Tietoevry's Interim Report 3/2024: Improved profitability - growth impacted by weakening market

24 Oct 2024 08:00 CEST

Tietoevry CorporationINTERIM REPORT  24 October 2024, 9:00 a.m. (EEST)

· Revenue decrease of 1% - growth impacted by the weakening market
· Resilient profitability of 13.5%
· Strategic review of Tietoevry Tech Services progressing - the company is in
an exclusive process with a non-industrial buyer

The full interim report with tables is available at the end of this release.

7-9/2024 7-9/2023 1-9/2024 1-9/2023
Revenue, EUR million 655.0 659.7 2103.9 2099.2
     Organic growth1), % -1 2 -1 4
     Acquisitions and 1 2 2 1
divestments, %
     Foreign exchange 0 -8 -1 -8
rates, %
Total growth, % -1 -4 0 -3
Organic growth adjusted -2 3 -1 5
for working days4), %
Operating profit (EBIT), 63.5 61.6 173.9 171.5
EUR million
Operating margin (EBIT), 9.7 9.3 8.3 8.2
%
Adjusted2) operating 88.4 85.6 255.4 250.3
profit (EBITA3)), EUR
million
Adjusted2) operating 13.5 13.0 12.1 11.9
margin (EBITA3)), %
EPS, EUR 0.32 0.37 0.89 0.99
Cash flow from operating 58.2 -2.0 198.1 113.1
activities, EUR million
Capital expenditure, EUR 17.8 17.7 66.5 57.2
million

Full-year outlook for 2024

The company updated its full-year outlook on 16 October:

Tietoevry expects its organic1) growth to be around -2% (revenue in 2023: EUR 2
851.4 million).

The company estimates its full-year adjusted operating margin2) (adjusted
EBITA3)) to be 12.3-12.7% (12.6% in 2023).

Previous outlook for 2024:

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:


"Our third-quarter performance reflects softer IT market sentiment while we were
able to improve profitability through active cost base management. Our software
businesses Tietoevry Banking, Care and Industry continued to grow, while
experienced softening of the market during the quarter. In Tietoevry Create and
Tietoevry Tech Services, growth for the quarter was negative. The drive for
resilient profitability continued in the third quarter, resulting in an adjusted
operating margin of 13.5%, an improvement from the previous year. At the
beginning of October, we delivered the second tranche of the total annual
dividends of EUR 1.47 per share, representing an annual dividend yield of around
8%.

We continue to operate in a lower demand market and a number of our specialized
businesses are experiencing lower than normal volume development. For Tietoevry
Create, our global digital engineering business, this is visible in customers'
cost optimization - while investments into AI are at an early stage. For our
software businesses, volumes and overall performance have been more resilient,
even as customers' investment level reductions have recently become visible. As
an example, the reduced spending in the public sector across the Nordics is
impacting several of our businesses.

We anticipate that the IT market will remain soft for the rest of the year and
softness to continue into 2025. In parallel with the ongoing efficiency
measures, we continue to strengthen the foundation for growth and expansion
across our businesses to be prepared for business acceleration once the macro
economy recovers.

In our multi-year strategic transformation, we are making consistent progress in
our ambition of repositioning Tietoevry as a leading software and digital
engineering company. Strategic review of Tietoevry Tech Services is progressing
and the company is in an exclusive process with a non-industrial buyer.

We continue to pursue our position as one of the leading players in the market
to deliver the benefits of AI for our customers. We are pleased to see the
accelerated activity level in AI and GenAI-centric products and services. Each
of our specialized businesses is actively driving innovations and
competitiveness in products and services delivered to clients as well as
efficiency gains across our own software development, production and internal
operations. Solutions such as GenAI-driven automated speech to text conversion
in the Lifecare Hospital Information System and AI-enabled Financial Crime
Prevention in Banking are tangible and encouraging signals of the value we can
create for our customers in this area.

In addition to the value that the implementation of AI brings to people,
businesses and societies, this technology development continues to fuel
continuous learning and professional growth opportunities for our people. As a
company committed to sustainability, we at Tietoevry take highly seriously the
ethical aspects embedded into the development and utilization of technology. By
the end of the third quarter, all our employees have gone through annual
training, including a dedicated chapter on Responsible AI. We remain committed
to keeping ourselves at the forefront also with respect to our responsible
approach to technology.

Our hearts and minds remain with our colleagues and people in Ukraine as the
devastating situation in the country continues."


Financial performance by segment

Revenue, Revenue, Growth, Organic Adjusted Adjusted
Adjusted Adjusted
% growth, operating operating
operating operating
EUR EUR %
million million profit, profit,
margin, % margin, %

EUR EUR
million million
7-9/2024 7-9/2023 7-9/2024 7-9/2023 7-9/2024 7-9/2023

Tietoevry 190.9 195.7 -2 -4 23.0 21.6 12.1
11.0
Create
Tietoevry 137.9 135.4 2 4 18.3 18.0 13.3
13.3
Banking
Tietoevry 53.3 51.5 3 3 16.8 15.7 31.6
30.6
Care
Tietoevry 61.7 61.4 0 1 10.1 10.9 16.3
17.7
Industry
Tietoevry 236.1 242.4 -3 -3 24.7 23.1 10.5
9.5
Tech
Services
Eliminations -24.8 -26.8 - - -4.6 -3.7 -
-
and
non
-allocated
costs
Group total 655.0 659.7 -1 -1 88.4 85.6 13.5
13.0

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 24 October 2024 at 10.00
a.m. EEST (9.00 a.m. CEST, 8.00 a.m. UK time). Kimmo Alkio, President and CEO,
and Tomi Hyryläinen, CFO, will present the results online in English. The
presentation (https://tietoevry.videosync.fi/q3-2024/) can be followed on
Tietoevry's website (http://www.tietoevry.com/investors).

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 (https://palvelu.flik.fi/teleconference/?id=50049892). 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. https://www.tietoevry.com

More information:
Access the news on Oslo Bors NewsWeb site

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