Tieto's Interim Report 4/2018: Solid performance in the fourth quarter with strong growth and cash flow
- Growth in local currencies 5% in the fourth quarter, 7% for the full year
- Fourth-quarter operating margin 11%, long-term target of 10% reached for the full year
- Dividend of EUR 1.45 proposed
- New strategy launched and financial objectives upgraded
The full interim report with tables is available at the end of this release.
Key figures for the fourth quarter
IT services- Sales growth totalled 2.7%, sales in local currencies up by 4.8%
- Adjusted operating profit amounted to EUR 50.6 (49.4) million, 13.1% (13.2) of sales
- Sales growth totalled 3.0%, sales in local currencies up by 5.3%
- Adjusted operating profit amounted to EUR 49.8 (49.2) million, 11.8% (12.0) of sales
- Net cash flow from operations amounted to EUR 81.7 (66.6) million
Key figures for the full year
IT services- Sales growth totalled 3.3%, sales in local currencies up by 6.1%
- Adjusted operating profit amounted to EUR 162.1 (162.6) million, 11.1% (11.5) of sales
- Sales growth totalled 3.6%, sales in local currencies up by 6.6%
- Adjusted operating profit amounted to EUR 162.8 (161.4) million, 10.2% (10.5) of sales
- Net cash flow from operations amounted to EUR 174.2 (151.0) million
- Proposed dividend EUR 1.45 per share, including base dividend of EUR 1.25 (1.20) and an additional dividend of EUR 0.20 (0.20), representing dividend yield of 6.1%
10-12/ 10-12/ 1-12/2 1-12/2
2018 2017 018 017
Net sales, 421.9 409.6 1 599. 1 543.
EUR million 5 4
Change, 3.0 1.5 3.6 3.4
%
Change 5.3 2.4 6.6 4.1
in local
currencies,
%
Operating 46.1 51.6 167.6 154.3
profit
(EBITA), EUR
million
Operating 10.9 12.6 10.5 10.0
margin
(EBITA), %
Operating 45.7 47.9 154.7 139.1
profit
(EBIT), EUR
million [1]
Operating 10.8 11.7 9.7 9.0
margin
(EBIT), % [1]
Adjusted [1] 49.8 49.2 162.8 161.4
[2] operating
profit
(EBIT), EUR
million
Adjusted [1[ 11.8 12.0 10.2 10.5
[2] operating
margin
(EBIT), %
Profit after 35.6 36.7 123.2 107.7
taxes, EUR
million
EPS, EUR 0.48 0.50 1.67 1.46
Net cash flow 81.7 66.6 174.2 151.0
from
operations,
EUR million
Return on 25.7 22.3 25.7 22.3
equity, 12
-month
rolling, %
Return on 20.9 20.5 20.9 20.5
capital
employed, 12
-month
rolling, %
Capital 16.7 11.4 45.0 50.8
expenditure,
EUR million
Acquisitions, 4.3 49.3 14.5 49.3
EUR million
Interest 137.4 155.7 137.4 155.7
-bearing net
debt, EUR
million
Net 0.7 0.8 0.7 0.8
debt/EBITDA
Order 1 698 1 860 1 698 1 860
backlog
Personnel on 15 14 15 14
31 190 329 190 329
December
[1] the fourth quarter includes EUR 1.2 (1.2) million in amortization of acquisition-related intangible assets, EUR 5.2 (4.3) in the full year
[2] adjusted for restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
Full-year outlook for 2019
Tieto expects its full-year adjusted1)operating profit (EBIT) to increase from the previous year's level (EUR 168.0 million2)in 2018). The definition of adjusted operating profit has been revised to improve comparability of operating profit also in light of the company's acquisitions.
[1] adjusted for amortization of acquisition-related intangible assets, restructuring costs, capital gains/losses, goodwill impairment charges and other items affecting comparability
[2] not restated for IFRS 16
CEO's comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
"We are pleased with our year-end performance with good growth, 11% profitability and strong cash flow. The year now ended demonstrated the continuation of our multi-year performance improvement with growth accelerating to 7% in local currencies and profitability reaching a level of 10% - all supported by our strongest-ever customer experience (rNPS) results. While we have maintained our investment agenda for future competitiveness, strong overall performance continued in our Technology Services and Modernization and Product Development Service businesses.
During the past year, as we celebrated our 50th anniversary as a company, Tieto was recognized as a Top 100 Global Technology Leader thanks to our employees' long-term commitment to innovation, performance, quality and social responsibility. In addition, Equileap ranked us among the Top 25 companies globally in gender equality - the highest-ranked technology company on their list. At Tieto, we are proud of these recognitions and continue to reinforce our open source culture and ecosystem-based innovations as well as enhance continuous learning opportunities and employee experience. We continue to be inspired by opportunities to contribute to society-level advancement through smarter use of data and technology.
Today, we are launching our new strategy, aiming to further accelerate our competitiveness and enhance value creation for our customers, shareholders and employees. Innovation and business creation opportunities in the expanding data-rich world open up new avenues for business and profitability expansion. We will embrace and expand design and data-led consulting services, create new capabilities for customer engagement, simplify our operations into networked ways of working, and once again set our financial ambitions higher for the upcoming years."
Financial performance by service line
EUR million Customer Customer Change, % Operating Operating
sales sales profit profit
10-12/2018 10-12/2017 10-12/2018 10-12/2017
Technology Services 190.3 189.5 0 20.6 22.7
and Modernization
Business Consulting 66.6 53.5 24 5.1 4.8
and Implementation
Industry Solutions 128.7 132.5 -3 22.9 22.7
Product Development 36.2 34.2 6 3.6 3.5
Services
Support Functions - - - -6.4 -5.8
and Global
Management
Total 421.9 409.6 3 45.7 47.9
Operating margin by service line
% Operating Operating Adjusted[1] Adjusted[1]
margin margin operating operating
10-12/2018 10-12/2017 margin margin
10-12/2018 10-12/2017
Technology Services 10.8 12.0 13.0 12.8
and Modernization
Business Consulting 7.6 9.0 8.2 8.1
and Implementation
Industry Solutions 17.8 17.1 15.8 15.7
Product Development 9.9 10.1 10.1 10.1
Services
Total 10.8 11.7 11.8 12.0
[1] adjusted for
restructuring
costs, capital
gains/losses,
goodwill impairment
charges and other
items affecting
comparability
Customer sales by industry group
EUR million Customer sales Customer sales Change, %
10-12/2018 10-12/2017
Financial Services 97.7 99.9 -2
Public, Healthcare and Welfare 144.0 135.4 6
Industrial and Consumer Services 143.9 140.1 3
IT services 385.7 375.4 3
Product Development Services 36.2 34.2 6
Total 421.9 409.6 3
M&A impact by service line
Sales growth, % Organic growth, %
(in local currencies) (in local currencies)
10-12/2018 10-12/2018
Technology Services 2 2
and Modernization
Business Consulting 27 9
and Implementation
Industry Solutions -1 1
IT services 5 2
Product Development 10 10
Services
Total 5 3
M&A impact by industry group
Sales growth, % Organic growth, %
(in local currencies) (in local currencies)
10-12/2018 10-12/2018
Financial Services 0 -1
Public, Healthcare and Welfare 9 7
Industrial and Consumer Services 4 -1
IT services 5 2
Product Development Services 10 10
Total 5 3
For further information, please contact:
Janne Salminen, Acting CFO, tel.+358 2072 70707, +358 50 359 8521,
janne.salminen (at) tieto.com
Tanja Lounevirta, Head of Investor Relations, tel.+358 2072 71725, +358 50 321 7510,
tanja.lounevirta (at) tieto.com
A teleconference for analysts and media will be held on Wednesday 6 February 2019 at 10.00 am EET (9.00 am CET, 8.00 am UK time). Analysts and media are also welcome to participate in the conference at Tieto's office in Espoo, address: Keilalahdentie 2-4.
Kimmo Alkio, President and CEO, and Janne Salminen, Acting CFO, will present the results online in English. The presentation (http://webcast.tieto.com/quarterlyreport/?q=060219) can be followed on Tieto's website (http://www.tieto.com/investors), for which attendees need Adobe Flash plugin version 10.1.0 or newer. The teleconference details can be found below.
Teleconference numbers
Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
UK: +44 (0)330 336 9105
US: +1 929 477 0324
Conference code: 4404154
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.
Tieto publishes its financial information in English and Finnish.
TIETO CORPORATION
DISTRIBUTION
NASDAQ Helsinki
Principal Media
Tieto aims to capture the significant opportunities of the data-driven world and turn them into lifelong value for people, business and society. We aim to be customers' first choice for business renewal by combining our software and services capabilities with a strong drive for co-innovation and ecosystems.
Headquartered in Finland, Tieto has around 15 000 experts in close to 20 countries. Tieto's turnover is approximately EUR 1.6 billion and shares listed on NASDAQ in Helsinki and Stockholm. www.tieto.com