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2016-10-25

Tieto: Tieto's Interim Report 3/2016 - Solid profitability - well positioned for future growth and competitiveness

· Modest growth - good order intake with significant contracts won
towards the end of the quarter

· Operating structure aligned with the new strategy - temporary
transition impact addressed

· Investments in automation and future high-growth businesses
continued

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

Key figures for the third quarter
IT services
· Sales growth totalled 2.6%, sales in local currencies up by 3.1%
· Adjusted operating profit amounted to EUR 33.7 (36.8) million,
10.7% (12.0) of sales

The Group

· Sales growth totalled 1.6%, sales in local currencies up by 2.2%
· Adjusted operating profit amounted to EUR 35.4 (38.6) million,
10.4% (11.5) of sales

· Order intake (Total Contract Value) at EUR 406 (490) million,
order backlog at EUR 1 722 (1 864) million - book-to-bill 1.2

+------------------------+--------+--------+---------+---------+
| |7-9/2016|7-9/2015| 1-9/2016| 1-9/2015|
+------------------------+--------+--------+---------+---------+
|Net sales, EUR million | 340.5 | 335.1 |1 089.0 |1 064.5 |
+------------------------+--------+--------+---------+---------+
| Change, % | 1.6 | -3.2 | 2.3 | -4.9 |
+------------------------+--------+--------+---------+---------+
| Change in local | 2.2 | -0.6 | 3.1 | -2.4 |
|currencies, % | | | | |
+------------------------+--------+--------+---------+---------+
|Operating profit | 38.6 | 44.5 | 105.9 | 87.9 |
|(EBITA), EUR million 1) | | | | |
+------------------------+--------+--------+---------+---------+
|Operating margin | 11.3 | 13.3 | 9.7 | 8.3 |
|(EBITA), % | | | | |
+------------------------+--------+--------+---------+---------+
|Operating profit (EBIT),| 35.1 | 41.4 | 95.7 | 78.4 |
|EUR million | | | | |
+------------------------+--------+--------+---------+---------+
|Operating margin (EBIT),| 10.3 | 12.4 | 8.8 | 7.4 |
|% | | | | |
+------------------------+--------+--------+---------+---------+
|Adjusted2) operating | 35.4 | 38.6 | 102.7 | 99.4 |
|profit (EBIT), EUR | | | | |
|million | | | | |
+------------------------+--------+--------+---------+---------+
|Adjusted2) operating | 10.4 | 11.5 | 9.4 | 9.3 |
|margin (EBIT), % | | | | |
+------------------------+--------+--------+---------+---------+
|Profit after taxes, EUR | 27.3 | 29.6 | 73.0 | 56.1 |
|million | | | | |
+------------------------+--------+--------+---------+---------+
|EPS, EUR | 0.37 | 0.40 | 0.99 | 0.76 |
+------------------------+--------+--------+---------+---------+
|Net cash flow from | 13.8 | 16.4 | 47.0 | 65.5 |
|operations, EUR million | | | | |
+------------------------+--------+--------+---------+---------+
|Return on equity, 12 | 24.4 | 13.8 | 24.4 | 13.8 |
|-month rolling, % | | | | |
+------------------------+--------+--------+---------+---------+
|Return on capital | 22.6 | 14.8 | 22.6 | 14.8 |
|employed, 12-month | | | | |
|rolling, % | | | | |
+------------------------+--------+--------+---------+---------+
|Capital expenditure and | 53.3 | 81.8 | 74.5 | 104.0 |
|acquisitions, EUR | | | | |
|million | | | | |
+------------------------+--------+--------+---------+---------+
|Interest-bearing net | 136.4 | 57.7 | 136.4 | 57.7 |
|debt, EUR million | | | | |
+------------------------+--------+--------+---------+---------+
|Net debt/EBITDA | 0.7 | 0.4 | 0.7 | 0.4 |
+------------------------+--------+--------+---------+---------+
|Book-to-bill | 1.2 | 1.5 | 1.0 | 1.2 |
+------------------------+--------+--------+---------+---------+
|Order backlog | 1 722 | 1 864 | 1 722 | 1 864 |
+------------------------+--------+--------+---------+---------+
|Personnel on 30 |13 758 |13 179 | 13 758 | 13 179 |
|September | | | | |
+------------------------+--------+--------+---------+---------+

1) amortization of all intangible items; previously, only
acquisition-related intangible items

2) adjusted for restructuring costs, capital gains/losses, goodwill
impairment charges and other items (see page 15)

Full-year outlook for 2016 unchanged
Tieto expects its adjusted1) full-year operating profit (EBIT) to
increase from the previous year's level (EUR 150.8 million in 2015).

1) adjusted for restructuring costs, capital gains/losses, goodwill
impairment charges and other items

CEO's comment

Comment regarding the interim report by Kimmo Alkio, President and
CEO:

"We ended the third quarter with good order intake and solid
profitability while growth was modest. The significant agreements won
during the quarter well demonstrate our competitiveness and support
our growth ambition.

Our aim is to help customers renew their business: to provide truly
innovative services and to constantly increase operational
efficiency. As part of our renewed strategy, we adopted a new
operating structure in July. While we transitioned to a new operating
model and experienced temporarily lower efficiency, I am pleased how
swiftly this was addressed. We believe that the new strategy combined
with targeted investments will accelerate our performance and help us
achieve our long-term financial objectives. To further strengthen our
position in the attractive financial services market, we are pleased
to have completed the acquisition of Emric, the Nordic market leader
in software and services for credit processing. We are happy to
welcome our new colleagues to join Tieto to accelerate our customers'
business renewal.

I believe that our existing investments, close co-innovation with our
customers and continuous productivity improvements will provide us
with a good basis for competitiveness and value creation in the
future as well."

Financial performance by service line
+-------------------+---------+---------+-------+---------+---------+
|EUR million | Customer| Customer|Change,|Operating|Operating|
| |sales |sales |% |profit |profit |
| |7-9/2016 |7-9/2015 | |7-9/2016 |7-9/2015 |
+-------------------+---------+---------+-------+---------+---------+
|Technology Services| 179| 177| 1| 24.2| 22.9|
|and Modernization | | | | | |
+-------------------+---------+---------+-------+---------+---------+
|Business Consulting| 30| 28| 5| -0.2| -0.5|
|and Implementation | | | | | |
+-------------------+---------+---------+-------+---------+---------+
|Industry Solutions | 106| 101| 4| 13.0| 22.7|
+-------------------+---------+---------+-------+---------+---------+
|Product Development| 26| 29| -9| 1.7| 0.6|
|Services | | | | | |
+-------------------+---------+---------+-------+---------+---------+
|Support Functions | | | | -3.5| -4.3|
|and Global | | | | | |
|Management | | | | | |
+-------------------+---------+---------+-------+---------+---------+
|Total | 341| 335| 2 | 35.1| 41.4|
+-------------------+---------+---------+-------+---------+---------+

Operating margin by service line

+-------------------+---------+---------+-----------------+----------------+
|% |Operating|Operating|Adjusted1) |Adjusted1) |
| |margin |margin | operating margin|operating margin|
| |7-9/2016 |7-9/2015 |7-9/2016 |7-9/2015 |
+-------------------+---------+---------+-----------------+----------------+
|Technology Services| 13.5 | 12.9| 13.4| 13.2|
|and Modernization | | | | |
+-------------------+---------+---------+-----------------+----------------+
|Business Consulting| -0.6| -1.6| -4.9| -0.1|
|and Implementation | | | | |
+-------------------+---------+---------+-----------------+----------------+
|Industry Solutions | 12.3| 22.3| 12.5| 16.4|
+-------------------+---------+---------+-----------------+----------------+
|Product Development| 6.4| 2.1| 6.5| 6.2|
|Services | | | | |
+-------------------+---------+---------+-----------------+----------------+
|Total | 10.3| 12.4| 10.4| 11.5|
+-------------------+---------+---------+-----------------+----------------+

1) adjusted for restructuring costs, capital gains/losses, goodwill
impairment charges and other items

Customer sales by industry group
+--------------+-----------------------+-----------------------+---------+
|EUR million |Customer sales 7-9/2016|Customer sales 7-9/2015|Change, %|
+--------------+-----------------------+-----------------------+---------+
|Financial | 88| 83| 6|
|Services | | | |
+--------------+-----------------------+-----------------------+---------+
|Public, | 106| 98| 8|
|Healthcare and| | | |
|Welfare | | | |
+--------------+-----------------------+-----------------------+---------+
|Industrial and| 121| 126| -4|
|Consumer | | | |
|Services | | | |
+--------------+-----------------------+-----------------------+---------+
|IT services | 315| ...

Författare WKR

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