Tieto Q3 results: Profitability improved. Markets gradually bottoming out. 21 October 29 Helsinki, Finland Hannu Syrjälä President and CEO Seppo Haapalainen CFO Reeta Kaukiainen EVP, Comms&IR 29 Tieto Corporation Markets and customers: Early signs of stabilization Financial Services started to recover, but continued to suffer Industry Group mixed performances Application management and infrastructure services stable, but project and consulting businesses still weak Lots of opportunities and demand for Outsourcing Managed services R&D-related IT offerings Digital front-office Good flow of new deals and renewals incl. Apoteket, Expressen, Kesko, Nokia Siemens Networks, Westdeutsche ImmobilienBank AG and Local Government Pension Institution 1 2 29 Tieto Corporation 29 Tieto Corporation
Financial highlights: Profitability clearly up from the first half Sales down by 1% to EUR 383 million 6% decline in local currencies 7% EBIT driven by the streamlining actions Streamlining according to plans; approx. half of savings target achieved All country segments Finland, Sweden, International profitable Strong net cash flow of EUR 32.2 million EPS EUR.25 6 5 4 3 2 1 Net sales EBIT % 1 9 8 7 6 5 4 3 2 1 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 3 29 Tieto Corporation Q3 and 9M snapshot Q3/29 Q3/28 9M/29 9M/28 Net sales, EUR million 382.9 425.3 1 265.7 1 373.7 Operating profit, EUR million 26.3 33.8 41.6 88. EBIT, % 6.9 8. 3.3 6.4 Operating profit excl. one-off items, EUR million 3.1 36.7 69.5 17.5 EPS, EUR.25.33.4.81 Net cash flow from operations 32.2-5.7 62.1 112.8 Gearing, % 24.4 34.3 Personnel on 3 September 16 215 16 392 2 4 29 Tieto Corporation 29 Tieto Corporation
Income statement EUR million Q3 29 Q3 28 Change % 1-9 29 1-9 28 Change % Net sales 382.9 425.3-1 1 265.7 1 373.7-8 Other operating income 1.3 2.2-4 11.3 8.4 35 Employee benefit expenses 21.7 227.1-7 743.4 777.2-4 Depreciation and amortization 16.9 16.7 1 53.2 49.3 8 Other operating expenses 13.3 149.9-13 438.8 467.6-6 Operating profit (EBIT) 26.3 33.8-22 41.6 88. -53 Net interest expenses -1.9-2.3-5.4-6.8-21 Net exchange losses/gains 2.8-2.2 2.3-4.5-151 Other financial income and expenses. 1. -.4 -.9-56 Profit before taxes 27.2 3.3 38.1 75.8-5 Income taxes -8.8-6.6-8.7-17.1-49 Net profit for the period 18.4 23.7 29.4 58.7-5 5 29 Tieto Corporation Streamlining actions good execution Savings targets Achievements One-off costs Actions EUR 7 million in 29 EUR 1 million in 21 Cost base* down by EUR 62 million in nine months Half of the decrease from currency impact Personnel costs the second biggest factor EUR 46 million in nine months EUR 4 million in Q3 Estimated EUR 5 million to be booked in Q4 Personnel adjustments reduction of 7 employees Decreasing the number of subcontractors Consolidation of offices Cutting down business expenses * Excluding non-recurring items in 28 and 29 3 6 29 Tieto Corporation 29 Tieto Corporation
Quarterly development Net sales Operating profit and margin (excl. one-time items) MEUR MEUR % 6 5 1 4 8 4 3 6 2 2 4 1 2 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Net cash flow from operations MEUR 1 8 6 4 2-2 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 % 5 4 3 2 1 Gearing Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 7 29 Tieto Corporation Offshoring ratio at 27% Importance of adequate offshore capabilities is increasing 5 45 4 35 3 25 2 15 1 5 3 % 25 % 2 % 15 % 1 % 5 % % Q1 4 Q3 4 Q1 5 Q3 5 Q1 6 Q3 6 Q1 7 Q3 7 Q1 8 Q3 8 Q1 9 Q3 9 Czech and Poland Baltics, Russia and Belarus India, China, Malaysia and Indonesia Offshore of total, % 4 8 29 Tieto Corporation 29 Tieto Corporation
Country sales by quarter 6 5 4 3 2 14 123 152 141 141 143 119 116 13 13 1 199 239 227 23 199 29 Tieto Corporation Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Finland Sweden International Note: Internal sales included Finland No growth, but improved profitability with 14.6% EBIT-margin Market for outsourcing cases strong Several new small or mid-sized deals and renewals Net sales, MEUR EBIT, % Q3/29 Q3/28 198 244 227 23 199 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Sales, MEUR EBIT, MEUR EBIT, % Employees 199 29. 14.6 5 772 199 25.7 12.9 6 48 5 1 29 Tieto Corporation 29 Tieto Corporation
Sweden Sales down by 16%; in SEK 1% decline Sales decline caused mainly by telecom Operating profit down from last year, but up from the first half One-off costs amounted to EUR 4.5 million 123 141 119 116 13 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 Net sales, MEUR EBIT, % Sales, MEUR EBIT, MEUR EBIT, % Employees Q3/29 13 4.8* 4.7 3 86 * Includes a non-recurring internal adjustment of EUR 2 million Q3/28 123 14.1 11.5 3 298 11 29 Tieto Corporation International Sales down by 8%; in local currencies 6% in Denmark and finance in the UK most challenging areas Profitability back into the black, but still unsatisfactory Q3/29 Q3/28 Sales, MEUR 13 14 14 152 141 143 13 EBIT, MEUR.7 5.2 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 EBIT, % Employees*.5 7 357 3.7 7 46 Net sales, MEUR EBIT, % * of which >6% in offshore locations 6 12 29 Tieto Corporation 29 Tieto Corporation
36% of sales from top 1 customers Apoteket Ericsson IF Insurance Kesko The National Board of Taxes (FI) Nokia Nokia Siemens Networks Nordea TeliaSonera Varma Healthcare & Welfare/ Retail Finance Retail Government Finance Finance Share of Group sales by customer sector 43 % 23 % 34 % Finance Industry sectors Notes: No customer exceeds 1% in net sales on Group level Customers are listed in alphabethical order. 13 29 Tieto Corporation Sales fell by 1% due to lower volumes and prices Tight competition emphasizes the importance of offshore capabilities Unsatisfactory profitability due to adjusting operations to market changes 2 15 1 5 147 162 153 149 132 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 7 14 29 Tieto Corporation 29 Tieto Corporation
Finance Sales down by 6%; over half of the drop due to currencies Business was stable in Finland and Sweden, but declined in the UK Products for Capital Markets was the strongest area Profit and margin improved from Q3/8 and H1/9 12 1 8 6 4 2 92 14 89 94 87 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 15 29 Tieto Corporation Industry sectors* Sales declined by 12%, in local currencies 6% Manufacturing and forest were the weakest sectors Public sector demand stable Profitability at a healthy level 25 2 15 1 5 186 226 197 21 165 Q3/8 Q4/8 Q1/9 Q2/9 Q3/9 8 * Automotive, energy, forest, healthcare and welfare, manufacturing, public, retail and logistics 16 29 Tieto Corporation 29 Tieto Corporation
Outlook for 29 unchanged Signs of stabilization in the IT market Tieto anticipates that the market will bottom out during 29 Potential pick-up in demand would effect Tieto s net sales with delay The company expects its full-year net sales and operating profit to decline from last year 17 29 Tieto Corporation Questions and answers 9 18 29 Tieto Corporation 29 Tieto Corporation