Ti t i 2010Tieto in 2010 · Nordea Finance OP-Pohjola Finance ... Mobile services– everything...

Ti t i 2010Tieto in 2010Demand is picking up,tough competition continuesHannu Syrjälä – President and CEO

Annual General Meeting 24 March 2011Helsinki, Finland

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Helsinki, Finland

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Tiet

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Strong position in main markets • Leading IT services company in Northern Europe providing IT and product• Leading IT services company in Northern Europe providing IT and product

engineering services#1 in IT services in Finland#1 in project services in Finland and Sweden#1 in project services in Finland and Sweden#1 in telecom R&D in Europe

• 17 800 employees in close to 30 countries• Listen on NASDAQ OMX Helsinki and Stockholm• Listen on NASDAQ OMX Helsinki and Stockholm• Founded in 968

#125%

#48%

Market size, EUR billionSweden 4.8Denmark 4.2Finland 3.0Norway 3.0Poland 2.2

Growth markets:Poland and Russia

© 2010 Tieto Corporation

Russia 1.8

Markets and customers:Gradual recovery – moderate growth for 2011

Flat market in 2010 Moderate growth expected in 2011Flat market in 2010• Growth started in the second half – full-year

growth close to zero• Outsourcing of ICT infrastructure and

Moderate growth expected in 2011• 2–4% growth expected for IT services in

Western Europe • Demand picking up in most sectors

application management as well as Business Process Outsourcing (BPO) were the strongest growth areas

• Outsourcing trend is extending from large to

• Finance, industrial manufacturing, media and telecom sectors most active

• Productivity and efficiency improvements are the main investment driversg g g

small and medium-sized companies• Continued pressure on prices

• Outsourcing continues as the biggest growth area; mobile applications on the rise

• Growing interest in cloud services i.e. buying IT i d bil li tias a service and mobile applications

© 2010 Tieto Corporation3

Biggest customers in 2010gg10 biggest account for 38% of salesC t * I d t Net sales byCustomer* Industry

Apoteket Healthcare/retail

Ericsson Telecom

Net sales bycustomer segement

Ericsson Telecom

IF Insurance Finance

Kesko Retail 33%46%

Finnish tax authority Public

Nokia Telecom 21%

Nokia Siemens Networks Telecom

Nordea Finance

OP-Pohjola Finance

Telecom & mediaFinancial servicesI d t t *OP Pohjola Finance

TeliaSonera TelecomIndustry sectors*


*In alphabethical order

Achievements in 2010Achievements in 2010Profitability and growth• Operating profit weakened by one-off costs; excluding these operating

profit improved slightly• Profitability in Sweden improved significantly• Flat sales. 7 % growth in the final quarter. Strong order backlog.

Investments and divestments• Investments EUR 101.4 million• New data centres with cloud service capabilitiesp• Divestments in France and the USA; acquisitions in Finland and Russia

Efficiency and productivity• 37% of personnel in offshoring countries

Strong cash flow and balance sheet


• Cash flow EUR 142.9 million • Gearing 9.3%

Key figures in 20102010 2009

Net sales, EUR million 1 713.7 1 706.3

Operating profit, EUR million 72.4 75.3

EBIT margin, % 4.2 4.4

Operating profit excl one off items EUR million 110 0 108 0Operating profit excl. one-off items, EUR million 110.0 108.0

EBIT margin, % 6.4 6.3

Earnings per share, EUR 0.69 0.77

Cash flow, EUR million 142.9 126.4

Gearing, % 9.3 12.7

Personnle at 31 December 17 757 16 663

Dividend proposal EUR 0 70 per share

© 2010 Tieto Corporation 6

Dividend proposal EUR 0.70 per share

Personnel37% of personnel in offshoring countries

• 37% offshoring rate above target Personnel by country37% offshoring rate above target• 40% target for 2011• Personnel in biggest offshoring countries

• China: 1 100 (+86%)33 %

6%

25 %Finland

Sweden

CzechChina: 1 100 ( 86%)• Czech: 1 900 (+14%)• India: 1 500 (+49%)• Poland: 950 (+41%)

17 %11 %

6 %

6 % Czech

India

China

Others

35 %

40 %

6000

7000

• Attrition rate 9.5%Offshoring development

20 %

25 %

30 %

3000

4000

5000

0 %

5 %

10 %

15 %

0

1000

2000


0 %02004 2005 2006 2007 2008 2009 2010

India, China, Malaysia and IndonesiaBaltic countries, Belarus and RussiaCzech and PolandTotal, %7

FinlandMarket has started to recover

• Net sales on previous year’s level at EUR 889 p ymillion

• Operating profit EUR 94.6 million or 10.6% • Excl. one-off items EUR 100.9 million or 11.3% 11.4% 12.0%

9 1%• Price pressure and higher personnel costs weakened

profitability

• Personnel 5 776222 228 199 240

10.2%9.1%

• New contracts: Aktia, Cargotec, Kuopion Energia, Metso, Nokia Siemens Networks, Tapiola, Sanoma, Vacon, Valtiokonttori, VR

2010 2009

Q1/10 Q2/10 Q3/10 Q4/10

Sales, MEUR EBIT, %

2010 2009

Sales, MEUR 889 888

Operating profit, MEUR 94.6 110.3

EBIT, % 10.6 12.4

Personnel 5 776 5 758


SwedenDemand for IT services on a good level

• Net sales EUR 504 million (+9%); down 2% in local• Net sales EUR 504 million (+9%); down 2% in local currency

• Operating profit EUR 34.4 million or 6.8%• Profitability improved due to high utilization rate and good 6 1%

8.0% 8.2%

• Profitability improved due to high utilization rate and good cost control

• Finance, public, healthcare and welfare continued as the strongest sectors 119 126 113 146

4.9%6.1%

g• Personnel 3 023• New contracts: Bilprovningen, Kammarkollegiet, City

of Stockholm, If P&C Insurance, Region Skåne, 2010 2009

Q1/10 Q2/10 Q3/10 Q4/10

Sales, MEUR EBIT, %, , g ,

Smurfit Kappa Kraftliner, Sollentunan kunta 2010 2009

Sales, MEUR 504 462

Operating profit, MEUR 34.4 -3.0

EBIT, % 6.8 -0.6



InternationalProfitability strained by one-off costs• Net sales EUR 542 million ( 2 %); 4% growth in local• Net sales EUR 542 million (-2 %); 4% growth in local

currency excl. one-off items• Operating profit EUR -13.7 million or -2.5%

• Includes EUR 28 8 million (net) one of costs3.6%

• Includes EUR 28.8 million (net) one of costs• Operating profit excl. one-off items EUR 15.0 million

or 2.8%

• China, India, Poland and Czech strongest growth

135 136 128 143-1.0% 0.2%

-12.0%Q1/10 Q2/10 Q3/10 Q4/10

, , g gcountries

• Personnel 8 958 (+15%)• New contracts: BancABC, Delovoy Peterburg, 2010 2009

Sales, MEUR EBIT, %

, y g,Hafslund, Lenta, Severstal

Sales, MEUR 542 553

Operating profit, MEUR -13.7 -6.7

EBIT % -2 5 -1 2EBIT, % -2.5 -1.2



Industry reviewIndustry reviewTelecom• Net sales EUR 571 million ( 2%) 500

Net sales development in 2010, EUR million

• Net sales EUR 571 million (-2%)• Lower prices and smaller volumes strained net

sales development• Profitability improved • Offshore resources of high importance 146

150400

450

Offshore resources of high importance

Finance• Net sales EUR 358 million (0 %)• Profitability on a satisfactory level 88 90

97

142 146131

250

300

350

• Profitability on a satisfactory level • Growth especially in Sweden

Industry sectors*225

88 9082

150

200

• Net sales EUR 785 million (+3%)• Full-year profitability on a healthy level• Healthcare and welfare and energy again

strongest performersI h i d i l f i l

193 194 173225

0

50

100

• In the industrial manufacturing sector, net sales in Finland were growing; Swedish market is still weak

Q1/10 Q2/10 Q3/10 Q4/10

Industry sectors Finance Telecom


* Automotive, energy, forest, healthcare and welfare,manufacturing, public, retail and logistics

Tieto strategy: growth ith strong offeringswith strong offerings

Future trends:Cloud services, mobile solutions and strong technology platform

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0 Ti

eto

Strategic choices: Leading in Northern Europe,Strategic choices: Leading in Northern Europe, global production, best service experience

MarketsNorthern Europe

Focused elsewhere

Services and solutionsIndustry and enterprise solutions

Managed servicesProduct engineering

CustomersGlobal customers,

large and medium-sized l l d i l i

IndustriesBroad industry offering

focused on service i d t i local and regional companiesindustries


O t htOur strenghts1. Deep technology know-how and

t i f t t l tf2. Solid financial position

strong infrastructure platform• Knowledgeable people• Modern technology• Wide operations

• Long-term reliable partner for customers• Ability to invest in innovations and

service development• Strong balance sheet• Wide operations

capabilities• Strong balance sheet

4. Strong customer relationships• Long history

3. Advanced Global Delivery Model1/3 i d li t • Long history

• Customers’ business knowledge• Strong customer interface

• 1/3 resources in delivery centres• Established GDM process• Rated among the top GDM

practicespractices


Where can we grow gGrowth through selected offerings

Markets Customers Services

Large market opportunity• Russia – market making• Poland – market making• Sweden – share growth

Expertise in service industries• Government and public• Healthcare and welfare• Energy and utilities

• IT as a Service – cloud services• Outsourcing• Spearhead offerings

• Financial services• Telecom, media and

entertainment

Mobile services – everything goes mobile!

Tieto growth ambition > Market growth


Cloud services lead to changes in the IT business mode• Market is growingg g

• 20% of IT market in 2015• Currently < 5% of Tieto’s net sales

• Flexible and affordable

E-invoicing from the Cloud

Supplier Company

• Used as needed• No license fees, no heavy investments• Invoiced on a pay-as-you go basis

E t b d IT• Easy way to buy and use IT• Services over the internet• Suitable for mobile devices

• Examples Internet

Tieto Cloude-invoicing

• Examples• e-lnvoicing, e-prescriptions• Virtualized desktop• Virtualized servers, data centres

Internet

Bank

ConsumerConsumer


M bil l ti i f tMobile solutions growing fast• New devices and service models boost iPhone + Android solution forthe market

• The use of smart phones and tablets will increase demand of mobile solutions

• The amount of tablets is expected to grow• First Nordic Mobile insurance service

solution

iPhone + Android solution for an insurance company

The amount of tablets is expected to grow more than 50% in 2011

• Supply of mobile solutions increases with cloud services

• New ways of working: limitations

solution • Targeted especially at car owners and

car crash situations with clear user guidance where help is just a click away

• New ways of working: limitations regarding time or place disappear

• Tieto is a forerunner in cross-industry mobile solutions

.

• iProvisio – iPad-solution for doctors• Web-tv applications• Tieto Pocket Bank


Investments in data centres in 2010Energy-efficient platform ready for growth

2 2010• Total investments approximately EUR 25 million in 2010• New energy-efficient data centres in Finland, Sweden and Russia• Criteria

• Energy consumption and efficiency• Minimizing CO2 emissions• Safety and security• Utilization of green energy solutions (e.g. district heating)

• Full capability for cloud services and virtualization


New operating modelNew operating modelSpeed, efficiency, strong offerings

M k t U it

Global Accounts

Central Europe & Russia

ScandinaviaFinland & Baltic

Market Units

Global sales offices

Business Lines and Technology mgmtgy g

Industry solutions Industry consulting, Tieto vertical products and related integration projects

IT cons lting Tieto hori ontal prod cts 3rd part prod ct integration andEnterprise solutions IT consulting, Tieto horizontal products, 3rd party product integration and custom application development and maintenance projects

Managed services and transformation Applications management and infrastructure management

St i f ti d t

R&D servicesProduct engineering solutions


Steering functions and group management

Summary:yRecovering market and the new operating model support growth

• The new operating model that was taken into use improves our competitivenessThe new operating model that was taken into use improves our competitiveness • Leaner structure and faster decision making• Efficiency and strong offering development• Better customer and market focus

• Main growth drivers for Tieto are our strong offerings in outsourcing areas and specific industry solutions

• Demand for cloud services and mobile solutions is on the rise• Key targets

• Profitable growth• Creating the best service experience in IT

Outlook for 2011• Tieto expects its net sales to develop in line with the Western

European IT services marketEuropean IT services market.• Full-year operating profit excluding one-off items is expected to be

better than in 2010 (EUR 110.0 million in 2010).


Market growth estimates 2009–2014Market growth estimates 2009 2014 Positive outlook – needs support from world economy


Source: PAC Market Figures, Software and IT Services, IT Services total, October 2010

Ti t i 2010Tieto in 2010 · Nordea Finance OP-Pohjola Finance ... Mobile services– everything...

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