Tietoevry's Interim Report 4/2023: Resilient performance in a mixed market

Tietoevry Corporation FINANCIAL STATEMENT RELEASE 15 February 2024, 9.00 a.m. (EET)
 

• Growth 1% – solid underlying performance in software businesses continued

• Healthy profitability of over 14% supported by efficiency measures

• Strategic review of Banking – demerger proposed to list the business, retaining optionality for other alternatives – sales process ongoing in parallel in light of market interest

• Strategic review of Tech Services – on track with previously announced schedule, active engagement with potential buyers

• Increased dividend of EUR 1.47 (1.45) per share proposed
   

The full Financial Statement Release with tables is available at the end of this release.

Full-year outlook for 2024

Tietoevry expects its organic1) growth to be in the range of 0–3% (revenue in 2023: EUR 2 851.4 million).

The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.0–13.0% (12.6% in 2023)

1) Adjusted for currency effects, acquisitions and divestments

2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability

3) Profit before interests, taxes and amortization of acquisition-related intangible assets

CEO’s comment

Comment regarding the interim report by Kimmo Alkio, President and CEO:

“In the fourth quarter, our performance remained resilient in a mixed market. Good underlying development in software businesses continued with 4% organic growth, contributing to total growth of 1% for the Group. On the other hand, weaker demand impacted Tietoevry Create and Tech Services. Our profitability was healthy, over 14%. Tietoevry Tech Services remained on a solid track with an improved margin, thanks to the execution of the efficiency measures initiated during the year.

We have seen continued advancement in the use of Artificial Intelligence (AI) and are taking advantage of this for the benefit of our customers and our competitiveness. From an overall demand and growth perspective, we had a strong start for the year 2023. While our growth continued throughout the year, macroeconomic uncertainty and gradually softening demand impacted our overall performance and resulted in lower growth rates. Despite continued high inflation, we were able to deliver solid performance and achieved the anticipated margin level. With this financial development, we are pleased to confirm that we are on the path to increasing our dividends.

The progress in the strategic reviews of Tietoevry Banking and Tech Services were key achievements during the year. For Tietoevry Banking, we have taken the next concrete step with today’s announcement of its separation, enabling its independent operations and potential listing. The listing process, subject to the approval of the Extraordinary General Meeting, is expected to commence during the first half of 2024. During the process, other alternatives can be considered if they would be in the best interest of shareholders. In light of market interest, a sales process is ongoing in parallel. The strategic review of Tietoevry Tech Services is progressing as planned with active engagement with potential buyers ongoing. We continue to drive specialization and to reposition Tietoevry as a software and digital engineering company.

We expect 2024 to be a transformative year for our company with the finalization of the two strategic reviews. In terms of market outlook for 2024, we expect the current weak macroeconomic conditions to continue – driving industry-wide conservative growth rates and the continued need for operational resilience. The wider guidance ranges in our full-year outlook for 2024 reflect current market conditions. Once the macroeconomy becomes healthier we expect to see better growth rates – similar to the realized growth path prior to the economic downturn.

We experienced a criminal ransomware attack in one of our data centres in Sweden last month. Since the attack, our teams have been working relentlessly to restore services for our customers, who have suffered from this disruption. Work will continue in close collaboration with customers until all possible restorations have been completed and the investigation has been concluded with the authorities. 

We will also continue to support our colleagues in Ukraine. Our hearts and minds remain with them as the devastating situation in the country continues. We are proud of our Ukrainian colleagues and will keep supporting our people and their families, including providing means for relocation and enhancing opportunities to continue working.

Our commitment to sustainability ​once again achieved the highest market recognitions in 2023. We were able to retain our platinum level in the EcoVadis sustainability rating, which was granted this time only to the top 1% performers globally.​ We also saw solid progress in our carbon reduction targets, verified by the Science Based Targets (SBT) initiative. 2023 also marked the final year of our sustainability plan for 2020–2023. I was pleased to see the progress we made across the key areas during the period: Ethical Conduct, Climate Action and Exciting Place to Work. We recognize the opportunities that digitalization brings for our customers and for society at large and will launch a new group-wide long-term sustainability plan during 2024.

In spite of a weaker market, the overall software and technology services industry remains very exciting with cloud and AI-enabled technologies advancing businesses and societies. I thank our employees, customers and partners for a solid year in a demanding overall market environment.”

Financial performance by segment

For further information, please contact:

Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com

Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com

A teleconference for analysts and media will be held on Thursday 15 February 2024 at 10.00 a.m. EEST (09.00 am CET, 08.00 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.

To take part in the questions and answers session after the presentation you will need to dial in by phone. You can access the teleconference by registering on this link. After the registration you will be provided phone numbers, user ID and a conference ID to access the conference.

The event 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

Nasdaq Stockholm

Oslo Børs

Principal Media

Tietoevry creates purposeful technology that reinvents the world for good. We are a leading technology company with a strong Nordic heritage and global capabilities. Based on our core values of openness, trust and diversity, we work with our customers to develop digital futures where businesses, societies, and humanity thrive.

Our 24 000 experts globally specialize in cloud, data, and software, serving thousands of enterprise and public-sector customers in more than 90 countries. Tietoevry’s annual turnover is approximately EUR 3 billion and the company’s shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. https://www.tietoevry.com