Tieto grows sales but growing expenses hurt bottom line

Tieto’s (OMXH: TIE1V, OMXS: TIEN) net sales grew to 462 million Euro, up 7% from the comparison period but variable costs from use of subcontractors grew faster than sales and operating profit was down slightly to 19.2 million. Operating profit does however include a 5 million plus restructuring cost from Danish operations.

ICT infrastructure development and subsequent demand for applications is picking up and the company foresees outsourcing of ICT infrastructure, application management and business processes to remain brisk. Tieto says that offshore competitions has led to continued price pressure in basic services and although Tieto still enjoys some benefits from being a local supplier, Nordic customers are becoming more receptive to the use of offshore resources. Skilled workers are also in short supply in the Nordic countries.

The firm maintains its 2011 outlook of 2-4% growth in Western European IT services market and expects its own sales to develop in line with that. Tieto expects full-year EBIT to be above 2010 level of 110 million Euro. The share is trading close to even par 30 minutes in. More information is here.