* Q3 op. profit 37.1 mln euros vs 31.1 mln in poll
* Q3 sales up 2 pct to 423.5 mln euros
* Says cost cuts bearing fruit
* Shares rise 10.5 pct
(Adds analyst comments, shares)
By Tarmo Virki and Jussi Rosendahl
HELSINKI, Oct 23 Nordic IT services provider
Tieto raised its profit outlook for the full year,
boosted by a rise in sales and cost cutting as an overhaul of
the company bears fruit.
Tieto, which competes with bigger technology services
companies such as Accenture and IBM, is aiming
to boost its operating profit margin as part of a revamp under
new Chief Executive Kimmo Alkio as the euro zone debt crisis
clouds the outlook for its customers.
Shares jumped on the report and were 10.5 percent higher at
14.90 euros by midday. Shares in the company have risen around
35 percent so far this year, valuing the firm at 1.06 billion
euros ($1.39 billion).
Tieto reported quarterly operating profit excluding one-offs
rose 8 percent to 37.1 million euros, beating all analysts'
forecasts in a Reuters poll.
Tieto said profit was boosted by a 7 million euro drop in
"The result is very good, and it shows that the company has
been able to adjust its cost base despite client behaviour and
changes in demand," said Evli analyst Mikko Ervasti.
Sales grew 2 percent to 423.5 million euros, also beating
all forecasts, which ranged from 393 million euros to 420
Full-year operating profit, excluding special items, was
expected to rise more than 10 percent, Tieto said, having
previously not specified growth.
Tieto aims to reach a 10 percent operating profit margin by
2016. So far this year its underlying operating profit margin
stands at 6.9 percent.
Rival Atos, which will report this Thursday, is
targeting 2012 operating margin rising to 6.5 percent of revenue
from 4.8 percent in 2011 on a proforma basis. Capgemini
has forecast its margin to improve from 7.4 percent
Tieto said it does not expect its sales to grow this year
and warned "the overall IT services market may reflect
cautiousness at the beginning of 2013" due to weak economies.
($1 = 0.7651 euros)
(Reporting By Tarmo Virki; Editing by David Cowell and Louise