EUR
Slide 8: Quarterly development
Quarterly development 500 Net Sales 1 Net debt/EBITDA 400 5 4 5 2 0.5 300 0.2 0.2 200 0 100 -0.1 -0.4 387 382 341 399 363 -0.5 -0.6 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 -1 Adjusted for divestments and acquisitions Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Net of divestments and acquisitions Number of full-time emplo
Slide 9: Organic growth in local currencies by Service Line and Industry Group
Organic growth in local currencies by Service Line and Industry Group 150 2% 1% -1% 125 -24% 100 Service 75 Q1/14 Lines 50 Q1/15 25 127 130 100 101 100 99 60 46 0 Managed Services Consulting and System Industry Products Product Development Integration Services 150 4% 125 5% 0% 100 -9% Industry 75 Q1
Slide 10: 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 10 © Tieto Corporation
Slide 11: Managed Services
Managed Services Customer sales MEUR % • EUR 126 (127) million, down by 1% • Organic growth in local currencies 2% 150 9.1 10 8.4 EBIT 6.9 8 • EBIT EUR -8.3 (11.1) million, -6.6% (8.8) • EBIT excluding one-off items* 100 5.8 EUR 4.6 (11.0) million, 3.6% (8.4) 6 3.6 Q1 highlights 4 • Cloud services d
Slide 12: Consulting and System Integration
Consulting and System Integration Customer sales MEUR % • EUR 99 (100) million, down by 1% • Organic growth in local currencies 1% 150 14 11.2 11.6 10.8 12 EBIT 9.5 • EBIT EUR 8.2 (11.1) million, 8.3% (11.1) 7.4 10 • EBIT excluding one-off items* 100 EUR 10.8 (11.2) million, 10.8% (11.2) 8 Q1 highli
Slide 13: Industry Products
Industry Products Customer sales MEUR % • EUR 94 (100) million, down by 6% • Organic growth in local currencies -1% 150 22.3 25 EBIT 18.3 20 • EBIT EUR 12.6 (15.5) million, 13.3% (15.4) 15.4 15.6 • EBIT excluding one-off items* 100 13.4 EUR 12.7 (15.4) million, 13.4% (15.4) 15 Q1 highlights 10 • Dou
Slide 14: Product Development Services
Product Development Services Customer sales MEUR % • EUR 47 (60) million, down by 22% • Organic growth in local currencies -24% 100 25 20.5 EBIT 20 • EBIT EUR 6.5 (1.1) million, 14.0% (1.9) • EBIT excluding one-off items* 14.0 EUR 6.5 (1.6) million, 14.0% (2.6) 5 15 4 50 5 2 Q1 highlights 8.9 10 • S
Slide 15: 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 15 © Tieto Corporation
Slide 16: Financial Services
Financial Services Customer sales Q1 MEUR • EUR 84 (83) million, up by 1% • Organic growth in local currencies 5% 100 Sales split by service line 75 Q1/2015 Q1/2014 MS 48% 44% CSI 21% 20% 50 IP 31% 36% Q1 highlights 25 • Good development in Managed Services, growth supported by a number of new agree
Slide 17: Manufacturing, Retail and Logistics
Manufacturing, Retail and Logistics Customer sales Q1 MEUR • EUR 78 (79) million, down by 2% • Organic growth in local currencies 0% 100 Sales split by service line 75 Q1/2015 Q1/2014 MS 50% 50% CSI 40% 39% 50 IP 10% 11% Q1 highlights 25 • Healthy development in manufacturing sector due to several n
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q1 MEUR • EUR 101 (100) million, up by 1% • Organic growth in local currencies 4% 125 Sales split by service line 100 Q1/2015 Q1/2014 MS 36% 39% 75 CSI 25% 24% IP 39% 37% 50 Q1 highlights 25 • Growth mainly in healthcare and welfare sector • Double-digit
Slide 19: Telecom, Media and Energy
Telecom, Media and Energy Customer sales Q1 MEUR • EUR 57 (65) million, down by 12% • Organic growth in local currencies -9% 100 Sales split by service line 75 Q1/2015 Q1/2014 MS 17% 18% CSI 45% 44% 50 IP 38% 38% Q1 highlights 25 • Demand in the oil and gas segment is weak and IT investment levels a
Slide 20: Accelerating growth in focus
Accelerating growth in focus 2016+ Expand markets 2015 Accelerate • Expand proven growth businesses beyond growth the Nordics 2014 portfolio • New growth areas, e.g. industry-specific Reorienting software products for growth 2013 • Accelerate customer renewal through digitalization • Scale growth bu
Slide 21: Investments in offering development and recruitment of new talent to accelerate growth
Investments in offering development and recruitment of new talent to accelerate growth New growth areas to be evaluated Investment profile 2015 Recruitments 2015 Net recruitments in Q1 2015 CEM Data analysts Industrial Internet Industry consultants Lifecare IT services recruitments Digital architect
Slide 22: Performance drivers 2015
Performance drivers 2015 Performance drivers in IT services H1 H2 IT services in 2015 Impact on Impact on profitability1) profitability 1) • Sales growth in line with the market • Gross savings related to automation and Sales growth industrialization – EUR 30 million Increase in offering development
Slide 23: Guidance for 2015
Guidance for 2015 Tieto expects its full-year operating profit (EBIT) excluding one-off items to increase from the previous year’s level (EUR 150.2 million in 2014). 23 © Tieto Corporation
Slide 24: Q1 2015 in brief
Q1 2015 in brief Accelerated investments to drive growth and renewal • Modest growth in IT services – continued strong order intake • In IT services, investments in offering development and the Managed Services automation programme affect first-half profitability • Efficiency measures improve profit
Slide 25: We enable enterprises to reinvent business models through cloud services
We enable enterprises to reinvent business models through cloud services Tieto Cloud Server Public cloud Government Cloud Tieto Productivity Cloud Pay-as- Flexible and SAP Dynamic Landscape you-go / alternative Google free business services models Archiving as a Service Private / Lifecare as a Servi
Slide 26: Changing perspectives
Changing perspectives" <a
Slide 27: Appendix
Public Appendix
Slide 28: Top customers 2015
Top 10 customers 2015 • City of Stockholm • Ericsson • Finnish Tax Administration • IF Insurance • Kesko • Nordea • Nokia • OP-Pohjola Group • S-Group • TeliaSonera 28 © Tieto Corporation