Tieto Q1 2016 · 2018. 9. 12. · Customer sales Q1 • EUR 79 (78) million, +2%, growth of 2 % in...
Transcript of Tieto Q1 2016 · 2018. 9. 12. · Customer sales Q1 • EUR 79 (78) million, +2%, growth of 2 % in...
Tieto Q1 2016Healthy growth in IT services and
continued profitability improvement
26 April 2016
Kimmo Alkio – President and CEO
Lasse Heinonen – CFO
Tanja Lounevirta – Head of IR
© Tieto Corporation
Q1 2016 in brief
2
Healthy growth in IT services and continued profitability improvement
• Industry Products driving growth – in line with the ambition to expand software businesses
• Product Development Services performing well
• New strategy to accelerate innovation and growth launched
© Tieto Corporation
2015 2020
Emerging services - software & digital*
Traditional services
Sales growth in
2016–2020 (CAGR)
Industry solutions
Cloud and modernization
services
New data-driven businesses
Other integration and services
~ 50%
UP BY
10–20 %
DOWN BY
5–10%
Tieto's growth ambition for IT services:
Faster that the market** (CAGR)
**Market growth expectation (CAGR) for the Nordics at 1.5–3%
Traditional infrastructure
and application services
*Includes current high-growth businesses and internal start-ups which represented ~20% of IT services sales in 2015
Business mix shifting towards high-growth services
~ 50%
Current high-growth
businesses
• ~EUR 75 million, 23% of
IT services sales
• Growth 25%
Other emerging services
and solutions
• ~EUR 115 million, 35%
of IT services sales
• Growth 17%
Traditional services
• ~EUR 140 million, 42%
of IT services sales
• Down by 7%
Development in Q1 2016
© Tieto Corporation
Defined growth businesses drive growthAdditionally investments in a dynamic portfolio of over ten industry solutions
CEMCloud Services Lifecare Industrial
InternetSecurity
Services
Tieto drives scale and repeatability through investments in software businesses, with start-up
businesses providing exponential growth
• Dynamic portfolio of over ten industry solutions
• New data-driven businesses
• Selective international expansion
• Strong 72% growth
• Investments in
integrated private
and public cloud
services
• Growth of 6%
outpace the market
• National eArchive
deliveries for
private segment
started
• Sales up by 31%
• Several innovation,
advisory and new
installation cases,
e.g. Elo and
Cargotec
• Focus on
development
• Tieto Security Wall
launced, new
services in the
pipeline
• Annual sales 2015:
around EUR 30 million
• Growth: 20%
• Annual sales 2015:
EUR 80 million
• Growth: 65%
• Annual sales 2015:
over EUR 160 million
• Growth: 6%
• In 2015, investments
around EUR 4 million,
cash flow negative
• In 2015, Tieto’s sales
in single digit millions
• Focus on several
use-cases, e.g.Machines: Komas
Fleets: Cargotec
MacGregor
Analytics: Valmet, HUS
(Hospital District of
Helsinki and Uusimaa
Financial development
© Tieto Corporation
Q1 2016 key figuresNet sales• EUR 367 (366) million, +0.5%, growth of 1.4% in local
currencies• Acquisitions added EUR 16 million• Divestments impacted EUR 2 million• Currency EUR -3 million
• In IT services, sales growth 6.0%, or 7.0% in local currencies
EBIT• EBIT EUR 28.3 (13.9) million, 7.7% (3.8%)• Adjusted EBIT* EUR 31.5 (30.7) million,
8.6% (8.4%)
Order backlog • Order backlog EUR 1 907 (1 819) million• Total Contract Value EUR 325 (430) million• Book-to-bill 0.89 (1.18)
Earnings per share • EPS EUR 0.29 (0.12)• EPS EUR 0.33 (0.31), adjusted*
6
*) adjusted for restructuring costs, capital gains/losses,
goodwill impairment charges and other items
MEUR %
362 363 330 382 352
3 15
1316
8,48,3
11,5
13,0
8,6
0
2
4
6
8
10
12
14
0
100
200
300
400
500
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Net of divestement and acquisitions
Customer sales adjusted
EBIT, % excluding one-off items*
© Tieto Corporation
Quarterly development
7
Offshore ratio: IT services 45,2% (43.8%) PDS 60.8% (57.4%)Number of personnel down by a net amount of 256
%
MEUR
Employees MEUR
36,712,4 16,4 67,1 46,9
-11,6 -10,5 -8,7 -12,9 -9,4-15
5
25
45
65
85
105
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Net cash flow from operations and capital expenditure
Net cash from operations Capital expenditure
-0,6
0,0
0,4
0,1
-0,1
-1
-0,5
0
0,5
1
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Net debt/EBITDA
13456 12949 13179 13083 13200
45,5 46,0 45,8 46,2 46,7
0
10
20
30
40
50
60
0
5000
10000
15000
20000
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Number of full-time employees and offshore ratio
Number of personnel Offshore ratio
362 363 330 382 352
3 1 513 16
0
100
200
300
400
500
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
Net of divestement and acquisitionsCustomer sales adjusted
© Tieto Corporation
-4%
18%/ 7%*
2%6%
-38%16%/ 6%*3%/ -1%*2%
Growth in local currencies by Service Line
and Industry Group
8
Service
Lines
Industry
Groups
(IT services)
*) Organic growth in local currencies (not shown for businesses where acquisition impact is not significant)
126 99 94 47129 102 109 290
25
50
75
100
125
150
Managed Services Consulting and SystemIntegration
Industry Products Product DevelopmentServices
Q1/15
Q1/16
84 76 101 5789 79 119 550
25
50
75
100
125
150
Financial Services Manufacturing, Retailand Logistics
Public, Healthcare andWelfare
Telecom, Media andEnergy
Q1/15
Q1/16
© Tieto Corporation9
Service Lines
Financial
Services
Public,
Healthcare
and Welfare
Manufacturing,
Retail and
Logistics
Telecom,
Media and
Energy
Consulting and System Integration
Managed Services
Product
Development
Services
Industry Products
© Tieto Corporation
Managed Services
Customer sales in Q1• EUR 129 (126) million, +2%, growth of 2% in local
currencies
EBIT• EBIT EUR 10.8 (-8.3) million, 8.4% (-6.6)• Adjusted EBIT* EUR 11.3 (4.6) million, 8.7% (3.6)
Q1 highlights
• Cloud sales up by 72% in Q1, representing 20% of MS sales
• Transformation with automation, offshore transfers and new launches continued
• Operating profit improvement mainly due to the savings related to the automation programme
• Competitive cloud portfolio enhanced with investments in integrated private and public cloud services
• Operating margin will be supported by automation also in Q2
10
*) adjusted for restructuring costs, capital gains/losses,
goodwill impairment charges and other items
126 131 122 132 129
3,6
7,6
13,8 13,0
8,7
0
2
4
6
8
10
12
14
16
0
50
100
150
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
%MEUR
Net of divestement and acquisitions
Customer sales adjusted
EBIT, % excluding one-off items*
© Tieto Corporation
Consulting and System Integration
Customer sales Q1• EUR 102 (99) million, +3%, growth of 3% in local
currencies• Ogranic growth in local currencies -1%
EBIT• EBIT EUR 5.6 (8.2) million, 5.5% (8.3)• Adjusted EBIT* EUR 7.0 (10.8) million, 6.8% (10.8)
Q1 highlights• Acquisition of Smilehouse and Imano support growth• Demand strongest for packaged solutions and CEM
• Double-digit growth also in cloud services, incl. integration and Value Networks
• Sales for customized application management down• Future industrialization driving efficiency
• Short-term pressure in utilization rate • A number of projects delayed as anticipated• Recruitments in new growth areas
• Utilization rates are expected to improve in H2• Margin anticipated to remain below the previous
year’s level in Q2
11
*) adjusted for restructuring costs, capital gains/losses,
goodwill impairment charges and other items
99 101 88 108 98
14
10,8
8,6
5,9
10,3
6,8
0
2
4
6
8
10
12
0
50
100
150
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
%MEUR
Net of divestement and acquisitions
Customer sales adjusted
EBIT, % excluding one-off items*
© Tieto Corporation
Industry ProductsCustomer sales Q1• EUR 107 (94) million, +13%, growth of 16% in local
currencies• Ogranic growth in local currencies 6%
EBIT• EBIT EUR 13.8 (12.6) million, 13.0% (13.3)• Adjusted EBIT* EUR 14.1 (12.7) million, 13.3% (13.4)
Q1 highlights• Strongest development in Financial Services and Public,
Healthcare and Welfare, up by 16% and 35% (in local currencies), respectively
• Healthcare and Welfare solutions (Lifecare) growth 6%• Sales affected by the acquisition of Software Innovation
and the divestment of Lean• The oil and gas segment impacted by a change in
delivery model and challenging market conditions• Operating profit somewhat up
• Improvement partly offset by new recruitments, especially in Financial Services
• Offering development costs up by EUR 2 million• Margin trend expected to follow the previous year’s path
12
*) adjusted for restructuring costs, capital gains/losses,
goodwill impairment charges and other items
93 97 91 109 95
1 1 5
12
1113,4
12,2
18,7
21,4
13,3
0
5
10
15
20
25
0
50
100
150
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
%MEUR
Net of divestement and acquisitions
Customer sales adjusted
EBIT, % excluding one-off items*
© Tieto Corporation
Product Development Services
Customer sales Q1• EUR 29 (47) million, -37%, decline of 37% in local
currencies
EBIT• EBIT EUR 2.6 (6.5) million, 9.0% (14.0)• Adjusted EBIT* EUR 2.4 (6.5) million, 8.4% (14.0)
Q1 highlights• Increased demand in telecom cloud network function
virtualization and software-defined networking• Increased pipeline in new growth areas• Operating profit as expected – Q1 in 2015 was
exceptionally high as it included income related to temporary commercial terms
• Healthy cost structure • Operating margin expected to remain in a range
below 10%
13
*) adjusted for restructuring costs, capital gains/losses,
goodwill impairment charges and other items
47 33 29 33 29
14,0
9,6
6,2
9,48,4
0,0
2,0
4,0
6,0
8,0
10,0
12,0
14,0
16,0
0
50
100
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
%MEUR
Net of divestement and acquisitions
Customer sales adjusted
EBIT, % excluding one-off items*
© Tieto Corporation14
Industry Groups
Consulting and System Integration
Managed Services
Product
Development
Services
Industry Products
Financial
Services
Public,
Healthcare
and Welfare
Manufacturing,
Retail and
Logistics
Telecom,
Media and
Energy
© Tieto Corporation
Financial Services
Customer sales Q1• EUR 88 (84) million, +5%, growth of 6% in local
currencies
Sales split by service line
Q1/2016 Q1/2015MS 45% 48%CSI 22% 21%IP 33% 31%
Q1 highlights
• Strong growth in Industry Products• Strong performance in a number of solutions, such
as Payments and Bank as a Service solutions in the SME segment
• Good demand all across the banking and insurance segments
• Good growth in Finland and Sweden as well as global payments markets
15
84 88 83 92 880
25
50
75
100
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
MEUR
Customer sales adjusted
Net of divestement and acquisitions
© Tieto Corporation
Manufacturing, Retail and Logistics
Customer sales Q1• EUR 79 (78) million, +2%, growth of 2 % in local
currencies
Sales split by service line
Q1/2016 Q1/2015MS 51% 51%CSI 41% 40%IP 8% 9%
Q1 highlights
• Sales affected by the acquisition of Smilehouse and Imano and the divestment of Lean
• Positive development continued in the manufacturing sector due to several new agreements
• Delayed investment decisions in the retail sector in Finland, affecting CSI business
• New agreements with Volvo Car Retail Solutions, Nelly.com, Boliden
16
76 76 72 77 76
2 11
1 3
0
25
50
75
100
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
MEUR
Customer sales adjusted
Net of divestement and acquisitions
© Tieto Corporation
Public, Healthcare and Welfare
Customer sales Q1• EUR 118(101) million, +17%, growth of 18% in local
currencies• Organic growth in local currencies 7%
Sales split by service line
Q1/2016 Q1/2015MS 34% 36%CSI 22% 25%IP 44% 39%
Q1 highlights• Strong growth driven by Industry Products• Acquisition of Software Innovation added EUR 11
million in sales • Demand remained good across all segments,
Healthcare and Welfare sector and the public sector in Finland and Sweden
17
101 107 95 121 107
4
12
11
0
15
30
45
60
75
90
105
120
135
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
MEUR
Customer sales adjusted
Net of divestement and acquisitions
© Tieto Corporation
Telecom, Media and Energy
Customer sales Q1• EUR 53 (57) million, -7%, decline of 4% in local
currencies
Sales split by service line
Q1/2016 Q1/2015MS 16% 17%CSI 49% 45%IP 35% 38%
Q1 highlights• Sales were down as anticipated due to the expiry of
some outsourcing contracts in Media • Positive development in the energy utilities segment
continued and sales to the telecom segment remained at the previous year’s level
• In oil and gas segment, improved price competitiveness while impacted by a change in delivery model and challenging market conditions
• Tieto Smart Utility Suite launched in 2015, first go-live successfully completed in January
18
57 58 53 59 52
1
0
25
50
75
100
Q1/15 Q2/15 Q3/15 Q4/15 Q1/16
MEUR
Customer sales adjusted
Net of divestement and acquisitions
© Tieto Corporation
EBIT 2016
EBIT 2015
Performance drivers in 2016
19
Sales growth andbusiness mix change
Growth investments Salary inflation Automation andindustialization and
other productivity gains
Profitability drivers in IT services
IT services
• We aim to grow faster than the market, supported by acquisitions
• Productivity gains carry to 2016
• Growth initiatives supported by recruitments and higher offering development
• Anticipated restructuring less than 2% of sales
Product Development Services
• Healthy cost structure for the existing business, margin expected to remain in a range below 10%
Strategy 2016–2020
© Tieto Corporation
Vertical industry insight,
consulting, software and
solutions
Full life-cycle IT services
Growth businesses and
internal start-ups
Industrialized services and
automation
Quality and efficiency
Competitive delivery centers
Capability renewal
Financial development
Tieto strategy 2012–2016
2012Build the foundation
2013Execute the structure and efficiency
2014Reorienting the growth
2015Accelerate growth portfolio
2016+Expand businesses
We are now positioned to accelerate innovation and growth
© Tieto Corporation
The market provides great opportunities for renewing our customers’ business
Demand for extreme productivity
Demand for new services
Co-innovate data-
driven businesses
Renew and optimize
customers’ business and IT
Opportunities
for TietoWORLD OF
DUALITY
AGILE
ENTERPRISES
& SOCIETY
Consumer expectations for on-
demand, personalized services
Ageing population and
workforce imbalance
Security vulnerability
Data-driven economy
Open ecosystems and
architectures
Rise of entrepreneurship
Key trends
We aim to be our customers’ first choice for business renewal
New data-driven
businesses
Vertical industry
solutions
Technology services
and modernization
Services to accelerate
customer value
Build solutions and capabilities
to accelerate our customers’
business performance and
renewal.
Nordic leadership and
international expansion
Further accelerate our strong
market position in the Nordics
and expand industry solutions
internationally.
Openness and
co-innovation
Co-innovate with customers
and partners, access open
talent networks and drive
continuous skill and capability
development.
Business choices
building on our
strengths
Tieto strategy 2016–2020
© Tieto Corporation24
Ambition 2020
IT services revenue growth
above the market (CAGR)
10% reported operating
margin (EBIT)
Aim is to increase dividends
annually in absolute terms
Net debt / EBITDA 1.5 as an
upper limit in the long run
Upgraded growth ambition – while maintaining profitability focus and attractive dividend policy
The leading Nordic
software and services
company with the aim to
be customers’ first choices
for business renewal
© Tieto Corporation
Guidance for 2016
25
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 restructuring costs, capital gains/losses,
goodwill impairment charges and other items
© Tieto Corporation
Q1 2016 in brief
26
Healthy growth in IT services and continued profitability improvement
• Industry Products driving growth – in line with the ambition to expand software businesses
• Product Development Services performing well
• New strategy to accelerate innovation and growth launched