Tieto Corporation · OMXHEX:TIETO
Tieto — Q4 2018 Earnings Presentation
23 slides from Tieto's earnings presentation, January 2019
Slide 1: Q4 2018: Solid performance in the fourth quarter with strong growth and cash flow
Public Q4 2018 Solid performance in the fourth quarter with strong growth and cash flow Kimmo Alkio, President and CEO Janne Salminen, Acting CFO Tanja Lounevirta, Head of IR © Tieto Corporation
Slide 2: Q4 2018 in brief
Q4 2018 in brief Solid performance in the fourth quarter with strong growth and cash flow › Growth in local currencies 5% in the fourth quarter, 7% for the full year › Fourth-quarter operating margin 11%, long-term target of 10% reached for the full year › Dividend of EUR 1.45 proposed › New strateg
Slide 3: 2018 as a continuation of our multi-year performance improvement
2018 as a continuation of our multi-year performance improvement CUSTOMER EXPERIENCE / NPS EMPLOYEE ENGAGEMENT SCORE 2015 2016 2017 2018 2015 2016 2017 2018 REVENUE GROWTH, % OPERATING MARGIN, % 2000 200 15% 4% 1500 150 2% 10% 1000 100 0% 500 50 5% -2% 0 0 2014 2015 2016 2017 2018 0% 2014 2015 2016
Slide 4: 2018 key figures
2018 key figures Full-year net sales up by 4% › EUR 1 600 (1 543) million › Growth in local currency 7% › Organic growth in local currencies 4% Dividend/share, EUR 1,5 Full-year EBIT 0,22 0,20 0,20 2) 0,30 0,25 › EBIT EUR 154.7 (139.1) million, 9.7% (9.0%) 1,0 › Adjusted1) EBIT EUR 162.8 (161.4) mil
Slide 5: The Nordic IT market remains highly dynamic
The Nordic IT market remains highly dynamic › Increasing investments for new data-rich services and differentiating experiences › Hybrid infrastructure as a foundation in customers’ business continuity and renewal › Uncertainty in macroeconomic trends › Tieto expects the Nordic IT services market to
Slide 6: Q4 2018 key figures
Q4 2018 key figures Net sales up by 3% › EUR 421.9 (409.6) million MEUR % › Growth in local currencies 5% 500 14 › Organic growth in local currencies 3% 11,6 12,0 11,8 11,3 12 2 11 400 1 2 13 12 9,2 9 EBIT margin 10.8% (11.7%) 9,0 2 9,0 8,6 10 › EBIT EUR 45.7 (47.9) million 300 8 › Adjusted1) EBIT E
Slide 7: Two-fold development with strong growth in growth services and continued decline in infrastructure services
Two-fold development with strong growth in growth services and continued decline in infrastructure services WE AIM TO GROW FASTER THAN THE MARKET* SHARE OF IT SERVICES 2018 GROWTH 2018 41% Growth 7% businesses** EMERGING SERVICES Other services and 17% solutions*** 19% TRADITIONAL SERVICES 2015 2020
Slide 8: Investments supporting continuous renewal and growth
Investments supporting continuous renewal and growth Up by 7% in local currencies in 2018 Customer Experience Data-Driven Businesses Cloud services Security services Management +16% +120% +15% +16% Selected industry solutions +3% Hydrocarbon Lifecare Credit solutions Production excellence management
Slide 9: Quarterly development
Quarterly development Net sales 1,5 Net debt/EBITDA MEUR 500 11 1,0 1,0 400 1 2 2 13 12 1 0,9 2 9 0,8 0,8 300 0,7 200 100 0,5 392 384 353 408 393 392 358 411 0,5 0 0,2 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Net of divestment and acquisitions 0 Customer sales adjusted Q1/17 Q2/17 Q3/17 Q4/17
Slide 10: Growth in local currencies by Service Line and Industry Group
Growth in local currencies by Service Line and Industry Group MEUR 2% 225 200 -1% / 1%* 175 150 Service 125 Q4/17 100 27% / 9%* 10% Lines 75 Q4/18 50 68 25 190 194 54 133 131 34 38 0 Technology Services Business Consulting and Industry Solutions Product Development and Modernization Implementation S
Slide 11: Service Lines
Service Lines New Financial Services Public, Healthcare Industrial and data-driven and Welfare Consumer Services businesses *) Industry Solutions Business Consulting and Implementation Technology Services and Modernization Product Development Services Support Functions 11 © Tieto Corporation *) Repo
Slide 12: Technology Services and Modernization
Technology Services and Modernization Customer sales in Q4 MEUR % › EUR 190 (190) million, growth at Q4 2017 level, or +2% in local currencies 250 16 13,5 13,8 12,8 13,0 14 11,7 12,3 EBIT 200 11,0 › Adjusted1) EBIT EUR 24.8 (24.3) million, 13.0% (12.8) 10,4 1 12 1 150 10 Q4 highlights 8 › Growth (in
Slide 13: Business Consulting and Implementation
Business Consulting and Implementation Customer sales Q4 MEUR › EUR 67 (54) million, +24%, or +27% in local currencies % › Organic growth in local currencies +9% 70 12 60 9,2 9 EBIT 12 10 › Adjusted1) EBIT EUR 5.5 (4.3) million, 8.2% (8.1) 8,2 8,1 13 8,2 50 7,7 9,8 8 8 8,7 Q4 highlights 40 › Growth
Slide 14: Industry Solutions
Industry Solutions Customer sales Q4 MEUR % › EUR 129 (133) million, -3%, or -1% in local currencies 150 15,8 18 15,7 › Organic growth in local currencies 1% 14,3 16 14,1 2 1 2 14 EBIT 2 › Adjusted1) EBIT EUR 20.4 (20.8) million, 15.8% (15.7) 100 12 9,4 8,1 10 Q4 highlights 7,5 › Strong growth in Hy
Slide 15: Product Development Services
Product Development Services Customer sales Q4 MEUR % › EUR 36 (34) million, +6%, or +10% in local 40 16 currencies 13,4 35 12,7 14 EBIT 30 12 › Adjusted1) EBIT EUR 3.7 (3.5) million, 10.1% (10.1) 10,1 9,9 10,1 25 8,7 10 8,0 Q4 highlights 7,2 20 8 › Strong volume development with the largest key cus
Slide 16: Industry Groups
Industry Groups New Public, Healthcare Industrial and data-driven Financial Services and Welfare Consumer Services businesses *) Industry Solutions Business Consulting & Implementation Technology Services and Modernization Product Development Services 16 © Tieto Corporation *) Reported in Industry S
Slide 17: Financial Services
Financial Services Customer sales Q4 MEUR › EUR 98 (100) million, -2%, growth in local currencies at Q4 2017 level 100 1 1 1 1 Sales split by service line 75 Q4/2018 Q4/2017 TSM 54% 55% BCI 10% 10% 50 IS 36% 35% Q4 highlights 25 › Sales affected by large customers’ transformation programmes and pric
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q4 MEUR › EUR 144 (135) million, +6%, or +9% in local currencies 175 Sales split by service line 150 2 Q4/2018 Q4/2017 125 2 2 TSM 44% 44% 1 BCI 13% 10% 100 IS 43% 46% 75 Q4 highlights 50 › Healthy development across the markets and businesses 25 › Lifec
Slide 19: Industrial and Consumer Services
Industrial and Consumer Services Customer sales Q4 MEUR › EUR 144 (140) million, +3%, or +4% in local currencies 175 › Organic growth in local currencies -1% 150 1 1 10 9 8 Sales split by service line 125 1 1 7 Q4/2018 Q4/2017 100 TSM 52% 54% BCI 26% 21% 75 IS 22% 25% 50 Q4 highlights 25 › Growth su
Slide 20: Performance drivers in 2019
Performance drivers in 2019 › Growth above the market › Offering development costs around 5% of Group sales › Efficiency and productivity improvement measures, incl. automation, optimized subcontracting, offshoring, management of competence pyramid › Salary inflation over EUR 30 million › New strate
Slide 21: Guidance for 2019
Guidance for 2019 › Tieto expects its full-year adjusted 1) operating profit (EBIT) to increase from the previous year’s level (EUR 168.0 million2) in 2018) 1) adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges a
Slide 22: Q4 2018 in brief
Q4 2018 in brief Solid performance in the fourth quarter with strong growth and cash flow › Growth in local currencies 5% in the fourth quarter, 7% for the full year › Fourth-quarter operating margin 11%, long-term target of 10% reached for the full year › Dividend of EUR 1.45 proposed › New strateg
Slide 23: - tieto
- tieto