Markets News

UPDATE 2-Nordic IT firm TietoEVRY to pay dividend after Q2 profit rise

(Adds CEO, analyst comment, shares)

July 24 (Reuters) - Nordic IT services provider TietoEVRY reported on Friday a rise in second-quarter underlying profit, helped by cost cuts following the takeover of EVRY business last year, and said it would pay a dividend.

The company, which finalised the takeover of Norwegian EVRY’s businesses in December 2019, had put shareholder payout on hold in response to the coronavirus epidemic.

Its adjusted operating profit came in at 80.4 million euros ($93 million), compared with a pro forma 69.8 million last year.

Tieto raised the merger-related synergies target to 100 million euros from 75 million.

“Overall, it was a positive report creating pressure for us to raise our estimates,” Inderes analyst Joni Grönqvist said in a note to clients.

The company declared a dividend of 0.635 euros per share, half of 1.27 euros decided by shareholders in April, citing pandemic-related uncertainty and large one-time items.

The company booked 90.1 million euros in non-recurring items in the quarter from ending a large development project, from integration, and from a change in IBM co-operation.

TietoEVRY said the pandemic cut revenues by 2% in the quarter with some customers delaying purchasing decisions.

“There’s an element of slowdown that will move into the third quarter,” Chief Executive Kimmo Alkio said at a conference call. “We anticipate Q3 to be a bit higher impact than Q2.”

Alkio said the impact would be smaller in the fourth quarter, assuming there is no second wave of the virus, and then the full-year hit would be closer to 2% than 5%.

Shares in TietoEVRY were 2.1% lower on Friday, in line with weaker markets. ($1 = 0.8624 euros) (Reporting by Tarmo Virki in Tallinn; Editing by Jacqueline Wong, Sherry Jacob-Phillips and Emelia Sithole-Matarise)