TietoEnator Q4 and full year February 2008, Helsinki Strategy and actions for 2008 Interim CEO Åke Plyhm

Transcription

1 TietoEnator Q4 and full year February 2008, Helsinki Strategy and actions for 2008 Interim CEO Åke Plyhm Performance and outlook CFO Timo Salmela

2 Strategy and actions for 2008 Performance and outlook

3 Summary of full year 2007 Positive development in IT market High level of organic growth (9%) Revised strategy Performance Improvement Programme started Number of people in offshore countries up 60% Appointment of new President and CEO Profitability impacted by one-off items related to Performance Improvement Programme Page 3

4 Financial highlights full year 2007 Net sales growth 8% to EUR million Operating profit (EBIT) EUR 1.3 (127.7) million including one-off items of EUR million Proposed dividend EUR 0.50 (1.20) per share Comparable EPS excludes goodwill impairments, amortization of allocated intangible assets from acquisitions, stock option expenses and one-time capital gains Page 4

5 Business area operating margin FY % 6% 2% -2% -6% Banking & Insurance Telecom & Media Government, Manufacturing & Retail Healthcare & Welfare Forest & Energy Processing & Network EBIT% Impact of one-off items % EBIT% excluding capital gains and losses and impairment losses Digital Innovations allocated to business areas Page 5

6 Background for the revised strategy and performance improvement programme Decline in profitability Low-cost competition and price pressure Salary increases in high-cost countries Stagnant prices Customers demand cost-efficiencies and low-cost production Operational efficiency improvements Focus on improving quality and productivity Reducing overhead activities and corporate-level administrative costs New strategy to restore profitability and strengthen competitive positioning for future growth Page 6

7 Improved profitability through focused strategy Focused approach Sharper regional and global strategies Fewer international spearheads Re-evaluating solutions portfolio Efficiency Quality and productivity Speed-up offshore production Page 7

8 Performance Improvement Programme Target of over EUR 100 million annual cost savings by the end of 2009 Covers all business areas, horizontal units and group operations The programme consists of three components Increase the quality of services Improve utilization of staff and facilities, reduce administrative costs and increase offshoring Restructure, discontinue or divest low-performing businesses Negotiations concerning personnel adjustments started in January 2008 Page 8

9 Global service production Number of people in offshore countries up 60% Combining onshore and offshore capabilities efficiently is the key to success Offshoring target 40% in 3-5 years % 20.0% 15.0% 10.0% 5.0% 0.0% India, China, Malaysia and Indonesia Baltics and Russia Czech and Poland Off-shore of total, % Page 9

10 Going forward

11 Strategy and actions for 2008 Performance and outlook

12 Financial highlights in Q Net sales growth 8% to EUR million Operating profit (EBIT) EUR (43.9) million including EUR million of one-off items Capital gains EUR 1.5 (7.3) million EPS EUR (0.39) Full-year EPS EUR (1.15) Comparable EPS excludes goodwill impairments, amortization of allocated intangible assets from acquisitions, stock option expenses and one-time capital gains Page 12

13 Net sales by industry segment FY % -23% 4% +4% +27% -4% 6% 5% 11% 22% Banking and insurance Telecom and media Government Healthcare and Welfare Forest -2% 8% 8% 37% +26% Energy Nordic regional verticals*) Non-allocated -16% * Incl Retail, Logistics and Manufacturing Share of net sales Change Page 13

14 Net sales and margin by country FY 2007 EBIT% Finland Sweden 1 2 Other countries neg neg EBIT including one-off items +8% +23% 9% 0% 5% 13% 45% +7% Finland Sweden Germany Norway Other 28% +9% Share of net sales Change, local currency Page 14

15 Top 10 customers FY 2007 Top 10 customers account for around 37% of net sales Danske-Sampo banking and insurance Ericsson telecom If insurance banking and insurance Nokia telecom Nordea banking and insurance Nokia Siemens Network telecom SAAB Technology manufacturing Stora Enso forest The National Board of Taxes (FI) government TeliaSonera telecom Page 15

16 Financial impact of the Performance Improvement Programme during Q and Total impact on operating profit (EBIT) EUR 160 million Impact in Q EUR 105 million Restructuring EUR 22 million Impairment of assets EUR 60 million of which EUR 40 million goodwill related Provisions for project risks EUR 23 million Impact during EUR 60 million Page 16

17 Banking & Insurance Positive organic growth after decline in previous quarters One-off items EUR 50 million (incl. impairment loss of EUR 40 million) in Q4 Q Q Net sales, MEUR Growth, % 5% 17% EBIT, MEUR * 7.8% 7.1% EBIT, % -8.0% 7.7% Employees * Excl. EUR 40 million impairment loss -5.4% -5.2% -8.0% Q Q Q Q Q Net sales EBIT % EBIT excluding capital gains and impairment losses Page 17

18 Telecom & Media High level of organic growth continued One-off items EUR 6 million in Q4 8.8% 9.2% 7.7% 8.2% Q Q Net sales, MEUR Growth, % 24% 1% EBIT, MEUR EBIT, % 7.1% 8.8% Employees % Q Q Q Q Q Net sales EBIT % EBIT excluding capital gains Page 18

19 Government, Manufacturing & Retail Profitability impacted by one-off items One-off items EUR 17 million in Q4 9.9% 9.9% 5.6% 1.6% Q Q Net sales, MEUR Growth, % -20% -11% EBIT, MEUR EBIT, % -29.7% 9.9% Employees % Q Q Q Q Q Net sales EBIT % EBIT excluding capital gains Page 19

20 Healthcare & Welfare Q4 seasonality effect not visible due to one-off items One-off items EUR 10 million in Q4 17.8% Q Q Net sales, MEUR Growth, % -7% 6% EBIT, MEUR EBIT, % -13.0% 17.8% Employees % -0.8% -1.8% Q Q Q Q Q Net sales EBIT % -13.0% EBIT excluding capital gains Page 20

21 Forest & Energy Growth slowed down from previous quarters One-off items EUR 5 million in Q4 8.1% 7.3% 8.1% Q Q Net sales, MEUR % Growth, % 2% 6% EBIT, MEUR EBIT, % -3.6% 4.9% Employees % Q Q12007 Q Q Q Net sales EBIT % EBIT excluding capital gains Page 21

22 Processing & Network Good growth despite continuous price pressure One-off items EUR 6 million in Q4 12.5% Q Q Net sales, MEUR % 8.6% Growth, % 14% 12% 6.2% EBIT, MEUR EBIT, % 5.2% 9.2% Employees % Q Q Q Q Q Net sales EBIT % EBIT excluding capital gains Page 22

23 Employees FY 2007 FY 2006 Employees at the end of period Gross recruitment Leaves Layoffs Acquisitions and outsourcing Divestment Employee turnover (12-month rolling) 11.2% 9.0% Page 23

24 Balance sheet Change MEUR 31 Dec 31 Dec % Non-current assets Loan receivables Current assets Cash Total assets Equity Interest-bearing debt Other non-current liabilities Other current liabilities Total shareholders equity and liabilities Net interest-bearing liabilities Gearing % Equity ratio % Return on equity % (rolling 12 months) Return on capital employed % (rolling 12 months) 8 19 Page 24

25 Cash flow MEUR Q Q FY 2007 FY 2006 Cash generated from continuing operations Net financial items Income taxes paid Net cash flow from discontinued operations Total Net Cash flow from operations Net cash used in investing activities from - continuing operations discontinued operations Dividends and donations Repurchase of own shares Net cash used in other financing activities Net cash used in financing activities from discontinued operations Total Net Cash used in investing/financing activities Change in cash Liquid assets at end of period Page 25

26 Dividend proposal EUR 0.50 per share EUR EPS non-recurring EPS recurring Dividend non-recurring Dividend recurring Page 26

27 Outlook for 2008 IT market is expected to remain active Prices are expected to stay roughly on the same level or be higher than in 2007 Full-year revenue growth will follow the overall development in the relevant market Actions related to Performance Improvement Programme will impact on profitability in 2008 Full-year operating profit is expected to improve from 2007 Page 27

28 Questions and answers»

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