Tietoevry Corporation INTERIM REPORT 25 April 2024, 9.00 a.m. (EEST)
- Growth of -2% impacted by a soft macroeconomic environment, high comparison figures and fewer working days
Healthy growth of 8% in Tietoevry Banking and 4% in Tietoevry Industry - Resilient profitability of over 12% supported by improvement in Tietoevry Banking and continued healthy profitability in Tietoevry Care
- Strategic review of Tietoevry Banking concluded: Banking continues as a specialized business in the Group - value currently not maximized through a listing or sale
- Strategic review of Tietoevry Tech Services on track with the previously announced schedule, aiming for conclusion Q2'24
The full interim report with tables is available at the end of this release.
1-3/2024 | 1-3/2023 | |
Revenue, EUR million | 733.9 | 744.3 |
Organic growth1), % | -2 | 8 |
Acquisitions and divestments, % | 4 | -2 |
Foreign exchange rates, % | -3 | -4 |
Total growth, % | -1 | 2 |
Organic growth adjusted for working days4), % | -1 | 8 |
Operating profit (EBIT), EUR million | 62.7 | 68.7 |
Operating margin (EBIT), % | 8.5 | 9.2 |
Adjusted2) operating profit (EBITA3)), EUR million | 88.6 | 91.9 |
Adjusted2) operating margin (EBITA3)), % | 12.1 | 12.3 |
EPS, EUR | 0.32 | 0.41 |
Net cash flow from operations, EUR million | 71.8 | 103.7 |
Capital expenditure, EUR million | 24.2 | 20.7 |
Full-year outlook for 2024 unchanged
Tietoevry expects its organic1) growth to be in the range of 0-3% (revenue in 2023: EUR 2 851.4 million).
The company estimates its full-year adjusted operating margin2) (adjusted EBITA3)) to be 12.0-13.0% (12.6% in 2023)
1) Adjusted for currency effects, acquisitions and divestments
2) Adjustment items include restructuring costs, capital gains/losses, impairment charges and other items affecting comparability
3) Profit before interests, taxes and amortization of acquisition-related intangible assets
4) Company estimate
CEO's comment
Comment regarding the interim report by Kimmo Alkio, President and CEO:
"First-quarter performance was as anticipated, impacted by the soft macroeconomic environment, high comparison figures and fewer working days. Our revenue was organically down by 2%. Profitability remained resilient with a healthy profit margin of over 12% despite the headwinds, including continued high inflation. Banking business continued to post solid growth of 8% and a year-on-year improvement in profitability. In Tietoevry Industry, performance remained healthy with 4% growth and profit margin of over 16%. In Tietoevry Care, profitability remained at a healthy level whereas performance in Tietoevry Create was impacted by macroeconomic uncertainty, fewer working days and high comparison figure. Tietoevry Tech Services' profitability improved from the prior year. We anticipate that the first quarter represents the lowest growth rate for 2024 and we expect revenue to return to growth in the second quarter.
During the quarter, we experienced a criminal ransomware attack in one of our data centres in Sweden. Since the attack, our teams have been working relentlessly to restore services for our customers. With the exception of efforts continuing with few customers, all impacted customer services were fully restored by mid-March. We regret the challenges this criminal attack has caused to our customers and the Swedish society.
As Tietoevry, we have an active role in promoting future technology and innovation, and currently we are advancing within the field of generative AI together with our customers. Our agreement with Helsinki University Hospital is an exciting example of the development of AI-based solutions. In collaboration with the client, we are developing an artificial intelligence solution that enables rapid identification of rare diseases. In Tietoevry Create, our activity level in delivering AI-powered solutions to customers is high. I am also proud of Tietoevry Tech Services for being named the European leader in the 2023 ISG Provider Lens Intelligent Automation Services and Solutions report. The report examines the essential capabilities required to succeed in digital transformation and intelligent automation.
We have seen good progress in the strategic review of Tietoevry Tech Services. The sales process is progressing as planned, with high engagement level. We have now concluded the strategic review of Tietoevry Banking. Prevailing capital market conditions do not support maximizing the value creation of Tietoevry Banking through a listing or sale. Higher value of Banking is realizable by further developing the performance of the business in the Group as an international fintech software player.
Our hearts and minds remain with our colleagues in Ukraine as the devastating situation in the country continues. We continue to support our people and their families and to provide means for relocation and enhance opportunities to continue working.
In March, we launched a new Sustainability Pledge to guide and accelerate our sustainability performance in 2024 and beyond. We are committed to accelerating the company's sustainability performance in three areas: climate change, ethical conduct and our social impact. Caring for our people and planet remains close to our heart - and we recognize the opportunities our industry has to offer to help safeguard the world around us."
Financial performance by segment
Revenue, EUR million | Revenue, EUR million | Growth, % | Organic growth, % | Adjusted operating profit, EUR million | Adjusted operating profit, EUR million | Adjusted operating margin, % | Adjusted operating margin, % | |
1-3/2024 | 1-3/2023 | 1-3/2024 | 1-3/2023 | 1-3/2024 | 1-3/2023 | |||
Tietoevry Create | 223.8 | 223.2 | 0 | -5 | 29.4 | 34.4 | 13.1 | 15.4 |
Tietoevry Banking | 148.8 | 142.3 | 5 | 8 | 17.8 | 14.7 | 11.9 | 10.3 |
Tietoevry Care | 58.6 | 61.8 | -5 | -5 | 16.5 | 19.0 | 28.2 | 30.7 |
Tietoevry Industry | 69.8 | 68.7 | 2 | 4 | 11.4 | 11.8 | 16.3 | 17.2 |
Tietoevry Tech Services | 263.3 | 288.5 | -9 | -7 | 20.1 | 21.0 | 7.6 | 7.3 |
Eliminations and non-allocated costs | -30.4 | -40.1 | - | - | -6.5 | -9.0 | - | - |
Group total | 733.9 | 744.3 | -1 | -2 | 88.6 | 91.9 | 12.1 | 12.3 |
For further information, please contact:
Tomi Hyryläinen, Chief Financial Officer, tel. +358 50 555 0363, tomi.hyrylainen (at) tietoevry.com
Tommi Järvenpää, Head of Investor Relations, tel. +358 40 576 0288, tommi.jarvenpaa (at) tietoevry.com
A teleconference for analysts and media will be held on Thursday 25 April 2024 at 10.00 a.m. EEST (09.00 am CET, 08.00 am. UK time). Kimmo Alkio, President and CEO, and Tomi Hyryläinen, CFO, will present the results online in English. The presentation can be followed on Tietoevry's website.
To take part in the questions and answers session after the presentation you will need to dial in by phone. You can access the teleconference by registering on this link. After the registration you will be provided phone numbers, user ID and a conference ID to access the conference.
The event is recorded and it will be available on demand later during the day. Tietoevry publishes its financial information in English and Finnish.
Tietoevry Corporation
DISTRIBUTION
Nasdaq Helsinki
Nasdaq Stockholm
Oslo Børs
Principal Media
Tietoevry creates purposeful technology that reinvents the world for good. We are a leading technology company with a strong Nordic heritage and global capabilities. Based on our core values of openness, trust and diversity, we work with our customers to develop digital futures where businesses, societies, and humanity thrive.
Our 24 000 experts globally specialize in cloud, data, and software, serving thousands of enterprise and public-sector customers in more than 90 countries. Tietoevry's annual turnover is approximately EUR 3 billion and the company's shares are listed on the NASDAQ exchange in Helsinki and Stockholm, as well as on Oslo Børs. www.tietoevry.com
