Transcript Slide 1

© 2013 Tieto Corporation
Tieto Q4/2012
1
Kimmo Alkio – President and CEO
Lasse Heinonen – CFO
Pellervo Hämäläinen – VP, Communications & IR
6 February 2013
Q4 2012 in brief
• Strong improvement in underlying profitability
• Strategy execution on schedule
• Divestments of low-synergy businesses
2
IT service market and market drivers
• The macroeconomic outlook in Northern Europe and the IT services market
in Tieto’s core countries have remained relatively stable
• Overall IT services market may reflect cautiousness at the beginning of 2013
• The Nordic IT services market expected to grow by ~2% in 2013
• IT outsourcing the strongest growing area
• The telecom sector expected to remain sluggish in 2013 due to
customers’ cost savings programmes
Market drivers
Cloud
3
Mobility
Big
Data
Social
Media
Q4 highlights
Strong improvement in underlying profitability - strategy execution on schedule
Net sales
•
EUR 478.6 (489.7) million, down by 2%
• Excluding currency effects and divestments,
net sales were down by 2%
Operating profit (EBIT)
•
•
EUR -8.3 (26.1) million, or -1.7% (5.3) of net sales
• Includes impairments of EUR 33.6 and
restructuring costs of EUR 18.5
EBIT excluding one-off items EUR 43.8 (34.2) million,
or 9.2% (7.0) of net sales
Order intake
•
•
•
Book-to-bill 1.1 (1.2)
Order intake EUR 550 (601) million
Order backlog EUR 1 703 (1 719)
Net sales
EBIT excl one-off items, %
500
9.2%
8.8%
9
8.3%
400
8
7.0%
5.3%
300
7
6.0% 6.2%
6
5.2%
5
200
4
3
100
2
Earnings per share
•
•
EUR -0.26 (0.18)
EPS excluding one-off items EUR 0.41 (0.28)
1
462
462
415
490
467
456
424
479
0
0
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
4
© 2012 Tieto Corporation
10
Quarterly development
Net cash flow
Net debt/EBITDA
75
1
50
MEUR
1.5
0.5
0.1
0.9
0.7
0.4
0
0.5
0.5
0.3
25
0.2
38.8
0.0
40.7
43.7
69.3
0
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
-2.5
36.3
60.6
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
Number of personnel
Offshore ratio
-8.8%
20000
50
40
15000
% 30
10000
20
5000
10
18 136 18 071 18 145 18 123 18 121 17 723 17 404 16 537
0
5
37.8
38.6
40.0
40.4
40.7
40.3
40.7
41.6
0
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
• Number of personnel down by a net amount of 1 586
• Offshore ratio of IT Services increased to 35%
• Offshore ratio of PES 59%
© 2012 Tieto Corporation
2012 – executing strategy
6
• Strategy and
organization
Strategy defined
Competitive cost structure actions initiated
Operating model to support strategy execution in place
New Leadership Team nominated
• Key
customer
WINs
Large outsourcing agreement with NSN
Ticket and information system for Helsinki Region Transport
City of Stockholm IT operations
Folksam IT operations
Five year agreement with Kesko
Apoteket contract renewal
• New Service
offering and
technology
Lifecare solution launched
Tieto cloud server and Productivity cloud launched
Recognized as most competent Microsoft partner in Northern Europe
Group-level technology strategy defined
• Divest
businesses
with low
synergy
Divest Danish union business
Divest financial services product business in UK
Divest Italy and Spain
Divest Belarus delivery center and closing of Bangalore center
Divest local businesses in Germany and Netherlands
Year of restructuring
Net sales, EUR million
EBIT, including one-off items, EUR million
Q4/2012
2012
479 (490)
1825 (1828)
-2%
0%
-8.3 (26.1)
61.3 (98.1)
-
-45%
Capital gain related to the
divestment of UK business
Impairment charges mainly
related to Germany
-33.6
-34.1
Restructuring costs
-18.5
-57.1
One-off items total
-52.1
-75.8
EBIT excluding one-off items, EUR million
EBIT margin excluding one-off items, %
7
15.4
43.8 (34.2)
137.1 (117.1)
+28%
+17%
9.2% (7.0)
7.5% (6.4)
Dividend proposal
Dividend policy
•
•
Dividend payout ratio
minimum 50% of net result
Average payout ratio in the
past few years at 80%
Dividend proposal for 2012
•
EUR 0.83 (0.75) per share
Cash flow
•
EUR
1.00
0.80
0.60
0.70
0.75
0.83*)
0.50 0.50 0.50
0.40
0.20
52% of free cash flow*
0.00
Strong balance sheet
•
•
Net debt / EBITDA currently at 0.2
Financial targets: net debt / EBITDA
less than 1.5
*) Net cash flow from operations - CAPEX
8
2007 2008 2009 2010 2011 2012
*)
Proposal by the Board of Directors
Market units and
business lines Q4 2013
9
Finland and the Baltic countries
Positive sales development continued in most sectors
Net sales at EUR 205 (202) million, up by 2%
• Strong CSI growth
• Strongest growth in the finance and
public sector
11.5%
12.2%
12.0%
11.0%
8.9%
8.2%
7.4%
EBIT at EUR 21.1 (23.9) million,
or 10.3% (11.9%)
• EBIT excluding one-off items EUR 24.7 (24.6)
million, or 12.0% (12.2)
• The cost savings programme contributed to
continued profit improvement
2.3%
184
178
169
202
193
190
176
205
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
Sales, MEUR
10
© 2012 Tieto Corporation
EBIT excl one-off items, %
Scandinavia
Strongest growth in healthcare, welfare, media and energy sectors
Net sales at EUR 143 (147) million,
down by 2%
8.3% 8.0%
• Excluding currency effects and the divestment,
net sales were down by 4%
6.6%
7.2%
• Decreased internal sales to Global Accounts
5.7%
• External sales up by 1%
• Growth in Sweden and Norway
4.4%
3.7%
• Good performance in the healthcare and welfare
solutions as well as the media and the energy
sectors
EBIT at EUR 7.7 (2.4) million,
or 5.4% (1.6)
• EBIT excluding one-off items EUR 11.5 (2.4)
million, or 8.0% (1.6)
• Subcontracting costs declined substantially
• Profit development was partly attributable to weak
comparison figure
11
© 2012 Tieto Corporation
1.6%
141
140
120
147
141
135
129
143
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
Sales, MEUR
EBIT excl one-off items, %
Central Europe* & Russia
Preparations to divest German and Dutch operations
Net sales at EUR 31 (36) million, external
sales at the previous year’s level
• Net sales down by 13% due to internal
business transfers
• Largest increase in Russia, especially
in the Cards area
• Negative development in Product
Engineering Solutions continued
EBIT at EUR -22.4 (-6.8) million,
or -71.7% (-18.9)
• EBIT excluding one-off items EUR -2.7(-5.3)
million, or -8.5% (-14.7)
• Positive trend continued in Russia
• German operations remained
unsatisfactory in the fourth quarter
• Spanish and Italian operations divested
• Divestment of German and Dutch operations
announced in February 2013
* Austria, Germany, the Netherlands and Poland
12
© 2012 Tieto Corporation
31
33
31
36
34
31
30
31
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
-15.8%-16.5%-11.4%-14.1% -12.1%-11.9% -10.6%-8.5%
Sales, MEUR
EBIT excl one-off items, %
Global Accounts
Sales declined, profitability improved
Net sales at 166 (185) EUR, down by 10%
• Excluding divestment and currency fluctuations,
net sales were down by 7%
• Decline in Industry Solutions and Enterprise
Solutions due to customers’ cost savings
programmes
9.6%
7.7% 8.3%
8.1%
9.1%
8.9%
8.6%
5.7%
EBIT at EUR -10.1 (9.6) million, or -6.1% (5.2)
• EBIT excl. one-off items EUR 15.1 (15.3) million,
or 9.1% (8.3)
• Profitability improved
• Operations successfully adjusted to
meet lower demand
• Substantially lower subcontracting costs
190
193
162
175
170
150
166
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12
Sales, MEUR
13
185
Includes ~20 accounts, sales offices (Canada/USA, Italy, Spain,
the UK) and offshore countries China, the Czech Republic, India and Philippines
© 2012 Tieto Corporation
EBIT excl one-off items, %
Business Lines
% of
total sales
Industry Solutions
Enterprise Solutions
Managed Services
& Transformation
Product Engineering
14
© 2012 Tieto Corporation
31%
(30)
•
•
•
•
15%
(14)
• Customer sales EUR 71 (71) million
• Finland continued as the strongest market
• Profitability improved substantially, mainly due to the
cost savings programme
36%
(37)
• Customer sales down to EUR 175 (182) million, partly due
to some large transformation projects in Sweden
• Profitability improved: weak comparison figure and cost
savings programme
18%
(18)
• Customer sales EUR 85 (90) million
• Mobile devices segment still under pressure, healthy
development in network equipment manufacturers’ segment
• Sales decline partly attributable to PES operations in German
• Still potential to improve the utilization rate
Customer sales EUR 148 (147) million
Healthy growth continued in the energy and HC&W sector
Good sales pipeline for Tieto’s Lifecare solutions
Underlying profitability improved further
Competitive cost structure
programme ahead of plan
•
Target to achieve annualized net savings of EUR 60 m
•
•
Net savings of around EUR 25 million gained in 2012
Total restructuring costs of EUR 57.1 million booked by the end of 2012
•
•
In 2013, one-off costs are expected to be far lower, around half of the 2012 level
18 000
Number of personnel
Including ~200 redundancies mainly in Q1 2013
18 100
17 000
Of which
Finland 450
Sweden 300
Germany 180
other 470
16 000
1 Jan 2012
15
1 400
© 2012 Tieto Corporation
Competitive
cost structure
reductions
600
Divestments
100
16 500
300
Outsourcing
deals
Recruitment 31 Dec 2012
for new
competences
Events after review period
Divestment of local German and Dutch businesses
Divested local businesses
Continuing global businesses in Tieto
TIPS for forest industry
~100 employees
Tieto
Germany
Tieto
Netherlands
From
Tieto India
(dedicated to
Germany)
From
Tieto Poland
(dedicated to
Germany)
16
•
Tieto divests its local
operations in Germany and
Netherlands to German
industrial group AURELIUS
•
Some 900 employees will be
transferred to new company
~ 550 employees
Global PES and other
global roles ~20 employees
~ 100 employees
HC Central
Europe
~ 100
employees
Industrial R&D
~ 150
employees
Energy Component industry
~20 employees
Tieto India (~1 450)
and Poland (~950)
remain key delivery
centers for IT services
and Product Engineering
Services
Events after review period
Divestment of local German and Dutch businesses
• Net sales of divested businesses amounted to over
EUR 110 million in 2012
• Tieto’s operating margin of underlying business will improve
by some 0.5 percentage points based on 2012 performance
•
German businesses were loss-making in 2012
• Tieto booked about EUR 30 million in impairment in Q4 2012
• Tieto is expected to book some EUR 5 million in additional
divestment costs
•
Mainly related to taxes, at the time of the closing
• Cash flow impact will amount to approximately EUR 20 million negative
•
Mainly due to the restoration of shareholders equity in Tieto
Deutschland GmbH, which occur between signing and closing
• Closing is expected to take place Q2 2013
17
Full-year outlook for 2013
Tieto expects its organic net sales development to be at the level
of the IT services market growth, with the exception of weaker
outlook in the telecom sector
Tieto expects its profitability to continue to improve and full-year
operating profit (EBIT) excluding one-off items to increase from
the previous year’s level (EUR 137.1 million in 2012)
18
Strategy update
Focused
Simplified
Positioned for future
19
Strategy implementation has specific
topics for each year
• Transition to industry driven structure
• Accelerate Consulting and System Integration
expansion and Managed Services automation
• Implement competitive cost structure
• Focus on 2012 operating plan
2015-2016
Focus on
future growth
2013-2014
Expand service
scope
2012
Build the
foundation
• Seek growth in and
beyond core markets
• Consider strategic
inorganic opportunities
•
•
•
20
Expand full life-cycle IT services
Make future market choices and initiate execution
Product Engineering Services strategy defined and
execution to pursue global opportunities starts
Priorities for 2013
Priorities
•
Objectives
• Proactively transform customers’ legacy environments
Transformation
driven customer
value
• Drive mobility and SaaS models for our industry products
• Expand PES’ global customer base
• Enhance industry specific full-stack implementations
•
High quality project
based operations
• Continue standardization and quality focus in managed services
• Accelerate global delivery capability
• Increase industry process competencies
•
Employer of choice
• Promote knowledge sharing networks
• Invest into CSI transformation competencies
Financial objectives
(Profitability, Cash flow, Revenue, Order intake)
21
New operating model based on
project-driven steering
Reporting segments in 2013
Sales and EBIT for Service Lines will
be reported
Sales for Industry Groups will be reported
22
Product
Engineering
Services
Public,
Healthcare
and Welfare
Financial
Services
Industry Solutions
Manufacturing,
Retail and
Logistics
Industry Products
2013
Enterprise Solutions
Consulting and System Integration
Managed Services and Transformation
Managed Services
Telecom,
Media, Energy
and Utilities
Q4 2012 in brief
• Strong improvement in underlying profitability
• Strategy execution on schedule
• Divestments of low-synergy businesses
23
Financial calendar
24
Week 8/2013
Annual Report 2012 on Tieto's website
25 March 2013
Annual General Meeting
25 April 2013
Interim report 1/2013
19 July 2013
Interim report 2/2013
23 October 2013
Interim report 3/2013
We are committed to develop
enterprises and society through
information technology