Customers cost savings and efficiency in focus

Transcription

1 Tieto Q2 Report Progress in difficult markets Hannu Syrjälä President and CEO Seppo Haapalainen CFO Reeta Kaukiainen EVP, Comms&IR Challenging market conditions continue Markets weakness in demand Project and consulting demand soft Application management and infrastructure services stable Outsourcing market offers growth opportunities Competition intense and price pressure remains hard Customers cost savings and efficiency in focus Telecom under pressure, move to offshore continues Financial services still weak, regulatory changes create new demand Manufacturing suffering from global recession, recovery not yet in sight Public sector stable, uncertainty in future demand, but plenty of opportunities 1 2

2 Tieto s transformation progresses according to the plans Tieto s key focus areas Capacity cut to current demand reduction of ~5 employees since Jan/9 Internal productivity actions organisational model, cost cuts and process investments Investments in quality and GDM offshoring rate now at 26% Offering development geared towards productivity and efficiency outsourcing and advanced IT solutions: healthcare, financial services and energy EquaTerra outsourcing survey 29: Tieto ranked as the best partner for application management outsourcing in the Nordics 3 Performance highlights Sales down 7% to EUR million. In local currencies down 3%. EBIT, excluding OTI, EUR 24.6 million. One time items: Sale of TietoSaab EUR 5.2 million Revenue recognition EUR 5.5 million Cost of streamlining actions EUR million EPS EUR.14 Negative cash EUR million due to increase in working capital. Strong liquidity EUR 11.7 million. 2 4

3 Q2 financials progress from Q1 Q2/29 Q2/28 H1/29 H1/28 Net sales, EUR million Operating profit, EUR million EBIT, % Operating profit excl. one-off items, EUR million EPS, EUR Gearing, % Net cash flow from operations Personnel on 3 June Quarterly development MEUR Net sales MEUR Operating profit and margin (excl. one-time items) % Net cash flow from operations MEUR Gearing %

4 Streamlining actions progressing well Savings target EUR 1 million EUR 7 million expected to materialize in 29, mainly in Q3 and Q4 Estimated one-off costs approximately EUR 35 million in 29 EUR 24.9 million booked in Q2 Finland EUR 7.3 million Sweden EUR 7.4 million International EUR 9.9 million Group EUR.3 million Actions Personnel adjustments Decreasing the number of subcontractors Consolidation of offices Cutting down business expenses 7 Offshoring target 3% in 29 Q2 actual at 26% % 25 % 2 % 15 % 1 % 5 % % Q1 4 Q3 4 Q1 5 Q3 5 Q1 6 Q3 6 Q1 7 Q3 7 Q1 8 Q3 8 Q1 9 Czech and Poland Baltics, Russia and Belarus India, China, Malaysia and Indonesia Offshore of total, % 4 8

5 Country sales by quarter EUR million Finland Sweden International 9 Finland Sales flat, but outsourcing market strong Profitability down 2% due to restructuring and other costs Public and healthcare and welfare continue to grow Sound development in financial services Personnel negotiations completed in May Net sales, MEUR EBIT, % Q2/29 Q2/ Net sales, MEUR EBIT, MEUR EBIT, % Employees

6 Sweden Sales fell by 19% due to weak telecom segment and currency impact; 7% decline in SEK Profitability burdened by low sales and exchange rates; lower costs insufficient to offset the negative impact Strong development in healthcare and welfare, public and retail and logistics Q2/29 Q2/28 Net sales, MEUR EBIT, MEUR EBIT, % Employees Net sales, MEUR EBIT, % 11 International Flat sales of EUR 143 million Loss of EUR 6.6 million, including one-off EUR 9.9 million in restructuring costs Finance and telecom the most challenging areas Denmark and UK had a weak performance Q2/29 Q2/28 Net sales, MEUR EBIT, MEUR Net sales, MEUR EBIT, % EBIT, % Employees 4 48 (>6%) in offshore countries

7 Customer sectors Top 1 customers account for 35% of sales Apoteket Retail Ericsson Telecom If Insurance Finance Kesko Retail The National Board of Taxes (FI) Government Nokia Telecom Nokia Siemens Networks Telecom Nordea Finance TeliaSonera Telecom Varma Finance Share of Group sales by customer sector 45% 21% 34% None of the customers exceeds 1% in net sales on Group level Telecom Finance Industry sectors 13 Telecom Net sales down by 13%, half of the drop from lower volumes Operating profit declined due to lower utilization rates and prices Cost savings and supplier consolidation continue, Tieto well-positioned Offshoring to Asia high on the agenda

8 Finance Net sales down 8% More than half due to currency effect Additional impact from two ending contracts Operating profit remained on a relatively good level Products business suffering most Stable business in Finland, but more challenging in Sweden and International countries Industry sectors* Sales declined by 2% Net sales include EUR 5.5 million one-time income Manufacturing, forest and automotive weakest areas Healthcare and welfare and public continued to grow Profitability in most industry sectors at a healthy level * Automotive, energy, forest, healthcare and welfare, manufacturing, public, retail and logistics 16

9 Outlook for 29 Uncertainty continues in the IT market. Tieto expects the IT services market to decline and tough market conditions to continue in 29. Tieto expects full-year net sales and operating profit to decline from last year. In the Nordic countries, the best prospects for growth in 29 are seen in the outsourcing of application and ICT infrastructure management. 17 Questions & Answers 9