Tieto Corporation · OMXHEX:TIETO
Tieto — Q2 2015 Earnings Presentation
28 slides from Tieto's earnings presentation, Jul 22, 2015
Slide 1: Tieto Q2/2015
Tieto Q2/2015 Healthy growth in IT services – competitiveness strengthens further 22 July 2015 Kimmo Alkio – President and CEO Lasse Heinonen – CFO Tanja Lounevirta – Head of IR
Slide 2: Q2 2015 in brief
Q2 2015 in brief Healthy growth in IT services – competitiveness strengthens further • IT services growth close to 3% – profit as expected • Managed Services automation programme on track • Acquisition of Software Innovation strengthens Tieto’s competitiveness • Solid performance in Product Developm
Slide 3: Market conditions unchanged – expected Nordic IT services market growth 2%
Market conditions unchanged – expected Nordic IT services market growth 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 3% • Finnish economy remains sluggish • IT servic
Slide 4: Emerging services continue to drive growth
Emerging services continue to drive growth 2–5% Customer Experience (CAGR) ~20% Management Emerging services Over In H1/2015 sales close to 20% ~50% Industrial Internet (CAGR) EUR 130 million, growth ~ 24%** >4% Lifecare Traditional services* Over In H1/2015 sales ~30% Cloud -5% EUR 310 million, dow
Slide 5: Well positioned to become the preferred digitalization partner
Well positioned to become the preferred digitalization partner Customer Expercience Management Industrial Internet • Investments in offerings and recruitment of new talent • Full-service IT partner for HSB Living Lab, • Tieto and Varma launched the first mobile application research project to design
Slide 6: Financial development
Financial development <a
Slide 7: Q2 2015 key figures
Q2 2015 key figures Net sales MEUR % • EUR 364 (386) million, -5.8%, organic growth in local 500 14 currency -3.3% 11.9 • Currency EUR -5 million 12 • In IT services, organic growth in local currencies 2.7% 11.0 400 4 5 8.9 2 10 EBIT 5 8.4 8.3 • EBIT EUR 23.1 (21.5) million, 6.3% (5.6%) 7.8 300 8 •
Slide 8: Quarterly development
Quarterly development Net Sales 1 Net debt/EBITDA 500 400 5 4 0.5 5 2 0.2 0.2 300 0.0 0 200 -0.1 -0.4 100 -0.5 -0.6 387 382 341 399 363 364 0 Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 -1 Adjusted for divestments and acquisitions Q1/14 Q2/14 Q3/14 Q4/14 Q1/15 Q2/15 Net of divestments and acquisitions Numbe
Slide 9: Organic growth by Service Line and Industry Group
Organic growth in local currencies by Service Line and Industry Group 150 1%* 6% 3% 125 -39% 100 Service 75 Q2/14 Lines 50 Q2/15 25 132 132 97 102 97 100 55 34 0 Managed Services Consulting and System Industry Products Product Development *) Comparable sales Integration Services 150 growth 4% 125 4%
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 Q2 MEUR % • EUR 131 (132) million, down by 1% • Organic growth in local currencies 1%, or 4% excl. 150 9.1 10 revenue recognized from equipment sales in 2014 8.4 7.6 6.9 8 EBIT • EBIT EUR 3.1 (7.6) million, 2.4% (5.8) 100 5.8 • EBIT excluding one-off items* 6 EUR 9.9
Slide 12: Consulting and System Integration
Consulting and System Integration Customer sales Q2 MEUR % • EUR 101 (97) million, up by 5% • Organic growth in local currencies 6% 150 14 11.2 11.6 10.8 12 EBIT 9.5 • EBIT EUR 8.5 (6.1) million, 8.4% (6.3) 7.4 8.6 10 • EBIT excluding one-off items* 100 EUR 8.7 (7.2) million, 8.6% (7.4) 8 Q2 highlig
Slide 13: Industry Products
Industry Products Customer sales Q2 MEUR % • EUR 98 (97) million, up by 1% • Organic growth in local currencies 3% 150 22.3 25 EBIT 18.3 20 • EBIT EUR 10.8 (14.9) million, 11.0% (15.3) 15.4 15.6 • EBIT excluding one-off items* 100 13.4 EUR 12.0 (15.2) million, 12.2% (15.6) 12.2 15 Q2 highlights 10 •
Slide 14: Product Development Services
Product Development Services Customer sales Q2 • EUR 33 (60) million, down by 44% • Organic growth in local currencies -39% MEUR % 100 25 EBIT 20.5 • EBIT EUR 5.7 (-2.3) million, 17.1% (-3.8) 20 • EBIT excluding one-off items* EUR 3.2 (3.7) million, 9.6% (6.1) 14.0 5 15 4 Q2 highlights 50 5 9.6 2 •
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 88 (84) million, up by 4% • Organic growth in local currencies 6%, or 10% 100 excluding revenue recognized from equipment sales Sales split by service line 75 Q2/2015 Q2/2014 MS 47% 48% 50 CSI 21% 20% IP 32% 32% 25 Q2 highlights • Healthy development i
Slide 17: Manufacturing, Retail and Logistics
Manufacturing, Retail and Logistics Customer sales Q2 MEUR • EUR 77 (78) million, at previous year’s level • Sales in local currencies at the Q2/2014 level 100 Sales split by service line 75 Q2/2015 Q2/2014 MS 52% 52% CSI 38% 38% 50 IP 10% 10% Q2 highlights 25 • Strong development in manufacturing s
Slide 18: Public, Healthcare and Welfare
Public, Healthcare and Welfare Customer sales Q2 MEUR • EUR 107 (104) million, up by 2% • Organic growth in local currencies 4% 125 Sales split by service line 100 Q2/2015 Q2/2014 MS 37% 38% 75 CSI 25% 24% IP 38% 38% 50 Q2 highlights 25 • Growth mainly in healthcare and welfare sector • Driven, for
Slide 19: Telecom, Media and Energy
Telecom, Media and Energy Customer sales Q2 MEUR • EUR 58 (60) million, down by 3% • Organic growth in local currencies -1% 100 Sales split by service line 75 Q2/2015 Q2/2014 MS 17% 19% CSI 45% 42% 50 IP 38% 39% Q2 highlights 25 • Business starting to stabilize • Development in telecom and energy ut
Slide 20: 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 Offering development and internal Recruitments in 2015 Net recruitments in H1 2015 development* in IT services, 20 EUR million Industry consultants 15 IT services new roles Digital
Slide 21: Performance drivers 2015
Performance drivers 2015 Performance drivers in IT services H1 H2 Performance drivers for Impact on Impact on Product Development Services profitability1) profitability 1) • Sales decline related to insourcing decision Sales growth by one key customer • Expansion of customer base and new customer wi
Slide 22: 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). 22 © Tieto Corporation
Slide 23: 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 24: Tieto acquires Software Innovation
Tieto acquires Software Innovation to accelerate its role as the leading digitalization advisor in the Nordic countries • Strengthens Tieto’s position as the preferred partner for digitalization in the Nordic countries • Extends our scalable software-based businesses • Strengthens our presence espec
Slide 25: Q2 2015 in brief
Q2 2015 in brief Healthy growth in IT services – competitiveness strengthens further • IT services growth close to 3% – profit as expected • Managed Services automation programme on track • Acquisition of Software Innovation strengthens Tieto’s competitiveness • Solid performance in Product Developm
Slide 26: Changing perspectives
Changing perspectives" <a
Slide 27: Appendix
Public Appendix
Slide 28: Top 10 customers Q2 2015
Top 10 customers Q2 2015 • City of Stockholm • Ericsson • IF Insurance • Kesko • Nordea • OP-Pohjola Group • S-Group • Region Skåne • TeliaSonera • UPM-Kymmene 28 © Tieto Corporation