Nordic IT services vendor TietoEnator has bounced back from a difficult 2006 with solid results in the first quarter of 2007.
For the three months to the end of March, TietoEnator reported net profit from continuing operations of 24.1m euros ($32.8m), up from 20.8m euros ($28.3m) in the same period of the previous year, on revenue that grew 7.9% to 442.2m euros ($602.3m). Organic growth was 10%, or 9% in local currencies, compared to just 2% for full-year 2006.
The improvement in TietoEnator’s sales was largely driven by a turnaround from the company’s largest business unit, telecoms and media. The operation’s sales were flat in 2006 at 542m euros ($738.2m), but grew 19.2% to 161m euros ($219.3m) in the first quarter of 2007, with organic growth at 18%. TietoEnator said this reversal in fortunes was driven by several new contracts and good general demand in the market.
TietoEnator’s forest and energy division also enjoyed a strong start to the year, with sales up 15.4% to 45m euros ($61.3m) after a flat 2006. However, revenue from the government, manufacturing, and retail operation was down 24.2% at 50m euros ($68.1m), due mainly to the divestment of TietoEnator’s government business in Denmark, Norway, and Sweden during 2006.
On a geographic basis, TietoEnator’s first-quarter growth came from outside its domestic market of Finland. While Finnish sales were flat at 197m euros ($268.3m), German sales were up 61% at 39m euros ($53.1m), and Swedish sales increased by 6% to 121m euros ($88.8m).
TietoEnator remained cautious in its outlook for the rest of 2007, simply saying it expects full-year organic growth to be higher than the 2% recorded in 2006, with demand in the Nordic market in general remaining favorable. The company also said it would invest further in its low-cost delivery centers during the year, as well as continuing to expand its business internationally.
Following the results announcement, TietoEnator’s shares rose just under 4% in trading on the Stockholm stock exchange.