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Tieto Q2/2012Kimmo Alkio – President and CEOLasse Heinonen – CFOPellervo Hämäläinen – VP, Communications & IR
20 July 2012
© 2012 Tieto Corporation2
Summary
Strategy implementation and cost reductions on schedule
Financial performance according to plan
Full-year outlook for 2012 unchanged
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Business transformation drives growth
Cloud services, mobility, business intelligence and analytics as continued trends
IT market relatively stable
The macroeconomic outlook in Northern Europe and the IT services market in Tieto’s core countries have remained relatively stable
Telecom R&D and finance market affected by budget cuts
Two-fold development in pricing• Continued pressure in basic services• Prices for high value added services stable
or slightly rising
IT services market in Western Europe is expected to grow by 0–2% and the Nordic outsourcing market by 2–3% in 2012
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© 2012 Tieto Corporation
Q2 highlightsPerformance according to plan
462 462 415 490 467 456
5.2% 5.3%
8.3%
7.0%
6.0%6.2%
0
1
2
3
4
5
6
7
8
9
0
100
200
300
400
500
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Net sales EBIT excl one-off items, %
Net sales• EUR 456.1 (462.3) million, organically flat growth• Good growth in Finland and the Baltic countries• Decline in Global Accounts net sales
• Telecom R&D and the finance sector
Operating profit (EBIT)• EUR -3.7 (19.2) million including one-off
costs of EUR 31.9 million• EBIT margin -0.8% (4.2)• EBIT excluding one-off items EUR 28.2 (24.5) million• EBIT margin excluding one-off items 6.2% (5.3)
Order intake• Book-to-bill 1.1• Order intake EUR 505 (600) million
Earnings per share• EUR -0.10 (0.16)• EPS excluding one-off costs EUR 0.26 (0.24)
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© 2012 Tieto Corporation
0
10
20
30
40
50
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
37.8 40.340.440.038.6 40.7
38.8 0.0 40.7 43.7 69.3 -2.50
25
50
75
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Quarterly developmentNet cash flow
Offshore ratio
ME
UR
Number of personnel
%
0.1 0.9 0.7 0.4 0.5 0.50
0,5
1
1,5
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Net debt/EBITDA
-1.9%
18 136 18 071 18 145 18 123 18 121 17 7230
5000
10000
15000
20000
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
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© 2012 Tieto Corporation
Second quarter of 2012
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Q2/2012 Q2/2011
Net sales, EUR million 456.1 462.3
EBIT, EUR million -3.7 19.2
EBIT, % -0.8 4.2
EBIT excluding one-off items, EUR million 28.2 24.5
EBIT,% excl. one-off items 6.2 5.3
Profit after taxes, EUR million -6.8 11.4
EPS, EUR -0.10 0.16
EPS excl. one-off items, EUR 0.26 0.24
Net cash flow from operations -2.5 0.0
Gearing, % 14.7 25.8
Personnel at the end of period 17 723 18 071
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Market units and business linesMarket units and business lines
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© 2012 Tieto Corporation
184 178 169 202 193 190
7.4% 2.3%
11.5%
12.2%
8.9% 8.2%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Sales, MEUR EBIT excl one-off items, %
Finland and the Baltic countriesGrowth continued in all customer segments
Net sales at EUR 190 million, up by 7%• Several new agreements announced e.g. in the
transportation, insurance and retail sectors
EBIT at EUR 7.9 (4.2) million, or 4.2% (2.4)• EBIT excluding one-off items EUR 15.6 (4.1)
million, or 8.2% (2.3)
• Profitability improved due to higher net sales coupled with improved quality and utilization rate
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© 2012 Tieto Corporation
141 140 120 147 141 135
3.7% 7.2%
6.6%
1.6%
4.4%5.7%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Sales, MEUR EBIT excl one-off items, %
ScandinaviaSlight sales decrease
Sales at EUR 135 million, down by 4%• Divestment of unions business in Denmark
had a negative impact of EUR 1 million• Good growth in the Norwegian energy sector
EBIT at EUR -2.5 (5.1) million, or -1.9% (3.7)
• EBIT excluding one-off items EUR 7.7 (9.2) million, or 5.7% (6.6)
• Overcapacity in Enterprise Solutions
Datacentre incident closed in Sweden
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© 2012 Tieto Corporation
31 33 31 36 34 31
-15.8% -16.5% -11.4% -14.1% -12.1% -11.9%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Sales, MEUR EBIT excl one-off items, %
Central Europe* & RussiaFocus on selected products and industries
Sales at EUR 31 million, comparable sales up by 3%
• Due to internal business transfers, net sales down by 6%
• New customer agreements in Poland, Russia and Germany
EBIT at EUR -9.5 (-5.6) million, or -31.1% (-17.1)
• EBIT excluding one-off items EUR -3.7 (-5.4) million, or -11.9% (-16.5)
• Profitability in Germany and Russia remained unsatisfactory
• Streamlining actions continue
New head of CER appointed
* Austria, Germany, the Netherlands and Poland
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© 2012 Tieto Corporation
190 193 162 185 175 170
8.1%9.6%
7.7% 8.3%8.9%
5.7%
Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12
Sales, MEUR EBIT excl one-off items, %
Global AccountsChallenging telecom R&D market
Sales at EUR 170, down by 12%• Decreased sales for one key telecom customer• Sales strained by price erosion in R&D through
offshoring • Divestment of the financial services product
business in UK had a negative impact of EUR 5 million
EBIT at EUR 5.1 (18.5) million, or 3.0% (9.6)• EBIT excl. one-off items EUR 9.8 (18.5) million,
or 5.7% (9.6)• Benefits from the actions to improve profitability
are expected to materialize in the second half
Includes ~20 accounts, sales offices (Canada/USA, Italy, Spain, the UK) and offshore countries China, the Czech Republic and India
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© 2012 Tieto Corporation
Business Lines
Industry Solutions
Enterprise Solutions
Managed Services & Transformation
Product Engineering
• Net sales EUR 138 (138) million• Profitability remained solid• Strongest growth in healthcare and welfare as well as in energy
• Net sales EUR 67 (53) million• Profitability below target• Finland the strongest market, overcapacity in Sweden
• Net sales EUR 166 (179) million• Profitability improved in all markets• Offshoring and automation as value drivers
• Net sales EUR 86 (92) million• Overcapacity weakened profitability• Focus on adjusting operations to demand
30%(29)
15%(17)
36%(35)
19%(20)
% of total sales
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© 2012 Tieto Corporation
Competitive cost structureWell on schedule
Early 2013September
First phase of redundancies
June
Second phase of redundancies
March
Target to achieve annualized net savings of EUR 50 million by 2014• Around 1/3 expected to materialize in 2012, instead of the earlier estimate of 1/4• Total one-off costs are estimated at around EUR 50 million
Reduction of some 900 positions of which 300 in PES
• 2/3 of reductions related to overcapacity
• 300 in Finland, close to 200 in Sweden and over 400 in other countries
• Part of gross savings reinvested in automation in managed services
• In Q2, EUR 31.9 million booked in one-off costs
Reduction of some 400 positions completed by early 2013
• Mainly related to implementation of new operating model
• Part of gross savings will be reinvested in the development of CSI business and automation in managed services
• The remaining part of the estimated total one-off costs of EUR 50 million, close to EUR 20 million, are expected to be booked during H2
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© 2012 Tieto Corporation
Customer case in Q2 Russia: MTS Bank and MasterCard
• In May, Tieto announced the agreement to deliver its Tieto Card Suite Contactless solution for MTS and MasterCard in Russia
• Solution enables consumers to pay without traditional plastic bank card present
• Increasing flexibility and speeding up buying process with mobile phone
• Point of Sale terminal with a special SIM card with built-in NFC chip
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© 2012 Tieto Corporation
Customer case in Q2 Finland: Helsinki Region Transport Authority
• In May, Tieto signed an agreement with Helsinki Region Transport Authority (HRT) to deliver a ticketing and information system
• Modernizing current travel card system and providing for Helsinki region public transport up-to-date passenger information
• Easier planning of a journey withextensive real-time information and network services
• Stop screens to all the busses helps to manage the route
• Information on exceptional situations provided with satellite navigation
• To be taken in use by the end of 2015
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Full-year outlook for 2012 unchanged
• The outlook for 2012 remains unchanged. Tieto expects its net sales to develop in
line with the anticipated growth rate for the Western European IT services market,
i.e. 0–2%. Full-year operating profit (EBIT) excluding one-off items is expected to
be above the previous year’s level (EUR 117.1 million in 2011).
• In the second quarter, Tieto booked EUR 31.9 million in costs related to the
streamlining actions. The remaining part of the estimated total one-off costs of EUR
50 million, close to EUR 20 million, are expected to be booked during the second
half of 2012 as announced earlier.
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FocusedSimplifiedPositioned for futureUpdate of Tieto’s strategy 2012-2016 launched in March 2012
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© 2012 Tieto Corporation
Key strategic choices lead us to the future
Reinforcing industry expertiseBuilding on our long customer relationships and customer core process understanding
Expanding to provide full life-cycle IT services Investments in Consulting and System Integration capabilities
Focusing on markets where we can be in TOP 3Nordics as a current core market building on our strengths in Finland and Sweden
Product Engineering pursues global opportunities
Industries
Services
Markets
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Tieto’s long-term journey has begunand proceeds step by step
2012Build the
foundation
2013-2014Expand service
scope
2015-2016Focus on
future growth
• Transition to industry driven structure• Accelerate Consulting and System Integration
expansion and Managed Services automation• Implement competitive cost structure• Focus on 2012 operating plan
• Expand full life-cycle IT services in core markets• Qualify and build future core markets• Product Engineering Services pursues growth
globally
• Seek growth in and beyond core markets• Consider strategic inorganic opportunities
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© 2012 Tieto Corporation
Summary
H1 financial performance on plan
Strategy well received and execution on schedule
Full-year guidance unchanged
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