Slide 1: Tieto Q3 2017
Public Tieto Q3 2017 Good third-quarter performance – strong improvement in customer experience results 24 October 2017 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR © Tieto Corporation
Slide 2: Q3 2017 in brief
Q3 2017 in brief Good third-quarter performance – strong improvement in customer experience results • Revenue growth over 4% – continued solid market demand • Operating margin close to 12% – improvement in all businesses with Industry Solutions’ margin rising to over 14% • All-time high Net Promoter
Slide 3: Tieto announced a public offer for Avega
Tieto announced a public offer for Avega - aims to strengthen its position as the preferred business renewal partner Avega Group Avega and Tieto together • The Avega Group creates services, products and • Strong local consulting capabilities, especially in business models for the modern society by b
Slide 4: Outlook in the Nordic IT market remains solid
Outlook in the Nordic IT market remains solid Growth in the Nordic economies picked up in 2017 IT market affected by economic outlook 5% GDP growth, % 4% • Positive outlook in Sweden continues • Improved outlook in Finland 3% Tieto expects the Nordic IT services market 2% to grow by 2–3% in 2017 1%
Slide 5: High-growth businesses driving growth
High-growth businesses driving growth Application Services’ growth 6% in Q3 while decline in traditional infrastructure 3% TIETO'S GROWTH AMBITION FOR IT SERVICES: SALES GROWTH SHARE OF IT SERVICES GROWTH FASTER THAN THE MARKET* (CAGR 2015-2020) 2016–2020 (CAGR) 1-9/2017 1-9/2017 37% High-growth bus
Slide 6: High-growth businesses up by 10%
High-growth businesses up by 10% SERVICE LINE SERVICE LINE HIGH-GROWTH Annual sales 2016 Growth 1–9/2017 BUSINESSES Annual sales 2016 Growth 1–9/2017 Selected high-growth Selected solutions*: 8% Industry industry solutions 7% EUR ~ 320 million 8% Solutions**) DDB: EUR 475 million Data-Driven Busines
Slide 7: Q3 2017 key figures
Q3 2017 key figures Net sales MEUR % • EUR 355 (341) million, +4.2%, growth in local currencies +4.5% 12,3 • Acquisitions added EUR 3 million 500 14 • Currency impact EUR -1 million 11,6 • In IT services, sales growth 3.8%, or 4.0% in local currencies 12 400 10,4 • Organic growth in local currencies
Slide 8: Significance of order intake and backlog is changing
Significance of order intake and backlog is changing The total market is expected to remain dynamic and to continue to grow Market trends affecting order intake Q3 characteristics Total market expected to continue to grow while Q3 order intake affected by ➢ shifting towards agile methods and consump
Slide 9: Quarterly development
Quarterly development Net sales 1,5 Net debt/EBITDA MEUR 500 0,9 400 5 5 3 1,0 0,8 300 0,7 200 0,5 0,6 100 367 381 341 404 388 381 352 0,5 0 0,2 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/17 0,0 Net of divestment and acquisitions Customer sales adjusted -0,1 -0,5 Q1/16 Q2/16 Q3/16 Q4/16 Q1/17 Q2/17 Q3/1
Slide 10: Growth in local currencies by Service Line and Industry Group
Growth in local currencies by Service Line and Industry Group MEUR 1% 200 175 9% / 6%* 150 125 Service 100 Q3/16 7% 10% Lines 75 Q3/17 50 25 179 180 30 32 106 114 29 0 26 Technology Services Business Consulting and Industry Solutions Product Development and Modernization Integration Services MEUR 20
Slide 11: Service Lines
Service Lines New Financial Services Public, Healthcare Industrial and data-driven and Welfare Consumer Services businesses *) Business consulting & implementation Industry solutions Technology Services and Modernization Product Development Services 11 © Tieto Corporation *)Reported in Industry Solu
Slide 12: Technology Services and Modernization
Technology Services and Modernization Customer sales in Q3 • EUR 180 (179) million, +1%, growth of 1% in local MEUR % currencies 250 14,1 16 13,4 13,8 11,9 14 EBIT 200 • EBIT EUR 25.0 (24.2) million, 13.9% (13.5) 10,8 10,9 12 10,2 • Adjusted* EBIT EUR 24.9 (24.0) million, 13.8% (13.4) 10 150 Q3 high
Slide 13: Business Consulting & Implementation
Business Consulting & Implementation Customer sales Q3 MEUR • EUR 32 (30) million, +7%, growth of 7% in local currencies % 50 7,1 8 EBIT • EBIT EUR 0.7 (-0.2) million, 2.3% (-0.6) 6 40 3,7 3,3 4,0 • Adjusted* EBIT EUR 0.9 (-1.5) million, 2.8% (-4.9) 2,8 4 1,8 Q3 highlights 30 2 • Healthy growth in c
Slide 14: Industry Solutions
Industry Solutions Customer sales Q3 • EUR 114 (106) million, +8%, growth of 9% in local MEUR % currencies 150 15,5 18 • Organic growth in local currencies 6% 14,4 16 12,5 5 5 14 EBIT 3 • EBIT EUR 16.6 (13.0) million, 14.5% (12.3) 100 12 • Adjusted* EBIT EUR 16.5 (13.2) million, 14.4% (12.5) 9,0 8,0
Slide 15: Product Development Services
Product Development Services Customer sales Q3 MEUR % • EUR 29 (26) million, +10%, growth of 10% in local 35 16 currencies 13,6 30 14 EBIT 11,1 11,3 25 12 • EBIT EUR 2.2 (1.7) million, 7.6% (6.4) • Adjusted* EBIT EUR 2.2 (1.7) million, 7.5% (6.5) 8,4 8,3 10 20 7,5 6,5 8 Q3 highlights 15 • Strong vol
Slide 16: Industry Groups
Industry Groups New Public, Healthcare Industrial and data-driven Financial Services and Welfare Consumer Services businesses *) Business consulting & implementation Industry solutions Technology Services and Modernization Product Development Services 16 © Tieto Corporation *)Reported in Industry So
Slide 17: Financial Services
Financial Services Customer sales Q3 MEUR • EUR 92 (88) million, +5%, growth of 5% in local currencies 100 • Organic growth in local currencies 2% 5 5 3 Sales split by service line 75 Q3/2017 Q3/2016 TSM 57% 60% 50 BCI 5% 4% IS 38% 36% 25 Q3 highlights • Acquisition of Emric and a significant agreem
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q3 MEUR • EUR 112 (106) million, +6%, growth of 6% in local currencies 135 120 Sales split by service line 105 Q3/2017 Q3/2016 90 TSM 48% 47% 75 BCI 7% 8% IS 45% 45% 60 45 Q3 highlights 30 • Healthy growth driven by Industry Solutions 15 • Finland the st
Slide 19: Industrial and Consumer Services
Industrial and Consumer Services Customer sales Q3 MEUR • EUR 122 (121) million, 0%, growth of 1% in local currencies 150 Sales split by service line 125 Q3/2017 Q3/2016 100 TSM 60% 62% BCI 16% 15% 75 IS 24% 23% 50 Q3 highlights • New contracts signed, while positive impact offset by 25 expiring con
Slide 20: Outlook
Outlook a tieto
Slide 21: Performance drivers in 2017
Performance drivers in 2017 IT services 1–9/2017 Q4 2017 Full year Growth 4%, faster than the market Q4 dynamics – Solid underlying trend We aim to grow faster than the market, growth supported by acquisitions Efficiency programme affected cost base Revenue: IS growth maybe temporarily negative Effi
Slide 22: Guidance for 2017 unchanged
Guidance for 2017 unchanged Tieto expects its full-year adjusted*) operating profit (EBIT) to increase from the previous year’s level (EUR 152.2 million in 2016). *) Adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items © Tieto Corporation
Slide 23: Q3 2017 in brief
Q3 2017 in brief Good third-quarter performance – strong improvement in customer experience results • Revenue growth over 4% – continued solid market demand • Operating margin close to 12% – improvement in all businesses with Industry Solutions’ margin rising to over 14% • All-time high Net Promoter
Slide 24: - tieto
- tieto