Slide 1: Tieto Q2 2016
Tieto Q2 2016 Growth of 5% – profit improvement continues 22 July 2016 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR
Slide 2: Q2 2016 in brief
Q2 2016 in brief Growth of 5% – profit improvement continues • Group sales growing by 5% driven by 12% growth in software-based Industry Products • Adjusted operating margin improvement to above 9% • Healthy profitability in Product Development Services 2 © Tieto Corporation
Slide 3: IT growth in the Nordics remaining steady
IT growth in the Nordics remaining steady Brexit: short-term marginal impact on Tieto IT market affected by economic outlook • Tieto expects the Nordic IT services market to 5% GDP growth, % grow by around 2% in 2016 • IT services market strongest in Sweden 4% • Long-term growth in cloud services ar
Slide 4: Business mix shifting towards high-growth services
Business mix shifting towards high-growth services Tieto's growth ambition for IT services: Sales growth in Faster than the market** (CAGR 2015-2020) 2016–2020 (CAGR) Development in H1 2016 Current high-growth businesses Industry solutions • ~EUR 160 million, 23% Cloud and modernization of IT servic
Slide 5: Strong solution foundation to accelerate growth
Strong solution foundation to accelerate growth Current high-growth businesses up by 23% Cloud Services Lifecare CEM Industrial Security Internet Services • 34% growth in Q2 • 9% growth in Q2 • 35% growth in Q2, incl. • Industrial Internet • Double-digit growth • Investments in • Dynamic HCW Smileho
Slide 6: Financial development
Financial development tieto
Slide 7: Q2 2016 key figures
Q2 2016 key figures Net sales MEUR % • EUR 381 (364) million, +4.7%, growth in local currencies +5.9% • Acquisitions added EUR 15 million 500 13,0 14 • Divestments impacted EUR 2 million 11,5 • Currency EUR -4 million 12 400 • In IT services, sales growth 6.1%, or 7.3% in local currencies 13 15 3 1
Slide 8: Quarterly development
Quarterly development 1 Net debt/EBITDA MEUR 500 0,5 0,5 0,4 400 3 1 13 15 5 16 0,1 300 0,0 200 0 100 362 363 330 382 352 366 -0,1 0 -0,5 Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 -0,6 -1 Net of divestment and acquisitions Q1/15 Q2/15 Q3/15 Q4/15 Q1/16 Q2/16 Customer sales adjusted Employees Number of ful
Slide 9: Growth in local currencies by Service Line and Industry Group
Growth in local currencies by Service Line and Industry Group 3% 6%/ 1%* 150 15%/ 7%* 125 100 -8% Service 75 Q2/15 Lines 50 Q2/16 25 131 134 101 107 98 110 34 31 0 Managed Services Consulting and System Industry Products Product Development Integration Services 150 13%/ 5%* 125 7% 6%/ 2%* Industry 1
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 in Q2 • EUR 134 (131) million, +3%, growth of 3% in local MEUR % currencies 150 16,0 13,8 13,0 EBIT 14,0 • EBIT EUR 9.8 (3.1) million, 7.4% (2.4) 12,0 • Adjusted* EBIT EUR 9.9 (9.9) million, 7.4% (7.6) 100 8,7 10,0 7,6 7,4 Q2 highlights 8,0 50 6,0 • Cloud sales up by
Slide 12: Consulting and System Integration
Consulting and System Integration Customer sales Q2 MEUR % • EUR 107 (101) million, +6%, growth of 6% in local 150 10,8 10,6 12 currencies 10,3 • Organic growth in local currencies 1% 8,6 10 EBIT 1 5 • EBIT EUR 10.9 (8.5) million, 10.2% (8.4) 100 4 8 • Adjusted* EBIT EUR 11.3 (8.7) million, 10.6% (8
Slide 13: Industry Products
Industry Products Customer sales Q2 • EUR 110 (98) million, +12%, growth of 15% in local MEUR % currencies 150 25 • Organic growth in local currencies 7% 21,4 18,7 20 EBIT 12 • EBIT EUR 12.5 (10.8) million, 11.4% (11.0) 100 13,4 11 9 1 1 5 • Adjusted* EBIT EUR 14.1 (12.0) million, 12.9% (12.2) 13,3
Slide 14: Product Development Services
Product Development Services Customer sales Q2 MEUR % • EUR 31 (34) million, -9%, decline of 8% in local currencies 100 14,0 16,0 14,0 EBIT 11,1 • EBIT EUR 3.3 (5.7) million, 10.7% (17.1) 12,0 9,6 9,4 • Adjusted* EBIT EUR 3.4 (3.2) million, 11.1% (9.6) 8,4 10,0 Q2 highlights 50 6,2 8,0 6,0 • Busines
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 Q2 MEUR • EUR 93 (88) million, +6%, growth of 7% in local currencies 100 Sales split by service line 75 Q2/2016 Q2/2015 MS 44% 47% CSI 23% 21% 50 IP 33% 32% Q2 highlights 25 • Growth driven by new projects in Finland and Industry 84 88 83 92 88 93 Products’ good per
Slide 17: Manufacturing, Retail and Logistics
Manufacturing, Retail and Logistics Customer sales Q2 MEUR • EUR 82 (77) million, +5%, growth of 6% in local currencies 100 • Organic growth in local currencies 2% 75 2 1 1 3 4 Sales split by service line 1 Q2/2016 Q2/2015 MS 50% 52% 50 CSI 41% 38% IP 9% 10% 25 Q2 highlights 76 76 72 77 76 77 • Sect
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q2 • EUR 120 (107) million, +13%, growth of 13% in local currencies MEUR • Organic growth in local currencies 6% 135 12 120 8 Sales split by service line 11 105 4 Q2/2016 Q2/2015 90 MS 36% 37% 75 CSI 22% 25% IP 43% 38% 60 45 Q2 highlights 30 • Strong 30%
Slide 19: Telecom, Media and Energy
Telecom, Media and Energy Customer sales Q2 MEUR • EUR 56 (58) million, -4%, decline of 1% in local currencies 100 Sales split by service line 75 Q2/2016 Q2/2015 MS 16% 17% 3 CSI 47% 45% 50 1 IP 37% 37% Q2 highlights 25 • Strong growth in Sweden, Telecom & Media 57 58 53 59 52 54 challenged in Finla
Slide 20: Performance drivers in 2016
Performance drivers in 2016 IT services • We aim to grow faster than the market, growth supported by acquisitions • Automation and industrialization expected to result in savings of around EUR 30 million in total • Growth initiatives supported by recruitments and higher offering development • Antici
Slide 21: Strategy 2016–2020
Strategy 2016—2020 tieto
Slide 22: We aim to be our customers' first choice for business renewal
Tieto strategy 2016–2020 We aim to be our customers’ first choice for business renewal Services to accelerate Nordic leadership and Openness and customer value international expansion co-innovation Build solutions and capabilities Further accelerate our strong Co-innovate with customers to accelerat
Slide 23: We implement the strategy in phases
We implement 2019 - Actively expand internationally 2020 • Expand productized services the strategy internationally • Drive large-scale expansion to adjacent markets in phases 2017 - Drive innovation and selective market entry 2018 • Scale chosen industry solutions internationally • Accelerate and c
Slide 24: Our structure aligned with the strategic choices
Our structure aligned with the strategic choices Faster time to market and co-creation New Financial Public, Industrial and data-driven opportunities with the customer by organizing BCI Services Healthcare Consumer businesses and Welfare Services and Industry solutions in Industry groups New dat
Slide 25: Upgraded growth ambition – while maintaining profitability focus
Upgraded growth ambition – while maintaining profitability focus and attractive dividend policy Ambition 2020 IT services revenue growth above the market (CAGR) 10% reported operating The leading Nordic margin (EBIT) software and services company with the aim to Aim is to increase dividends be custo
Slide 26: Guidance for 2016 unchanged
Guidance for 2016 unchanged 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
Slide 27: Q2 2016 in brief
Q2 2016 in brief Growth of 5% – profit improvement continues • Group sales growing by 5% driven by 12% growth in software-based Industry Products • Adjusted operating margin improvement to above 9% • Healthy profitability in Product Development Services 27 © Tieto Corporation
Slide 28: - tieto
- tieto