24 October 2019
The full interim report with tables is available at the end of this release
Key figures for the third quarter
| 7–9/2019 | 7–9/2018 | 1–9/2019 | 1–9/2018 | |||||
| Net sales, EUR million | 379.6 | 367.1 | 1 191.2 | 1 177.6 | ||||
| Change, % | 3.4 | 3.4 | 1.2 | 3.9 | ||||
| Change in local currencies, % | 4.6 | 7.3 | 2.6 | 7.1 | ||||
| Operating profit (EBIT), EUR million | 37.8 | 40.4 | 92.7 | 109.0 | ||||
| Operating margin (EBIT), % | 10.0 | 11.0 | 7.8 | 9.3 | ||||
| Adjusted[1] operating profit (EBIT), EUR million | 50.1 | 43.0 | 125.0 | 117.1 | ||||
| Adjusted[1] operating margin (EBIT), % | 13.2 | 11.7 | 10.5 | 9.9 | ||||
| Profit after taxes, EUR million | 21.9 | 33.0 | 67.0 | 87.6 | ||||
| EPS, EUR | 0.30 | 0.45 | 0.91 | 1.19 | ||||
| Net cash flow from operations, EUR million | 69.6 | 18.7 | 150.0 | 92.5 | ||||
| Return on equity, 12-month rolling, % | 23.7 | 27.8 | 23.7 | 27.8 | ||||
| Return on capital employed, 12-month rolling, % | 18.5 | 23.5 | 18.5 | 23.5 | ||||
| Capital expenditure, EUR million | 11.6 | 9.6 | 33.5 | 28.3 | ||||
| Acquisitions, EUR million | 0.1 | — | 0.7 | 10.2 | ||||
| Interest-bearing net debt, EUR million | 309.1 | 199.7 | 309.1 | 199.7 | ||||
| Net debt/EBITDA[2] | 1.3 | 1.0 | 1.3 | 1.0 | ||||
| Order backlog | 1 649 | 1 564 | 1 649 | 1 564 | ||||
| Personnel on 30 September | 15 175 | 15 109 | 15 175 | 15 109 | ||||
[1] Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
[2] EBITDA is 12-month average and is modified to reflect the impact of IFRS 16 on depreciations.
Full-year outlook for 2019 unchanged
Tieto expects its full-year adjusted[1] operating profit (EBIT) to increase from the previous year’s level (EUR 168.0 million in 2018) added by the impact of IFRS 16[2] to maintain comparability after the adoption of the new standard.
[1] Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
[2] The company estimates that the adoption of IFRS 16 will have a positive impact on operating profit in 2019. In the nine-month period, the impact on EBIT was EUR 2.7 million. Comparative periods are not restated.
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
"I am very pleased that we delivered record-high third-quarter performance for the company. It is gratifying to see all of our businesses performing well - and delivering 5% local currency growth. Especially our Hybrid Infra business outperformed the market with favourable volume development and cloud sales growth of 23%.
Our strategic renewal continued with an emphasis on data-driven services, simplified operations and efficiency improvement. Following the completion of our significant organizational change in the early part of this year, operational execution was at a healthy level in the third quarter. Our global Tieto community has quickly adapted to the ongoing strategic and operational change, which is an important capability in a rapidly evolving industry like ours.
During the quarter, we again received significant industry recognitions. Our innovation agenda has been well received in the market and we were recognized as a Top 25 global provider of financial technology by the IDC FinTech Rankings for the third consecutive year. Additionally, Tieto was again ranked among the Top 3 companies in the technology sector in Equileap's 2019 Global Gender Equality Ranking.
Integration planning for the merger of Tieto and EVRY is on schedule as we wait for approvals from the competition authorities. The integration planning focuses on cultural integration, operational readiness and synergy implementation. Recently, we also announced a new Group Leadership for TietoEVRY. These appointments will come into effect after the closing of the merger, which we expect to take place during the fourth quarter, or the first quarter of 2020 at the latest. I firmly believe that everyone in the management will make a significant contribution to full merger implementation and delivering on our objective of creating the leading digital services company in the Nordics. With the combined strengths of both Tieto and EVRY, we will be able to accelerate growth and to achieve higher performance in support of the interests of our customers, employees and shareholders. I personally look forward to this very exciting time of joining forces with EVRY.”
Financial performance by segment
| Customer sales |
Customer sales |
Change | Operating profit | Operating profit | ||||||
| EUR million | 7–9/2019 | 7–9/2018 | % | 7–9/2019 | 7–9/2018 | |||||
| Digital Experience | 107.6 | 105.9 | 2 | 11.8 | 11.1 | |||||
| Hybrid Infra | 131.1 | 124.1 | 6 | 18.1 | 15.2 | |||||
| Industry Software | 107.0 | 104.7 | 2 | 13.9 | 16.6 | |||||
| Product Development Services | 33.6 | 31.9 | 5 | 3.3 | 3.1 | |||||
| Segments total | 379.4 | 366.7 | 3 | 47.0 | 46.0 | |||||
| Other operations | 0.2 | 0.5 | -60 | -9.2 | -5.6 | |||||
| Group total | 379.6 | 367.1 | 3 | 37.8 | 40.4 | |||||
Operating margin by segment
| Operating margin | Operating margin | Adjusted[1] operating margin |
Adjusted[1] operating margin |
|||||
| % | 7–9/2019 | 7–9/2018 | 7–9/2019 | 7–9/2018 | ||||
| Digital Experience | 10.9 | 10.5 | 14.5 | 10.9 | ||||
| Hybrid Infra | 13.8 | 12.2 | 15.5 | 12.5 | ||||
| Industry Software | 13.0 | 15.8 | 15.2 | 16.9 | ||||
| Product Development Services | 9.7 | 9.7 | 9.6 | 9.9 | ||||
| Total | 10.0 | 11.0 | 13.2 | 11.7 | ||||
[1] Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
M&A impact by business
| Growth, % (in local currencies) |
Organic growth, % (in local currencies) | |||
| 7–9/2019 | 7–9/2019 | |||
| Digital Experience | 3 | 2 | ||
| Hybrid Infra | 7 | 7 | ||
| Industry Software | 4 | 4 | ||
| Product Development Services | 7 | 7 | ||
| Total | 5 | 4 | ||
For further information, please contact:
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tieto.com
Tanja Lounevirta, Head of Investor Relations, tel. +358 2072 71725, tanja.lounevirta (at) tieto.com
A teleconference for analysts and media will be held on Thursday 24 October 2019 at 10.00 am EET (9.00 am CET, 8.00 am UK time). Kimmo Alkio, President and CEO, and Tomi Hyryläinen, CFO, will present the results online in English. The presentation can be followed on Tieto's website.
Teleconference numbers
Finland: +358 981 710 310
Sweden: +46 856 642 651
United Kingdom: +44 333 300 08 04
United States: +1 631 913 14 22
Conference code: 74597758#
To ensure that you are connected to the conference call, please dial in a few minutes before the start of the press and analyst conference. The teleconference is recorded and it will be available on demand later during the day.
Tieto publishes its financial information in English and Finnish.
TIETO CORPORATION
DISTRIBUTION
NASDAQ Helsinki
Principal Media
Tieto aims to capture the significant opportunities of the data-driven world and turn them into lifelong value for people, business and society. We aim to be customers’ first choice for business renewal by combining our software and services capabilities with a strong drive for co-innovation and ecosystems.
Headquartered in Finland, Tieto has around 15 000 experts in close to 20 countries. Tieto’s turnover is approximately EUR 1.6 billion and shares listed on NASDAQ in Helsinki and Stockholm. www.tieto.com.
Attachments