TIETO's interim report 2/2009 (January-June) - IT market continues to
be weak, Tieto's profitability
TIETO's interim report 2/2009 (January-June) - IT market continues to be weak, Tieto's profitability improves slightly from the first quarter
(Thomson Reuters ONE) - Tieto Corporation Interim Report 17 July 2009, 8.00 am EETTo download the PDF file, please use this link:http://hugin.info/3114/R/1329263/313806.pdfApril-June highlights * Net sales totalled EUR 444.8 (480.1) million, down 7%. In local currencies, net sales declined by 3%. * Operating profit amounted to EUR 10.4 (29.6) million, representing an operating margin of 2.3% (6.2). * Operating profit excluding one-off items amounted to EUR 24.6 (33.2) million, 5.5% (6.9) of net sales. * Profit after taxes was EUR 10.0 (18.7) million. * Net cash flow from operations amounted to EUR -12.1 (53.9) million. * Tieto concluded several important agreements during the quarter, such as for application management services with Elisa and IT infrastructure services with Itella. * The outlook for 2009 remains unchanged.January-June highlights * Net sales totalled EUR 882.8 (948.4) million, down 7%. In local currencies, net sales declined by 2%. * Operating profit amounted to EUR 15.3 (54.2) million, representing an operating margin of 1.7% (5.7). * Operating profit, excluding one-off items, amounted to EUR 39.4 (70.9) million, 4.5% (7.5) of net sales. * Profit after taxes was EUR 11.0 (35.0) million. * Net cash flow from operations amounted to EUR 29.9 (118.5) million. Q2/2009 Q2/2008 H1/2009 H1/2008Net sales, EUR million 444.8 480.1 882.8 948.4Change in net sales, % -7 11 -7 8Operating profit, EUR million 10.4 29.6 15.3 54.2Operating margin, % 2.3 6.2 1.7 5.7Operating profit excl. one-off items, 24.6 33.2 39.4 70.9EUR millionOperating margin excl. one-off items, 5.5 6.9 4.5 7.5%Profit after taxes, EUR million 10.0 18.7 11.0 35.0Net cash flow from operations, EUR -12.1 53.9 29.9 118.5millionEPS, EUR 0.14 0.26 0.15 0.48Hannu Syrjälä, President and CEO:"The IT market continues to be weak, and the telecom sector hasremained the most challenging area for us. Although we signed severallarge agreements in the second quarter, Tieto's net sales were down7%. Due to the declining sales and one-off costs, our profitabilitywas clearly down from last year, but improved slightly from the firstquarter.We have continued to streamline our operations in Tieto with a focuson improving our utilization rate and accelerating the implementationof the global delivery model. We are also putting a lot of emphasison driving new sales and creating market for our advanced offerings.Many of Tieto's core services help our customers to meet theirproductivity and efficiency requirements during these difficulttimes.Outsourcing continues to offer the strongest growth potential forTieto in all our main markets, and this is the area where we aredirecting more and more of our sales efforts currently. In a recentstudy by EquaTerra, Tieto was ranked as the best provider ofapplication management services in the Nordic countries. The positivefeedback we have received from our customers is a clear indicationthat our efforts in quality and innovation are now starting to payoff."MARKET DEVELOPMENTPolarization of the IT services market continued during the secondquarter of 2009. On the one hand, the market for new, large-scale ITprojects has declined in most sectors. On the other, the outsourcingmarket is active and the size of new potential cases has grown.Customers are seeking to cut costs and improve productivity. Pricepressure remained hard during the quarter, especially in the telecomsector.Demand for IT services continued at a good level in the government,healthcare and welfare sectors as well as the utilities sector. Inthe finance sector, demand has been weak. The Finnish finance marketis fairly stable, but competition is fierce in Sweden. There isgrowing interest towards outsourcing in Tieto's main markets.In the telecom sector, competition has remained tough and industrytransformation continues. Customers have implemented aggressive costsavings and supplier consolidation programmes. Demand for offshoreproduction has increased and customers are shifting their coreoperations and decision-making to Asia, especially China and India.Overall IT demand has remained weak and investments by operators andtelecom equipment manufacturers are expected to be low for some time.Uncertainty has continued in the IT market. New investments are beingpostponed, unless they offer clear short-term productivity benefits.However, companies' efforts to achieve cost savings by rationalizingtheir operations are opening up new business opportunities and, as aresult, balance the changes in demand. Close to 60% of Tieto'sbusiness is related to application and ICT infrastructure managementas well as maintenance, which are more resilient to the impacts of aneconomic downturn.Market development by countryIn Finland, the outsourcing market continues to grow. Additionally,customers are in the market to buy enhancements to existingapplications. However, demand for new IT projects and consultancy hascontinued to slide. The decline in the telecom sector has beenfollowed by that of the Finnish exports sector, especially the metaland forest industries. IT budgets in the public sector have not beenaffected so far.In Sweden, weak demand in the telecom sector has continued during thesecond quarter. Due to general cautiousness, the trend is that onlyfew new development projects are started. On the other hand, newoutsourcing-related opportunities have opened up, especially in thefinance and public sectors.Outside Finland and Sweden, the recession has also hit the IT marketshard, but impacts vary country by country. In general, telecom andfinance are the most affected sectors. Companies are shifting theircore operations and decision-making to Asia, rapidly increasingpressure to accelerate offshoring. This is experienced especially ininternational sectors, such as telecom and forest.In Germany, the automotive sector has been hit the hardest and is nowgoing through a heavy transformation process. Additionally, themarket for local telecom R&D has deteriorated during the quarter.Energy and healthcare markets are active.In Norway, the local market is slowing down despite the fact that theeconomy has been hit less hard. However, the global oil & gas marketis at a reasonable level. Additionally, regulatory changes in thefinance sector create new opportunities for capital market solutions.TIETO'S BUSINESS TRANSACTIONS AND MAJOR AGREEMENTS IN JANUARY-JUNEIn June, the company divested its holding in TietoSaab Systems Oy,previously owned by Tieto Corporation (60%) and Saab Corporation(40%). In 2008, net sales of TietoSaab Systems amounted to EUR 9.3million. Tieto booked EUR 5.2 million in capital gain from thedivestment.In June, Tieto agreed on the acquisition of 20% of the shares in TKPTieto Oy and as of 1 July owns the entire share capital of thecompany. TKP Tieto Oy was a joint venture, owned by Tieto Corporation(80%) and Finnish pension insurance institutions (20%). In 2008, netsales of TKP Tieto amounted to around EUR 32 million and the numberof personnel totalled 211.Tieto also concluded several important agreements during the quarter,such as for application management services with Elisa and ITinfrastructure services with Itella.STREAMLINING ACTIONSThe targets set for Tieto's Performance Improvement Programmelaunched in 2008 were reached and the programme was completed duringthe first quarter of 2009. To further adjust its operations to thecurrent market situation and to address the declining trend indemand, the company started new streamlining actions during the firstquarter of 2009.The company's target is to achieve additional annualized cost-savingsamounting to EUR 100 million, of which approximately EUR 70 millionis expected to materialize in 2009, mainly in the third and fourthquarters. The streamlining measures include personnel adjustments,decreased use of subcontractors, accelerated utilization of offshoreresources, consolidation of offices and cutting business expensesthroughout the Group.Costs of EUR 16.4 million related to the Performance ImprovementProgramme materialized in the first quarter. In addition, Tietoestimates that it will book approximately EUR 35 million in one-offcosts related to the new streamlining actions in 2009, of which EUR24.9 million were booked in the second quarter. All costs have a cashflow effect which will materialize mainly in the third and fourthquarter.FINANCIAL PERFORMANCE IN APRIL-JUNESecond-quarter net sales declined by 7% and amounted to EUR 444.8(480.1) million. As close to 40% of Tieto's net sales are generatedin non-euro countries, the weakened currencies, especially theSwedish currency (SEK), had a negative impact on net sales in euros.In local currencies, net sales declined by 3%. Net sales dropped inmost customer industries, reflecting cautiousness in starting newprojects. The telecom market continued to be challenging and Tieto'snet sales in the sector declined by 13%, having a substantialnegative impact on the Group's net sales.Second-quarter operating profit amounted to EUR 10.4 (29.6) million,representing a margin of 2.3% (6.2). Operating profit includedone-off costs of EUR 24.9 million related to streamlining actions andone-off income totalling EUR 10.7 million. One-off income includesEUR 5.2 million in capital gain from the TietoSaab divestment inFinland and a positive revenue recognition estimate of EUR 5.5million in Tieto International. Operating profit excluding one-offitems amounted to EUR 24.6 (33.2) million, representing a margin of5.5% (6.9). The number of employees was somewhat down during thequarter, resulting in a decrease in personnel costs and animprovement in the utilization rate. However, net sales declined at afaster rate than costs.Net financial expenses stood at EUR 1.6 (5.8) million in the secondquarter. Net interest expenses were EUR 1.7 (2.2) million and netgains from foreign exchange transactions EUR 0.8 (negative 0.9)million, of which EUR 1.1 million were unrealized net gains. Otherfinancial income and expenses amounted to EUR 0.7 (2.7) million.Second-quarter earnings per share (EPS) totalled EUR 0.14 (0.26).Operating profit (EBIT) includes EUR 2.3 (2.4) million fromamortization on allocated intangible assets.The 12-month rolling return on capital employed (ROCE) was 18.5% andthe return on shareholders' equity (ROE) 7.8%.The order backlog, which only comprises services ordered with bindingcontracts, amounted to EUR 1 122 (1 178) million at the end of theperiod. In total, 49% (40) of the backlog is expected to be invoicedthis year.Financial performance by country Net sales in EBIT Net sales Q2/2008, EBIT margin in margin in in Q2/2009, EUR Q2/2009, Q2/2008, EUR million million Change,% % %Finland 230 230 0 10.9 13.7Sweden 116 144 -19 -5.8 5.2International 143 144 0 -4.6 1.4Group -45 -38eliminationTotal 445 480 -7 2.3 6.2In Finland, net sales remained flat. The market for new outsourcingcases was strong and Tieto concluded several new small and mid-sizeddeals and agreement renewals, e.g. those with Elisa, Nordea,TeliaSonera, Itella and Varma. However, the new agreements were notsufficient to compensate for the expired contracts. Telecom was themost challenging sector, whereas sales to the healthcare and welfareand public sectors continued to grow. Flat revenue with costinflation led to lower profitability. Second-quarter operating profitamounted to EUR 25.2 (31.6) million including EUR 7.3 million inprovisions related to personnel reductions and EUR 5.2 million incapital gains. Operating margin excluding one-off items totalled11.9%.In Sweden, net sales declined by 19%. In local currency, the declinewas 7%. Excluding the currency impact, the drop in sales was mainlyattributable to the weak development in the telecom sector. Telecomaccounts for close to half of Tieto's net sales in Sweden. Thestrongest developing sectors were healthcare and welfare, public,retail and logistics. Operating profit totalled EUR -6.7 (7.4)million and included EUR 7.4 million in restructuring costs.Operating margin excluding one-off items totalled 0.6%. The declinein net sales and exchange rates were the main reasons for theweakened profitability. Costs declined, but not sufficiently tooffset the negative effect. Part of the costs are in currencies otherthan the Swedish currency (SEK).In International, demand in the healthcare and energy sectors was ata reasonable level, whereas net sales in the finance and telecomsectors were dropping off. Denmark and the UK were the mostchallenging markets. In the second quarter, Tieto's net sales in itsinternational markets remained unchanged. Net sales include anone-off income of EUR 5.5 million due to a change in the revenuerecognition estimate. Excluding this income and currency impacts, netsales declined by 3%. Second-quarter operating profit amounted to EUR-6.6 (2.1) million and included EUR 9.9 million in restructuringcosts and EUR 5.5 million in one-off income. Operating marginexcluding one-off items totalled -1.5%.Net sales by customer sector Net sales in Net sales in Q2/2009, Q2/2008, EUR million EUR million Change, %Telecom 149 172 -13Finance 94 102 -8Industry sectors 201 206 -2Total 445 480 -7In the telecom sector, Tieto's net sales fell by 13%. Customers arerunning aggressive cost savings programmes and cutting newinvestments. About half of the drop in net sales is attributable tolower volumes. Additionally, weaker currencies had a major impact onnet sales. Despite the shrinking market, Tieto has been able to holdon to its strong market position. Operating profit declined duringthe quarter due to the lower utilization rate and prices.In the finance sector, net sales fell by 8%. Exchange rate changesaccount for more than half of the drop.Additionally, two major contracts that expired in 2008 had a negativeimpact on net sales. Business has been stable in Finland but morechallenging in Sweden and the international market. Products sufferthe most from the current market situation. Operating profit declinedbut remained at a fairly good level.In the industry sectors, net sales declined by 2%. Net sales includeincome of EUR 5.5 million due to a change in the revenue recognitionestimate. Excluding the one-off income and currency impacts, netsales declined by 2%. In Tieto's reporting, the industry sectorscover customers in healthcare and welfare, forest, energy,manufacturing, automotive, public, retail and logistics.Manufacturing, forest and automotive were the weakest areas duringthe second quarter. The market for manufacturing has deteriorated,especially in the metal industry, reducing investments in new ITsolutions. Net sales continued to grow in the healthcare and welfareas well as public sectors. Profitability in most of the industrysectors was at a healthy level.FINANCIAL PERFORMANCE IN JANUARY-JUNENet sales declined by 7% and amounted to EUR 882.8 (948.4) million.The weakened currencies had a negative impact on net sales in euros.In local currencies, net sales declined by 2%. Sweden was the mostchallenging market.Operating profit amounted to EUR 15.3 (54.2) million includingone-off income totalling EUR 18.4 million and one-off costs of EUR42.5 million mainly related to the Performance Improvement Programmeand new streamlining actions. Operating profit excluding one-offitems amounted to EUR 39.4 (70.9) million, representing a margin of4.5% (7.5).Financial performance by country Net sales in EBIT Net sales H1/2008, EBIT margin in margin in in H1/2009, EUR H1/2009, H1/2008, EUR million million Change,% % %Finland 457 462 -1 10.4 13.0Sweden 235 285 -18 -6.5 6.0International 284 279 2 -3.7 -0.2Group -93 -78eliminationTotal 883 948 -7 1.7 8.1Net sales by customer sector Net sales in Net sales in H1/2009, H1/2008, EUR million EUR million Change, %Telecom 302 339 -11Finance 183 206 -11Industry sectors 398 403 -1Total 883 948 -7Net financial expenses stood at EUR 4.4 (8.7) million in the firsthalf. Net interest expenses were EUR 3.5 (4.5) million and net lossesfrom foreign exchange transactions EUR 0.5 (2.3) million, of whichEUR 1.2 million were unrealized net gains. Other financial income andexpenses amounted to EUR 0.4 (1.9) million.Six-month earnings per share (EPS) totalled EUR 0.15 (0.48).Operating profit (EBIT) includes EUR 4.6 (4.9) million fromamortization on allocated intangible assets.Cash flow and financingSecond-quarter net cash flow from operations, including the increaseof EUR 25.8 (decrease 19.5) million in net working capital, amountedto EUR -12.1 million (53.9). The increase in net working capitalwas mainly attributable to the decrease in accounts payable andaccruals.Six-month net cash flow from operations declined to EUR 29.9 (118.5)million, reflecting negative cash flow in the second quarter. Netcash flow from operations includes the decrease of EUR 2.3 (41.2)million in net working capital.Tax payments amounted to EUR 16.6 (9.5) million in the six-monthperiod.Acquisitions totalled EUR 3.3 (11.6) million in the six-month period.The equity ratio was 40.7% (38.8). Gearing was 30.1% (29.3).Interest-bearing net debt totalled EUR 139.2 (138.1) million,including EUR 240.5 million in interest-bearing debt, EUR 11.9million in finance lease liabilities, EUR 11.4 million in financelease receivables and EUR 101.7 million in cash and cash equivalents.The interest-bearing long-term debt consists of EUR 150 million inbonds, of which EUR 100 million will mature in December 2013 and EUR50 million (private placement) in July 2012. Short-terminterest-bearing loans include EUR 55 million drawn from the EUR 250million syndicated revolving credit facility maturing in December2011, EUR 34.8 million in commercial papers issued under the EUR 250million Commercial Paper Programme and EUR 0.6 million usage of othershort-term credit lines.InvestmentsAccrual-based investments totalled EUR 30.5 (59.4) million for thesix-month period. Capital expenditure, including financial leasing,accounted for EUR 29.3 (47.2) million and investments in subsidiaryand associated company shares for EUR 1.2 (12.2) million.PERSONNELIn February, Tieto started personnel negotiations to decrease thenumber of employees by some 350 people, of which approximately 170are in Sweden and 180 in Tieto International. The adjustments werepart of the Performance Improvement Programme.On 7 April, Tieto started new Group-wide personnel adjustments inselected operating countries, mainly in Europe. The adjustments arepart of new streamlining actions targeting at annualized cost-savingsof EUR 100 million. In Finland, the negotiations were concluded on 28May, and as a result, Tieto will make a total of 220 personsredundant and temporarily lay off no more than 1 500 employees during2009 either for a fixed period or until further notice. In Sweden,personnel negotiations are expected to lead to a reduction of 150employees and in International, 170 employees.As a result of the completed personnel negotiations, approximately500 employees have been made redundant by the end of June.The number of full-time employees totalled 16 195 (16 301) at the endof June. From the beginning of 2009, the net number of employeesdecreased by 447 in onshore countries, and increased by 192 inoffshore sites. Acquisitions, divestments and new outsourcingcontracts added the net number of employees by a total of 35. Yearon year, the number of employees in the global delivery centres hadincreased by 21% and totalled about 4 480 (3 700), or 26% (21) of thetotal headcount at the end of June. Global operations have grownfast, especially in India and China.The employee turnover for January-June stood at 6.2% and the 12-monthrolling turnover at 8.9% at the end of June. The average number offull-time employees was 16 650 (16 361) in the six-month period.MANAGEMENTPer Johanson started in his new position as Executive Vice President,Financial Services and as a member of the Leadership Team on 16 May.SHARES AND SHARE-BASED INCENTIVESOn 26 March, the Board of Directors decided to convey a total of74 260 existing shares held by the company, for free, to the keypersonnel participating in Tieto's Share Ownership Plan 2006-2008, asa proportion of the reward to be paid as shares on the basis of theearning period 2008. The conveyance took place at the end of April.During the second quarter, Tieto completed the share repurchaseprogramme of 252 610 shares. The share repurchases relate to thecompany's incentive programme for key personnel announced in December2008 (Performance Share Plan 2009-2011). The plan includes onethree-year earning period, which will end on 31 December 2011. Ownshares were purchased with the company's distributable funds,reducing the company's distributable non-restricted equity.At the end of June, the total number of shares amounted to 72 023 173and the share capital to EUR 75 841 523. The number of shares in thecompany's possession totalled 540 000, representing 0.7% of the totalnumber of shares and voting rights. The outstanding number of shares,excluding the shares in the company's possession, was 71 483 173.CHANGE OF THE COMPANY NAME AND DOMICILETietoEnator Corporation's company name was changed to TietoCorporation (Tieto Oyj in Finnish and Tieto Abp in Swedish) on 30April 2009, and the company's new domicile is Helsinki, Finland.These changes were decided by the Annual General Meeting on 26 Marchand they were entered in the Trade Register on 30 April.NEAR-TERM RISKS AND UNCERTAINTIESAs close to 40% of Tieto's net sales are generated in non-eurocountries, further weakening of currencies, especially the Swedishcurrency (SEK), would have a negative impact on net sales andoperating profit translated into euro.Weak demand for IT services might lead to lower utilization ofresources and hence lower profitability if the company is not able toadjust its cost base fast enough to compensate for negative changesin the market situation.Changes in the company structure and the ongoing streamlining actionsincluding personnel reductions may create uncertainty. Additionally,credit risks related to receivables might pose a growing risk.A comprehensive description of the major long-term risks is availableon the company's website.OUTLOOK FOR 2009Uncertainty continues in the IT market. In the full year, Tietoexpects the IT services market to decline and tough market conditionsto continue. Therefore Tieto expects its full-year net sales andoperating profit to decline from last year.In the Nordic countries, the best prospects for growth in 2009 areseen in the outsourcing of application and ICT infrastructuremanagement.Financial calendar for 2009Interim report for January-September 2009 on 21 OctoberAccounting policies in 2009The interim report has been prepared in accordance with InternationalAccounting Standard (IAS) 34, Interim Financial Reporting, as adoptedby the EU.Tieto has reclassified all internal long-term loans to Swedishsubsidiaries as a net investment in a foreign operation according toIAS 21. All related unrealized foreign exchange gains and losses fromthe net investment are recognized directly in shareholders' equity.Excluding this change the accounting policies adopted are consistentwith those used in the annual financial statements for the year ended31 December 2008 and as described in the annual financial statements.Of the new standards and interpretations Tieto adopted in 2009, IFRS8 "Operating Segments" is the only one with a major impact on theGroup's financial statements.Tieto adopted a new financial reporting structure at the beginning of2009. The countries are the main operating segments and its reportingcovers Finland, Sweden and International. Reportable segments aredefined based on IFRS 8, "Operating Segments". Deviating from IFRS 8,Tieto will start to report the Group's net sales by products andservices in 2010.IAS 1 (Revised) "Presentation of Financial Statements" will have aminor impact on required disclosures.The figures in this report are unaudited.Key figures 2009 2008 2009 2009 2008 2008 4-6 4-6 1-3 1-6 1-6 1-12Earnings per share, EUR- basic 0.14 0.26 0.01 0.15 0.48 0.83- diluted 0.14 0.26 0.01 0.15 0.48 0.83Equity per share, EUR 6.46 6.58 6.31 6.46 6.58 6.75Return on equity rolling 12 month,% 7.8 -4.9 10.2 7.8 -4.9 12.6Return on capital employed rolling12 month, % 18.5 8.8 25.3 18.5 8.8 25.2Equity ratio % 40.7 38.8 40.0 40.7 38.8 41.1Net interest-bearing liabilities,EUR million 139.2 138.1 79.2 139.2 138.1 101.4Gearing, % 30.1 29.3 17.5 30.1 29.3 21.0Investments, EUR million 14.4 23.2 16.1 30.5 59.4 97.9Number ofshares 2009 2009 2009 2008 2008 4-6 1-3 1-6 4-6 1-12Outstandingshares, end ofperiod Basic 71 483 173 71 661 523 71 483 173 71 661 523 71 661 523 Diluted 71 557 433 71 739 083 71 557 433 71 661 523 71 739 083Outstandingshares,average Basic 71 577 023 71 661 523 71 619 040 71 661 523 71 661 523 Diluted 71 652 226 71 739 083 71 695 415 71 661 523 71 739 083Company's possession ofits own shares, End ofperiod 540 000 361 650 540 000 361 650 361 650 Average 446 150 361 650 404 133 361 650 403 945Income statement, EUR million 2009 2008 2009 2008 Change 2008 4-6 4-6 1-6 1-6 % 1-12Net sales 444.8 480.1 882.8 948.4 -7 1 865.7Other operating income 7.1 1.7 10.0 6.2 61 10.8Employee benefit expenses 265.8 273.1 532.7 550.1 -3 1 056.0Depreciation and amortization 19.0 16.3 36.3 32.6 11 66.1Other operating expenses 156.7 162.8 308.5 317.7 -3 642.8Operating profit (EBIT) 10.4 29.6 15.3 54.2 -72 111.6Net interest expenses -1.7 -2.2 -3.5 -4.5 -22 -9.3Net exchange losses/gains 0.8 -0.9 -0.5 -2.3 -78 -21.2Other financial income andexpenses -0.7 -2.7 -0.4 -1.9 -79 1.3Profit before taxes 8.8 23.8 10.9 45.5 -76 82.4Income taxes 1.2 -5.1 0.1 -10.5 -101 -21.9Net profit for the period 10.0 18.7 11.0 35.0 -69 60.5Net profit for the periodattributable to Shareholders of the parentcompany 9.9 18.4 10.7 34.6 -69 59.9 Minority interest 0.1 0.3 0.3 0.4 -25 0.6 10.0 18.7 11.0 35.0 -69 60.5Earnings attributable to the shareholdersof the parent company per share, EURBasic 0.14 0.26 0.15 0.48 -69 0.83Diluted 0.14 0.26 0.15 0.48 -69 0.83Statement of comprehensive income, EUR millionNet profit for the period 10.0 18.7 11.0 35.0 -69 60.5Tax impact on share-based payments 0.2 0.0 0.2 0.0 0.0Translation difference (net of tax) 1.5 0.9 3.9 -6.0 -165 -21.5Total comprehensive income 11.7 19.6 15.1 29.0 -48 39.0Total comprehensive income attributable to Shareholders of the parent company 11.6 19.3 14.8 28.6 -48 38.4 Minority interest 0.1 0.3 0.3 0.4 -25 0.6 11.7 19.6 15.1 29.0 -48 39.0Balance sheet, EUR million 2009 2008 Change 2008 30 June 30 June % 31 DecGoodwill 392.7 414.7 -5 389.3Other intangible assets 46.1 62.3 -26 53.1Property, plant and equipment 100.8 94.4 7 100.5Deferred tax assets 74.5 67.4 11 67.8Other non-current assets 0.8 1.6 -50 1.5Total non-current assets 614.9 640.4 -4 612.2Trade and other receivables 469.5 558.0 -16 498.5Current income tax receivables 14.4 15.1 -5 13.9Interest-bearing current assets 11.6 10.4 12 9.7Cash and cash equivalents 101.7 93.4 9 120.2Total current assets 597.2 676.9 -12 642.3Total assets 1 212.1 1 317.3 -8 1 254.5Share capital, share issuepremiums and other reserves 109.6 113.2 -3 109.0Retained earnings 350.9 355.0 -1 373.0Parent shareholders' equity 460.5 468.2 -2 482.0Minority interest 1.5 3.1 -52 1.6Total equity 462.0 471.3 -2 483.6Finance lease liability 11.9 15.3 -22 14.5Other interest-bearing loans 150.0 150.1 0 150.0Deferred tax liabilities 27.6 29.6 -7 29.2Pension obligations 17.8 21.8 -18 17.2Provisions 54.5 35.9 52 28.6Other non-current liabilities 1.5 1.7 -12 1.6Total non-current liabilities 263.3 254.4 3 241.1Trade and other payables 388.0 502.6 -23 447.5Current income tax liabilities 8.3 12.5 -34 15.6Interest-bearing loans 90.5 76.5 18 66.7Total current liabilities 486.8 591.6 -18 529.8Total equity and liabilities 1 212.1 1 317.3 -8 1 254.5Net working capital in the balance sheet, EUR million 2009 2008 Change 2009 2008 30 June 30 June % 31 Mar 31 DecAccounts receivable 312.1 339.6 -8 336.4 357.7Other working capitalreceivables 156.5 217.8 -28 151.3 140.3Working capital receivablesincluded in assets 468.6 557.4 -16 487.7 498.0Operative accruals 160.0 258.4 -38 197.1 191.1Other working capitalliabilities 222.8 234.7 -5 250.5 250.6Pension obligations andprovisions 72.2 57.7 25 55.5 45.7Working capital liabilitiesincluded in current liabilities 455.0 550.8 -17 503.1 487.4Net working capital in thebalance sheet 13.6 6.6 106 -15.4 10.6Cash flow, EUR million 2009 2008 2009 2009 2008 2008 4-6 4-6 1-3 1-6 1-6 1-12Cash flow from operationsNet profit 10.0 18.7 1.0 11.0 35.0 60.5Adjustments Depreciation, amortizationand impairment 19.0 16.3 17.3 36.3 32.6 66.1 Share-based payments 1.1 1.1 1.0 2.1 1.9 4.1 Profit/loss on sale of fixedassets and shares -6.1 0.2 0.0 -6.1 0.2 0.2 Other adjustments 0.8 -1.3 0.1 0.9 -1.3 -1.3 Net financial expenses 1.6 5.8 2.8 4.4 8.7 29.2 Income taxes -1.2 5.1 1.1 -0.1 10.5 21.9Change in net working capital -25.8 19.5 28.1 2.3 41.2 30.3 Cash generated fromoperations -0.6 65.4 51.4 50.8 128.8 211.0Net financial expenses paid -1.3 -0.6 -3.0 -4.3 -0.8 -6.0Income taxes paid -10.2 -10.9 -6.4 -16.6 -9.5 -14.0Net cash flow from operations -12.1 53.9 42.0 29.9 118.5 191.0Cash flow from investingactivitiesAcquisition of Group companiesand businessoperations, net of cashacquired 0.1 5.2 -2.4 -2.3 -2.8 -8.0Capital expenditure -13.4 -17.0 -15.9 -29.3 -31.5 -68.5Advance payment for acquisitionof shares -1.0 - - -1.0 - -Disposal of business operations 5.7 - - 5.7 - -Sales of fixed assets 1.7 1.2 - 1.7 1.3 3.0Change in loan receivables -1.9 -2.2 0.1 -1.8 -2.2 -1.4Net cash used in investingactivities from operations -8.8 -12.8 -18.2 -27.0 -35.2 -74.9Cash flow from financingactivities Dividends paid -36.3 -36.0 - -36.3 -36.0 -36.0 Repurchase of own shares -2.6 - - -2.6 - - Payment of finance leaseliabilities -3.9 -0.8 1.3 -2.6 -1.7 -2.6 Change in interest-bearingliabilities 70.4 2.5 -46.6 23.8 -25.0 -27.5 Net cash used in otherfinancing activities 0.0 1.4 - 0.0 - -Net cash used in financingactivities from operations 27.6 -32.9 -45.3 -17.7 -62.7 -66.1Change in cash and cashequivalents 6.7 8.2 -21.5 -14.8 20.6 50.0Cash and cash equivalents atbeginning of period -94.6 -85.0 -120.2 -120.2 -72.9 -72.9Foreign exchangedifferences -0.4 -0.2 4.1 3.7 0.1 2.7Cash and cash equivalents atend of period 101.7 93.4 94.6 101.7 93.4 120.2 6.7 8.2 -21.5 -14.8 20.6 50.0Statement of changes in shareholders' equity, EUR million Minority Total Parent shareholders' equity interest equity Share Share Own Retained Total capital issue shares earnings premiums and other reservesBalance at 31Dec 2007 75.8 39.6 -41.1 399.3 473.6 4.0 477.6Minorityinterest 0.2 0.2 -1.3 -1.1Cancellationof own shares 32.1 -32.1 0.0 0.0Transferbetweenrestricted andnon-restrictedreserves -2.0 2.0 0.0 0.0Share-basedpaymentsrecognizedagainst equity 1.9 1.9 1.9Dividend -35.8 -35.8 -35.8Totalcomprehensiveincome -0.2 28.5 28.3 0.4 28.7At 30 June2008 75.8 37.4 -9.0 364.0 468.2 3.1 471.3Balance at 31Dec 2008 75.8 33.2 -9.0 382.0 482.0 1.6 483.6Minorityinterest -0.4 -0.4Transferbetweenrestricted andnon-restrictedreserves 0.4 -0.4 0.0 0.0Share-basedpaymentsrecognizedagainst equity 2.1 2.1 2.1Dividend -35.8 -35.8 -35.8Own sharespurchased -2.6 -2.6 -2.6Totalcomprehensiveincome 0.1 14.7 14.8 0.3 15.1At 30 June2009 75.8 33.7 -11.6 362.6 460.5 1.5 462.0Net sales by country, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 230 230 0 457 462 -1 900Sweden 116 144 -19 235 285 -18 548International 143 144 0 284 279 2 572Group elimination -45 -38 19 -93 -78 20 -155Group total 445 480 -7 883 948 -7 1 866Internal sales by country, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 17 14 25 35 29 21 53Sweden 4 6 -28 14 11 26 26International 24 19 28 44 38 17 77Group total 45 38 19 93 78 20 155Net sales according to customer location, EUR million 2009 Change Share 2008 Share 2008 Change 1-6 % % 1-6 % 1-12 %Finland 417 -4 47 437 46 853 6Sweden 217 -18 25 266 28 506 2Other 248 1 28 246 26 506 6Group total 883 -7 100 948 100 1 866 5Net sales by customer sector, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Telecom 149 172 -13 302 339 -11 648Finance 94 102 -8 183 206 -11 402Industry sectors 201 206 -2 398 403 -1 816Group total 445 480 -7 883 948 -7 1 866Operating profit (EBIT) by country, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 25.2 31.6 -20.3 47.4 60.2 -21.3 114.2Sweden -6.7 7.4 -190.3 -15.4 17.1 -189.8 48.7International -6.6 2.1 -418.9 -10.5 -0.6 -1 630.8 3.8Countries total 11.9 41.1 -71.1 21.5 76.7 -72.0 166.7Group operations -1.5 -11.5 87.2 -6.2 -22.5 72.6 -55.1Operating profit (EBIT) 10.4 29.6 -64.9 15.3 54.1 -71.8 111.6Operating margin (EBIT) by country, % 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 1-6 1-6 1-12Finland 10.9 13.7 -2.8 10.4 13.0 -2.6 12.7Sweden -5.8 5.2 -11.0 -6.5 6.0 -12.6 8.9International -4.6 1.4 -6.0 -3.7 -0.2 -3.5 0.7Countries total 2.7 8.6 -5.9 2.4 8.1 -5.7 8.9Operating margin (EBIT) 2.3 6.2 -3.8 1.7 5.7 -4.0 6.0Personnel by country End of period Average 2009 Change Share 2008 2008 2009 2008 1-6 % % 1-6 1-12 1-6 1-6Finland 5 863 -4 36 6 111 6 021 6 016 6 233Sweden 3 122 -6 19 3 331 3 291 3 265 3 345Czech 1 500 13 9 1 322 1 501 1 519 1 279Germany 1 049 -16 6 1 252 1 143 1 097 1 284India 802 29 5 620 784 784 618Latvia 618 6 4 582 628 625 571Poland 596 21 4 492 558 576 457Norway 556 -16 3 664 655 628 683China 399 113 2 187 290 367 161Great Britain 285 -18 2 347 347 307 338Italy 260 8 2 241 251 261 242Denmark 241 -21 1 306 289 287 323Lithuania 180 22 1 147 186 187 139Netherlands 136 4 1 131 138 145 134France 131 0 1 131 143 140 130Estonia 122 -2 1 125 119 122 120Other 335 8 2 311 274 324 303Group total 16 195 -1 100 16 301 16 618 16 650 16 361Total assets by country, EUR million 2009 2008 Change 2008 30 June 30 June % 31 DecFinland 475.3 495.7 -4 460.4Sweden 245.3 315.5 -22 291.3International 346.2 353.7 -2 335.7Group elimination -20.9 -17.3 21 -26.7Countries total 1 045.9 1 147.7 -9 1 060.8Group Operations 166.1 169.6 -2 193.7Total assets 1 212.1 1 317.3 -8 1 254.5Non-current assets according to asset location, EUR million 2009 2008 Change 2008 30 June 30 June % 31 DecFinland 254.7 253.3 1 254.3Sweden 132.6 154.2 -14 132.7Other 152.3 163.9 -7 155.9Total non-current assets 539.6 571.4 -6 542.9Capital expenditure by country, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 6.2 8.2 -24 19.0 31.1 -39 58,0Sweden 2.3 4.1 -45 4.6 7.3 -36 9,5International 0.7 3.5 -79 0.7 6.9 -89 10.7Group Operations 4.2 1.3 224 4.9 1.9 159 5.0Group total 13.4 17.1 -22 29.3 47.2 -38 83.2Depreciation by country, EUR million 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 10.5 9.2 15 21.4 18.1 18 36,9Sweden 2.0 2.1 -2 4.1 4.4 -8 8.5International 4.1 1.5 168 5.8 3.1 88 6.4Group Operations 0.2 1.1 -79 0.4 2.1 -78 4.1Group total 16.8 13.8 22 31.7 27.7 15 56.0Amortization on allocated intangible assets from acquisitions, EURmillion 2009 2008 Change 2009 2008 Change 2008 4-6 4-6 % 1-6 1-6 % 1-12Finland 0.1 - 0.4 -130 0.3 0.3 -1 0.5Sweden 0.7 0.9 -20 1.5 1.6 -9 3.5International 1.5 2.2 -33 2.9 3.0 -5 6,0Group Operations 0.0 - 0.2 -100 0.0 0.0 0 0.0Group total 2.3 2.4 -7 4.6 4.9 -6 10.0Commitments and contingencies, EUR 2009 2008million 30 June 31 Dec Change %For Tieto obligations Pledges - -On behalf of joint ventures Guarantees 2.2 0.0 posOther Tieto obligations Rent commitments due in one year 50.3 54.4 -8 Rent commitments due in 1-5 years 106.4 102.2 4 Rent commitments due after 5 years 19.7 19.5 1 Operating lease commitments due in oneyear 14.4 14.4 0 Operating lease commitments due in 1-5years 9.2 13.5 -32 Operating lease commitments due after5 years 0.0 0.0 Other commitments 13.8 13.9 -1Operating lease commitments are principally three-year leaseagreements that do not include buyout clauses.Notional amounts of derivative financial 2009 2008instruments, EUR million 30 June 31 DecForeign exchange contracts 102.8 252.0Interest rate swaps 150.0 100.0Includes the gross amount of all notional values for contracts thathave not yet been settled or closed. The amount of notional valueoutstanding is not necessarily a measure or indication of marketrisk, as the exposure of certain contracts may be offset by that ofother contracts.Fair values of derivatives, EUR millionThe net fair values of derivative financial 2009 2008instruments at the balance sheet date were: 30 June 31 DecForeign exchange contracts -2.2 -6.1Interest rate swaps 0.0 0.6Derivatives are used for hedging purposes only.Contingent assetsThe Finnish tax authorities have confirmed an additonal loss EUR 41.0million (of which a deferred tax asset EUR 10.7 million could berecognized) on the loss incurred by the parent company in connectionwith the intra-group transaction carried out in April 2004, but thedecision has been contested.QUARTERLY FIGURESKey figures 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Earnings per share, EUR- basic 0.14 0.01 0.02 0.33 0.26 0.23- diluted 0.14 0.01 0.02 0.33 0.26 0.23Equity per share, EUR 6.46 6.31 6.75 6.90 6.58 6.29Return on equity rolling 12 month,% 7.8 10.2 12.6 -2.4 -4.9 -7.7Return on capital employed rolling12 month, % 18.5 25.3 25.2 8.9 8.8 7.2Equity ratio % 40.7 40.0 41.1 42.0 38.8 38.0Net interest-bearing liabilities,EUR million 139.2 79.2 101.4 169.7 138.1 139.7Gearing, % 30.1 17.5 21.0 34.3 29.3 31.0Investments, EUR million 14.4 16.1 12.8 25.7 23.2 36.2Income statement, EUR million 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Net sales 444.8 438.0 492.0 425.3 480.1 468.3Other operating income 7.1 2.9 2.4 2.2 1.7 4.5Employee benefit expenses 265.8 266.9 278.8 227.1 273.1 277.0Depreciation and amortization 19.0 17.3 16.8 16.7 16.3 16.3Other operating expenses 156.7 151.8 175.2 149.9 162.8 154.9Operating profit (EBIT) 10.4 4.9 23.6 33.8 29.6 24.6Financial income and expenses -1.6 -2.8 -17.0 -3.5 -5.8 -2.9Profit before taxes 8.8 2.1 6.6 30.3 23.8 21.7Income taxes 1.2 -1.1 -4.8 -6.6 -5.1 -5.4Net profit for the period 10.0 1.0 1.8 23.7 18.7 16.3Balance sheet, EURmillion 2009 2009 2008 2008 2008 2008 31 31 30 June March 31 Dec 30 Sep 30 June MarchGoodwill 392.7 391.4 389.3 412.9 414.7 415.9Other intangibleassets 46.1 49.2 53.1 59.3 62.3 62.5Property, plant andequipment 100.8 103.2 100.5 102.2 94.4 92.2Other non-currentassets 75.3 68.7 69.3 67.9 69.0 67.4Total non-currentassets 614.9 612.5 612.2 642.3 640.4 638.0Trade receivables andother current assets 495.5 514.1 522.1 579.3 583.5 579.7Cash and cashequivalents 101.7 94.6 120.2 58.2 93.4 85.0Total current assets 597.2 608.7 642.3 637.5 676.9 664.7Total assets 1 212.1 1 221.2 1 254.5 1 279.8 1 317.3 1 302.7Total equity 462 452.1 483.6 494.5 471.3 451.1Non-currentinterest-bearingloans 161.9 163.2 164.5 164.8 165.4 166.2Provisions 54.5 37.2 28.6 27.5 35.9 38.7Other non-currentliabilities 46.9 42.5 48.0 53.7 53.1 45.9Total non-currentliabilities 263.3 242.9 241.1 246.0 254.4 250.8Trade payables andother currentliabilities 396.3 506.1 463.1 465.9 515.1 531.1Currentinterest-bearingloans 90.5 20.1 66.7 73.4 76.5 69.7Total currentliabilities 486.8 526.2 529.8 539.3 591.6 600.8Total equity andliabilities 1 212.1 1 221.2 1 254.5 1 279.8 1 317.3 1 302.7Cash flow, EUR million 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Cash flow from operationsNet profit 10.0 1.0 1.8 23.7 18.7 16.3Adjustments 15.2 22.3 39.5 28.1 27.2 25.4Change in net working capital -25.8 28.1 35.6 -46.5 19.5 21.7 Cash generated fromoperations -0.6 51.4 76.9 5.3 65.4 63.4Net financial expenses paid -1.3 -3.0 -1.0 -4.2 -0.6 -0.2Income taxes paid -10.2 -6.4 2.3 -6.8 -10.9 1.4Net cash flow from operations -12.1 42.0 78.2 -5.7 53.9 64.6Net cash used in investingactivitiesfrom operations -8.8 -18.2 -14.3 -25.4 -12.8 -22.4Net cash used in financingactivitiesfrom operations 27.6 -45.3 0.7 -4.1 -32.9 -29.8Change in cash and cashequivalents 6.7 -21.5 64.6 -35.2 8.2 12.4Cash and cash equivalentsat beginning of period -94.6 -120.2 -58.2 -93.4 -85.0 -72.9Foreign exchange differences -0.4 4.1 2.6 0.0 -0.2 0.3Cash and cash equivalents at endof period 101.7 94.6 120.2 58.2 93.4 85.0 6.7 -21.5 64.6 -35.2 8.2 12.4Tieto has made minor adjustments in the quarterly segment figures for2008 in the tables below. For comparison with the figures announcedearlier, visit Tieto's website www.tieto.com/Investors/Financials.Net sales by country, EURmillion 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Finland 230 227 239 199 230 232Sweden 116 119 141 123 144 141International 143 141 152 140 144 135Group elimination -45 -48 -40 -37 -38 -40Group total 445 438 492 425 480 468Net sales by customer sector,EUR million 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Telecom 149 153 162 147 172 167Finance 94 89 104 92 102 104Industry sectors 201 197 226 186 206 198Group total 445 438 492 425 480 468Operating profit (EBIT) bycountry, EUR million 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Finland 25.2 22.1 28.3 25.7 31.6 30.0Sweden - 6.7 - 8.7 17.6 14.1 7.4 9.7International - 6.6 - 4.0 - 0.9 5.2 2.1 - 2.7Countries total 11.9 9.4 45.1 45.0 41.1 37.0Group operations - 1.5 - 4.5 - 21.5 - 11.1 - 11.5 - 12.4Operating profit (EBIT) 10.4 4.9 23.6 33.9 29.6 24.6Operating margin (EBIT) bycountry, % 2009 2009 2008 2008 2008 2008 4-6 1-3 10-12 7-9 4-6 1-3Finland 10.9 9.7 11.9 12.9 13.7 12.9Sweden -5.8 -7.3 12.5 11.5 5.2 6.9International -4.6 -2.8 -0.6 3.7 1.4 -2.0Countries total 2.7 2.1 9.2 10.6 8.6 7.9Operating margin (EBIT) 2.3 1.1 4.8 8.0 6.2 5.3Major shareholders 30 June 2009 Shares % 1 OP Pohjola Group 4 144 500 5.8 2 Swedbank Robur fonder 3 629 256 5.0 3 Didner & Gerge Aktiefond 2 580 000 3.6 4 Länsförsäkringar Fondförvaltning AB 2 570 841 3.6 5 Ilmarinen Mutual Pension Insurance Co. 2 010 975 2.8 6 The State Pension Fund 1 610 000 2.2 7 Svenska Litteratursällskapet i Finland 1 531 000 2.1 8 Tapiola Pension 1 530 000 2.1 9 Varma Mutual Pension Insurance Co. 1 349 749 1.910 SEB Investment Management 757 690 1.1 21 714 011 30.2 Nominee registered 42 523 957 59.0 Others 7 785 205 10.8 Total 72 023 173 100.0Based on the ownership records of Euroclear Finland Oy and EuroclearSweden AB.For further information, please contact:Hannu Syrjälä, President and CEO, tel. +358 2072 68729,hannu.syrjala(at)tieto.comSeppo Haapalainen, CFO, tel. +358 2072 63500, +358 400 455587,seppo.haapalainen(at)tieto.comReeta Kaukiainen, EVP, Communications and Investor Relations, tel.+358 2072 68711,+358 50 522 0924, reeta.kaukiainen(at)tieto.comPasi Hiedanpää, Manager, Investor Relations, tel. +358 2072 68088,+358 50 378 2228, pasi.hiedanpaa(at)tieto.comPress conference for analysts and media will be held in Tieto'spremises, Aku Korhosen tie 2-6, Helsinki at 10.00 am EET (9.00 amCET, 8.00 am UK time). The results will be presented in English byHannu Syrjälä, President and CEO. Notification of attendance tosirpa.salo(at)tieto.com, tel. +358 2072 68714.The conference will be webcasted and published live on Tieto'swebsite www.tieto.com and there will be a possibility to presentquestions on-line. An on-demand video will be available after theconference.Conference call hosted by the management starting at 2.00 pm EET(1.00 pm CET, 12.00 am UK time), will also be available as live audiowebcast at www.tieto.com. Callers may access the conference directlyat the following telephone numbers: US callers: +1 866 966 5335,non-US callers: +44 20 3023 4402, no code. Lines are to be reservedten minutes before the start of conference call.An on-demand audiocast of the conference will also be published onTieto's website later during the day. A replay will be availableuntil 24 July 2009 at the following numbers: US callers:+1 866 583 1035, non-US callers: +44 20 8196 1998, access code:141833#.Tieto publishes financial information in English, Finnish andSwedish. All releases are posted in full on Tieto's website as soonas they are published.TIETO CORPORATIONDISTRIBUTIONNASDAQ OMX HelsinkiNASDAQ OMX StockholmPrincipal MediaTieto is an IT service company providing IT, R&D and consultingservices. With approximately 16 000 experts, we are among the leadingIT service companies in Northern Europe and the global leader inselected segments. We specialize in areas where we have the deepestunderstanding of our customers' businesses and needs. Our superiorcustomer centricity and Nordic expertise set us apart from ourcompetitors.www.tieto.comTieto CorporationBusiness ID: 0101138-5Aku Korhosentie 2-6PO Box 38FI-00441 HELSINKI, FINLANDTel +358 207 2010Fax +358 2072 68898Registered office: HelsinkiE-mail: info(at)tieto.comwww.tieto.comhttp://hugin.info/3114/R/1329263/313806.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Bereitgestellt von Benutzer: hugin
" alt="IT market continues to be weak, Tieto's profitability improves
slightly from the first quarter>">Datum: 17.07.2009 - 07:02 Uhr
Sprache: Deutsch
News-ID 3672
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"TIETO's interim report 2/2009 (January-June) - IT market continues to
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