Tieto's fourth-quarter net sales declined by 10% and amounted to EUR 440.6 (492.0) million.
Outsourcing activity was strong, but net sales from new projects remained at a low level. Net sales dropped in most customer industries. The public and retail sectors performed well and their net sales continued to grow in the fourth quarter.
Fourth-quarter operating profit amounted to EUR 33.7 (23.6) million. Operating profit included a net amount of EUR 4.8 million (negative) in one-off items related to streamlining actions. Operating profit excluding one-off items amounted to EUR 38.5 (42.4) million, representing a margin of 8.7% (8.6). The trend in the margin in all country segments remained positive compared with the first three quarters of 2009. Profit before taxes totalled EUR 32.2 (6.6) million and earnings per share amounted to EUR 0.36 (0.02) in the fourth quarter.
The company has restructured its operations during the year and increased its resources in offshore locations substantially in 2009. From the beginning of 2009, the number of employees in the global delivery centres has increased by 20% and amounted to about 5 100 (4 280), or 30% (25) of the year-end headcount. Global operations have grown fast especially in India and China. As a result of efficient implementation of streamlining actions, the company achieved its EUR 70 million savings target, exclusive of currency effects.
The outsourcing market and the demand for new service models are expected to remain robust in 2010. The market for larger, new IT projects is expected to pick up, but only during the second half of 2010. In Finland, the utilities, healthcare and welfare sectors are anticipated to drive growth, whereas in Sweden, new outsourcing-related opportunities have opened up especially in the finance and public sectors. In 2010,Tieto expects its net sales to develop in line with the IT services market relevant to Tieto and its operating profit to be higher than in 2009.
President and CEO Hannu Syrjälä:
"The final quarter of 2009 was two-folded for Tieto - we improved our profitability from the previous three quarters, but at the same time our net sales continued to decline as a result of lower volumes and price pressure. We achieved an EBIT margin of 7.6% in the fourth quarter due to disciplined implementation of planned streamlining measures. Going forward, profitability improvement will continue to be high on our agenda, but we are starting to focus more on growth.
On the whole, year 2009 was exceptionally challenging. We implemented a new operating model and business structure and at the same time we tackled the impacts of lower demand for our services. Despite the tough market environment, we reached many of the goals set for 2009. In addition to cutting costs and improving the efficiency of our onshore operations, we increased our offshoring according to our plans. By the end of 2009, we had achieved the EUR 70 million savings target and our offshoring rate, i.e. share of personnel in global delivery centres, was at 30%.As a result of the work done in the past two years, Tieto is now a much stronger company and well positioned for the future."
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