24 July 2020
The full interim report with tables is available at the end of this release.
About this report
Tieto’s and EVRY’s merger was concluded on 5 December 2019. The attached report is based on the official financial figures of TietoEVRY, with EVRY being consolidated as from 5 December 2019.
Comparable financial information for illustrative purposes:
The new operating model became effective on 1 January 2020 and financial reporting has been prepared in accordance with the new structure as from this interim report. As additional information, the report includes comparable financial information for TietoEVRY with figures for 2019 restated to account for the current segments.
| 4–6/2020 | 4–6/2019 | |||
| Revenue, EUR million | 686.4 | 730.4 | ||
| Change, % | -6.0 | - | ||
| Organic growth1), % | -1.0 | - | ||
| Operating profit (EBIT), EUR million | -9.8 | 43.9 | ||
| Operating margin (EBIT), % | -1.4 | 6.0 | ||
| Adjusted2) operating profit (EBIT), EUR million | 80.4 | 69.8 | ||
| Adjusted2) operating margin (EBIT), % | 11.7 | 9.6 | ||
| One-time items, EUR million | 90.1 | - | ||
| Order backlog, EUR million | 3 310 | - | ||
| Net debt/EBITDA3) | 2.9 | - | ||
1) Adjusted for currency effects and impact from acquisitions and divestments
2) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability.
3) EBITDA is 12-month average including the full period for both Tieto and EVRY. This is in line with the additional debt due to the merger being included in net debt.
Full-year outlook for 2020 withdrawn on 27 March
Due to the Covid-19 pandemic, the current economic outlook in TietoEVRY’s main markets involves significant uncertainties. Given the uncertainties in the market outlook, it is not possible to estimate the potential impact of the pandemic on the company’s profitability. Hence the full-year guidance was withdrawn on 27 March. Further guidance will be issued once visibility to the market outlook for the second half has improved and significant uncertainties are cleared.
CEO’s comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
“We are pleased to report a good quarter in a demanding environment, supported by our successful measures to adjust for the impact of Covid-19 and ensure the well-being of our employees. Our integration continues to proceed well and we are increasing the outlook for merger synergies. Overall, the second quarter lays a strong operational foundation for future performance.
Group financial performance in the second quarter improved, with the adjusted operating margin increasing to 11.7%, up from 9.6% in the prior year, while revenues were organically down by 1%. All businesses performed well during the active integration period – and demonstrated fair resilience against the impact of Covid-19.
The merger integration is a major focus area throughout 2020 – we completed the implementation of our unified structure and new integrated financial model during the second quarter. We have executed the integration at a fast pace and are able to increase the target for our merger synergies from the prior level of EUR 75 million to EUR 100 million – with the end of year 2020 run-rate anticipated to reach the level of EUR 70-80 million.
As a result of the merger and our major transformation agenda we experience unusually high one-time costs during the second quarter and full year 2020. These one-time items are necessary to build improved future scale, quality and financial performance for the company. We expect that one-time items will return to normalized levels in 2021 as the integration process continues.
We are pleased to confirm the decision on the 2019 dividend pay-out at 50% of the level authorized by the Annual General Meeting 2020, reflecting the impact of Covid-19 and the expected large one-time items for 2020. We continue to believe in an attractive mid- and long-term dividend outlook for the company.
With the good operational foundation of TietoEVRY, we are committed to delivering a strong performance for the benefit of our customers, employees and shareholders. I'd like to thank our customers and employees for rapidly adapting to the new remote ways of working during the pandemic and continuing to ensure the high availability of services critical to society.”
Financial performance (comparable financial information)
| Revenue, EUR million | Revenue, EUR million | Growth, % | Organic growth, %2) | Adjusted1) operating profit, EUR million | Adjusted1) operating profit, EUR million | Adjusted1) operating margin, % | Adjusted1) operating margin % | ||||||
| 4–6/2020 | 4–6/2019 | 4–6/2020 | 4–6/2019 | 4–6/2020 | 4–6/2019 | ||||||||
| Digital Consulting | 162.7 | 185.2 | -12 | -6 | 17.9 | 15.5 | 11.0 | 8.4 | |||||
| Cloud & Infra | 232.0 | 249.2 | -7 | -3 | 26.6 | 25.3 | 11.5 | 10.2 | |||||
| Industry Software | 122.0 | 125.5 | -3 | 3 | 18.4 | 14.8 | 15.1 | 11.8 | |||||
| Financial Services Solutions | 101.9 | 105.3 | -3 | 6 | 12.0 | 13.2 | 11.8 | 12.6 | |||||
| Product Development Services | 34.4 | 35.4 | -3 | -2 | 4.0 | 2.7 | 11.5 | 7.6 | |||||
| Other | 33.4 | 29.7 | 12 | 12 | 1.6 | -1.8 | - | - | |||||
| Total | 686.4 | 730.4 | -6 | -1 | 80.4 | 69.8 | 11.7 | 9.6 | |||||
1) Adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
2) Adjusted for currency effects and impact from acquisitions and divestments
For further information, please contact:
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com
Kjell Arne Hansen, Head of Investor Relations, tel. +47 9504 0372, kjell.hansen (at) tietoevry.com
A teleconference for analysts and media will be held on Friday 24 July 2020 at 10.00 am EEST (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 TietoEVRY's website.
Teleconference numbers
Finland: +358 981 710 310
Sweden: +46 856 642 651
Norway: +47 235 002 43
United Kingdom: +44 333 300 0804
United States: +1 631 913 1422
Conference code: 98211130#
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.
TietoEVRY publishes its financial information in English and Finnish.
TIETOEVRY CORPORATION
DISTRIBUTION
NASDAQ Helsinki
Oslo Börs
Principal Media
TietoEVRY creates digital advantage for businesses and society. We are a leading digital services and software company with local presence and global capabilities. Our Nordic values and heritage steer our success.
Headquartered in Finland, TietoEVRY employs around 24 000 experts globally. The company serves thousands of enterprise and public sector customers in more than 90 countries. TietoEVRY’s annual turnover is approximately EUR 3 billion and its shares are listed on the NASDAQ in Helsinki and Stockholm as well as on the Oslo Börs. www.tietoevry.com
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