IT services firm Tieto (OMXH: TIE1V, OMXS: TIEN) announced its new strategy for 2012-2016. The company aims to focus and simplify its operations. The company states becoming preferred partner in business and IT transformation with a strong position in Nordic countries as its objective. The focus will be on industry-based tailored solutions.
Tieto will continue operations on markets where it feels a top 3 position is attainable. Markets that fail to live up to that goal plus the 10% target for EBIT outlook will be optimized or left. Operations in Russia will be focused on Nordic customers and locally on financial services and oil and gas industries. The German operations are currently under review.
A planned reduction of 50 million Euros in the cost base will come from simplified operations, efficiency improvements, growth in high-margin services and personnel adjustments affecting some 1300 employees. Tieto says that planned redundancies are close to 500 in Finland, close to 300 in Sweden and close to 500 in other countries.
The company worded job cuts pretty much as a done deal, despite saying that negotiations with unions will now start, which is sure to ruffle some feathers. The measures will be implemented in 2012 with one-off costs estimated at around 50 million Euros. President and CEO Kimmo Alkio says that in addition to shareholders, customers and employees have given such feedback, that the company needs to refocus.
Investments will be made in Consulting and System Integration to cover the full IT lifecycle. Product Engineering Services aims to go global. In addition to the EBIT margin target, Tieto aims for EPS growth of over 15% as a long term incentive target. A minimum dividend payout ratio should be 50% of net results and debt/EBITDA below 1.5. The stock has climbed 5% in an otherwise weak market.
No comments:
Post a Comment