IT market continues to be weak, Tieto's profitability improves
slightly from the first quarter
Tieto Corporation Press Release 17 July 2009 at 8.05 am EET
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Second-quarter net sales declined by 7% and amounted to EUR 444.8
(480.1) million. In local currencies, net sales declined by 3%. Net
sales dropped in most customer industries, reflecting customers'
cautiousness in starting new projects. The telecom market continued
to be challenging and Tieto's net sales in the sector declined by
13%, having a substantial negative impact on the Group's net sales.
Second-quarter operating profit amounted to EUR 10.4 (29.6) million.
Operating profit, excluding one-off items amounted to EUR 24.6 (33.2)
million, representing a margin of 5.5% (6.9). The number of employees
was somewhat down during the quarter, resulting in a decrease in
personnel costs and an improvement in the utilization rate. However,
net sales declined at a faster rate than costs. Profit before taxes
totalled EUR 8.8 (23.8) million and earnings per share amounted to
EUR 0.14 (0.26).
To further adjust its operations to the current market situation and
the declining trend in demand, Tieto started new streamlining actions
during the first quarter of 2009. The streamlining measures include
personnel adjustments, decreased use of subcontractors, accelerated
utilization of offshore resources, consolidation of offices and
cutting business expenses throughout the Group. The costs related to
these measures amounted to EUR 24.9 million in the second quarter.
Tieto's outlook for 2009 remains unchanged. The company expects the
IT services market to decline in 2009 and tough market conditions to
continue. Therefore Tieto expects its full-year net sales and
operating profit to decline from last year. In the Nordic countries,
the best prospects for growth in 2009 are seen in the outsourcing of
application and ICT infrastructure management.
President and CEO Hannu SyrjÃ¤lÃ¤:
"The IT market continues to be weak and the telecom sector has
remained the most challenging area for us. Although several large
agreements were made in the second quarter, Tieto's net sales were
down 7%. Due to the declining sales and one-time costs, our
profitability was clearly down from last year, but improved slightly
from the first quarter.
Outsourcing continues to offer the strongest growth potential for
Tieto in all our main markets, and this is the area where we are
directing more and more of our sales efforts currently. In a recent
study by EquaTerra, Tieto was ranked as the best provider of
application management services in the Nordic countries. The positive
feedback we have received from our customers is a clear indication
that our efforts in quality and innovation are now starting to pay
For further information, please contact:
Hannu SyrjÃ¤lÃ¤, President and CEO, tel. +358 2072 68729,
Seppo Haapalainen, CFO, tel. +358 2072 63500,
Reeta Kaukiainen, EVP, Communications and Investor Relations, tel.
+358 2072 68711,
+358 50 522 0924, firstname.lastname@example.org
Pasi HiedanpÃ¤Ã¤, Manager, Investor Relations, tel. +358 2072 68088,
+358 50 3782228, email@example.com
Tieto is an IT service company providing IT, R&D and consulting
services. With approximately 16 000 experts, we are among the leading
IT service companies in Northern Europe and the global leader in
selected segments. We specialize in areas where we have the deepest
understanding of our customers' businesses and needs. Our superior
customer centricity and Nordic expertise set us apart from our
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