FAQ by analysts in 2015
Q: Does your ambition to grow faster than the market include the impact of acquisitions or is it organic?
Acquisitions are expected to add some 3% to sales in 2016. Organically, we aim to grow at least in line with the market relevant to us.
Q: In your financial targets your ambition was to achieve 10% reported EBIT margin during the strategy period. Is that guidance for 2016?
In our presentations we have illustrated the connection between one-off items and reported EBIT. In order to achieve 10% reported EBIT, we need to achieve 11%–13% adjusted EBIT – assuming restructuring of 1–3% of sales. As there are annual variations in restructuring costs, there is a buffer around 10% while we still maintain 10% as a sustainable target level.
Q: What kind of companies are you interested in acquiring?
One key criteria is the strategic fit. Any potential target should support our objective to grow in new service areas and Tieto’s value creation.
Q: How will you be able to improve results in an environment with salary inflation and price pressure?
The whole IT industry is changing and based on increased automation and standardization, IT services companies are able to continuously improve efficiency of deliveries. As we also drive automation and many of our services are becoming less labour intensive. The programme we initiated in 2015 is expected to bring cost savings of close to EUR 30 million in 2016. Additionally, we also continue increase offshoring and improve quality.
Q: How will you use your cash flow – will you consider improving dividends or repurchase your own shares?
According to our financial targets, we aim to annually increase dividends in absolute terms. In 2015, we also proposed an extra dividend. While we will develop our capital structure, we also want to maintain our financial flexibility to invest in growth, both organically and inorganically.