Tieto Q4’09Sales down, profitability on the right track - shifting focusthe right track shifting focus to growth
10 February 201010 February 2010Helsinki, Finland
Hannu Syrjälä – President and CEO
eto
Cor
pora
tion
Hannu Syrjälä President and CEOSeppo Haapalainen – CFOReeta Kaukiainen – VP, Comms&IR
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Tie
M k t d tMarkets and customers:IT markets stabilizing – markets bottomed out in 2009g• IT market relevant for Tieto down approximately 5% in 2009• Finance and telecom sectors bottomed out• Finance and telecom sectors bottomed out• Mixed development in other industry sectors continue• Modest growth expected in 2010
• Market for projects expected to pick up only in the second half 2010• Robust demand for
• Outsourcingg• New service models e.g. cloud computing
• New energy-efficient data centres under construction in Finland, Sweden and Russia to support future growthRussia to support future growth
• Recent customer wins: • Finland: Local Government Pension Institution, Metsäliitto Group, Metso, NSN, Tradeka
S d Bil i K k ll i N k M i i li S fi K K f li• Sweden: Bilprovningen, Kammarkollegiet, Nacka Municipality, Smurfit Kappa Kraftliner• International: China mobile, Lukoil
© 2010 Tieto Corporation2
Q4 financial highlights:Q4 financial highlights:Profitability improvement continues
• Sales down by 10% to EUR 441 million
600 8
Net sales EBIT %MEURmillion• 7.6% EBIT driven by successful
streamlining actions• All country segments profitable
500
600
7
8
• All country segments profitable• Strong net cash flow of EUR 71.7
million400
5
6
• EPS EUR 0.36
• Dividend proposal EUR 0.50 200
300
3
4
Dividend proposal EUR 0.50
1001
2
0Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
0
© 2010 Tieto Corporation3
Q4 and FY2009:Q4 and FY2009: Key figures
Q4/2009 Q4/2008 FY/2009 FY/2008
Net sales, EUR million 440.6 492.0 1 706.3 1 865.7
Operating profit, EUR million 33.7 23.6 75.3 111.6
EBIT, % 7.6 4.8 4.4 6.0
Operating profit excl. one-off items, 38.5 42.4 108.0 149.9EUR millionEPS, EUR 0.36 0.02 0.77 0.83
Net cash flow from operations 71.7 78.2 126.4 191.0
Gearing, % 12.7 21.0
Personnel on 31 December 16 663 16 618
© 2010 Tieto Corporation4
Q4 and FY2009:Q4 and FY2009:Income statement
EUR millionQ4
2009Q4
2008Change
%FY
2009FY
2008Change
%
Net sales 440.6 492.0 -10 1 706.3 1 865.7 -9
Other operating income 4.7 2.4 96 17.5 10.8 62
Employee benefit expenses 243.3 278.8 -13 986.7 1 056.0 -7p y p
Depreciation and amortization 17.5 16.8 4 70.7 66.1 7
Other operating expenses 150.8 175.2 -14 591.1 642.8 -8
Operating profit (EBIT) 33 7 23 6 43 75 3 111 6 33Operating profit (EBIT) 33.7 23.6 43 75.3 111.6 -33
Interest and other financial income 2.1 3.7 -43 5.8 8.8 -34
Interest and other financial expenses -4.2 -4.0 5 -13.7 -16.8 -19
Net exchange losses/gains 0.6 -16.7 - 2.9 -21.2 -
Profit before taxes 32.2 6.6 388 70.3 82.4 -15
Income taxes -6.5 -4.8 35 -15.2 -21.9 -31Income taxes 6.5 4.8 35 15.2 21.9 31
Net profit for the period 25.7 1.8 1 328 55.1 60.5 -9
© 2010 Tieto Corporation5
Streamlining actions:Streamlining actions:Savings targets for 2009 achieved
Savings targets • EUR 70 million in 2009• EUR 100 million in 2010
Achievements* • Cost base down in line with the EUR 70 million target of which• approx. 50% from lower personnel costs
25% from business expenses• 25% from business expenses• 20% from less subcontracting
One-off costs • EUR 50.8 million in nine months• EUR 4.8 million in Q4
* Excluding non-recurring and exchange ratesg g g
© 2010 Tieto Corporation
FY2009 recap:FY2009 recap: Strong execution in an exceptionally tough environment
+• New operating model implemented
-• Growth ambitions hit by recessionNew operating model implemented
successfully• Renewed company brand and culture
positively acknowledged
Growth ambitions hit by recession • Sales down by 9% −
6% in local currenciesSi ifi t i i ll ipositively acknowledged
• Improved employee satisfaction• Savings target achieved
• Significant price pressure − especially in telecom
• Project services hit hard • Significant quality and efficiency
improvements• Offshore rate at 30%Offshore rate at 30%• Steady profitability improvement after Q1• Good cash-flow
Basis for growth established
© 2010 Tieto Corporation
Quarterly developmentQuarterly developmentNet sales Operating profit and margin
(excl one time items)(excl. one-time items)
Cash flow GearingMEUR %
%
MEUR
%
MEUR
© 2010 Tieto Corporation8
Offshoring ratio at 30%:Offshoring ratio at 30%:India and China growing fast
6000 35 %
4000
5000
25 %
30 %
3000
4000
15 %
20 %
1000
2000
5 %
10 %
15 %
0
04 04 05 05 06 06 07 07 08 08 09 09
0 %
5 %
Q1 0 Q3 0 Q1 0 Q3 0 Q1 0 Q3 0 Q1 0 Q3 0 Q1 0 Q3 0 Q1 0 Q3 0
Czech and Poland Baltics, Russia and BelarusI di Chi M l i d I d i Off h f t t l %
© 2010 Tieto Corporation9
India, China, Malaysia and Indonesia Offshore of total, %
Country sales by quarter
600
y y q
152141 143 139
500
600
141 119 116 125
141 143130
139
300
400
239 227 230 199 233
119 6103
100
200239 227 230 199 233
0
100
eto
Cor
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tion Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
Finland Sweden International
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Note: Internal sales included
Finland• Q4 sales down by 3%• Strong outsourcing market e.g. NSN and Metso deals• Continuously strong profitability• Continuously strong profitability• Healthy order backlog
Sales, MEUR EBIT, %Q4/2009 Q4/2008 FY/2009 FY/2008
Sales, MEUR 233 239 888 900
239 227 230 199 233
Sales, MEUR 233 239 888 900
EBIT, MEUR 34.0 28.3 110.3 114.2
EBIT, % 14.6 11.9 12.4 12.7
Employees 5 758 6 021239 227 230 199 233
Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
Employees 5 758 6 021
© 2010 Tieto Corporation11
SwedenQ %• Q4 sales down by 11%
• Half of the drop caused by telecom
• Operating profit lower than year agop g p y g• Strong execution of streamlining measures lead to significant profitability
improvement during the second half of 2009• Improved sales pipeline• Improved sales pipeline
Q4/2009 Q4/2008 FY/2009 FY/2008
Sales, MEUR 125 141 463 548
141 119 116 103 125
Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
EBIT, MEUR 7.9 17.6 -2.7 48.7
EBIT, % 6.3 12.5 -0.6 8.9
Employees 3 102 3 291
Sales, MEUR EBIT, %
© 2010 Tieto Corporation12
International• Q4 sales down by 9% • Telecom in Denmark and Germany, finance in the UK
continued as the most challenging areascontinued as the most challenging areas• Profitability improved due to restructuring• Increased offshore capabilities
• Resources doubled in China• Over 1 000 employees in India
Q4/2009 Q4/2008 FY/2009 FY/2008
Sales MEUR 139 152 553 572152 141 143 130 139
Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
Sales, MEUR 139 152 553 572
EBIT, MEUR 2.7 -0.9 -7.1 3.8
EBIT, % 2.0 -0.6 -1.3 0.7
E l 7 803 7 306
Net sales, MEUR EBIT, %
Employees 7 803 7 306
© 2010 Tieto Corporation13
Customers in 2009:Customers in 2009:Top 10 accounted 36% of sales
Share of Group sales b c stomer sector
Apoteket Healthcare & Welfare/ RetailEricsson Telecom by customer sectorEricsson TelecomIF Insurance FinanceKesko Retail
45%34%The National Board
of Taxes (FI)Government
N ki T l21%
Nokia TelecomNordea FinanceOP-Pohjola Group Finance
Telecom Finance Industry sectors
OP Pohjola Group FinanceTeliaSonera TelecomVarma Finance
Customers are listed in alphabethical order
© 2010 Tieto Corporation14
Customers are listed in alphabethical order.
Telecom & MediaMEUR• Sales fell by 8% due to lower
volumes and prices High importance of offshore
150
200MEUR
• High importance of offshore capabilities
• Profitability improved towards 162 153 149 132 1490
50
100
Profitability improved towards the year-end, but still unsatisfactory
0Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
© 2010 Tieto Corporation15
Financial Services• Sales down by 15%
• Exceptionally high comparison figure in Finland 80
100120MEUR
• Sales decline in the UK continued• Products for Capital Markets was
performing best 104 89 94 87 890
204060
performing best• Profitability on Q4/08 level due to
• Good utilization
0Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
• Streamlining actions
© 2010 Tieto Corporation16
Industry sectors*• Sales down by 10%• Manufacturing was the weakest sector
St f i th bli t200
250
MEUR
• Strong performance in the public sector• Profitability at a healthy level
226 197 201 165 20350
100
150
226 197 201 165 2030
Q4/08 Q1/09 Q2/09 Q3/09 Q4/09
* A t ti f t h lth d lf
© 2010 Tieto Corporation17
* Automotive, energy, forest, healthcare and welfare,manufacturing, public, retail and logistics
Actions for 2010Actions for 20101. Manage profitability
• ”Leaning” the organization and cost base• Continued focus on Sweden and International
2. Drive quality and sales excellence• Stronger sales force• Best in class customer care
3. Increase efficiency and productivity• Offshore target 35% in 2010
4. Transform Telecom R&D• Ramp-up Asia• Transform competences from R&D to IT
5. Investments in new offerings• E.g. cloud computing, financial value chain and
unified communications 6. Execute portfolio adjustments
© 2010 Tieto Corporation
Outlook for 2010• Tieto anticipates that the IT markets have now bottomed out• In 2010, Tieto expects its net sales to develop in line with the IT
i k t l t t thservices market relevant to the company• Tieto expects its operating profit to be higher than in 2009
© 2010 Tieto Corporation19
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