- Net sales EUR 236.6 million (251.0). Total growth -5.7% and organic growth1) in Power and Communication -1.5%
- Operative EBITA2) EUR -2.1 million (-3.0) and operative EBITA margin -0.9% (-1.2)
- Operating result (EBIT) EUR -2.2 million (-3.6) and EBIT margin -0.9% (-1.4)
- Net result EUR -4.8 million (-7.4)
- Earnings per share EUR -0.03 (-0.05), basic and diluted
- Cash flow from operating activities EUR -4.7 million (-33.8)
- Net debt3) ended at EUR 133.8 million (194.2)
Significant events during and after the first quarter
- On 22 January 2020, Eltel signed an agreement to divest its German Communication business to Circet Group. The transaction is estimated to give a positive cash flow impact of EUR 19 million and have a positive result of approximately EUR 13 million on Group EBIT in Q2 2020.
- On 23 March 2020, Eltel signed an agreement to divest its Swedish business area Aviation & Security to LFV, Air Navigation Services of Sweden. The transaction is estimated to give a positive cash flow impact of EUR 17 million and have a positive result of approximately EUR 6 million on Group EBIT in Q2 2020.
- In March 2020, Eltel agreed with its banks on certain amendments to its existing financial agreement that matures in Q1 2021. The new amendments include, among others, a 12-month extension of the current credit facilities until mid-Q1 2022.
- Eltel signed five contracts of significance to a value of about EUR 240 million during January 2020-April 2020.
|EUR million||Jan-Mar 2020||Jan-Mar 2019||Change, %||EUR million||Jan-Dec 2019|
|Net sales||Net sales|
|Total Group||236.6||251.0||-5.7||Total Group||1,087.6|
|Operative EBITA2)||Operative EBITA2)|
|Items not allocated4)||-2.6||-3.3||22.9||Items not allocated4)||-11.2|
|Total Group||-2.1||-3.0||32.0||Total Group||-11.3|
1) Adjusted for divested operations and currency effects.
2) Eltel follows the profitability of segments with Operative EBITA. Please see page 20 for definitions of the key ratios.
3) Refers to net debt as defined in financing agreement. See page 8 for calculation.
4) Items not allocated to operating segments consist of Group management and support function.
Comments by the CEO
During the first quarter, we managed to improve our operative EBITA, despite the expected decrease in net sales. By the end of the quarter, our net working capital was reduced by more than EUR 74 million year-on-year and we had reduced our net debt by more than EUR 60 million compared to Q1 2019.
We have won significant and strategically important contracts in both the Power and Communication segments in Finland and Sweden. This is a testament that Eltel continues to deliver high quality service and therefore is the customers’ first choice. These new contracts, mainly frame agreements, are predictable and repetitive businesses with healthy margins and low working capital requirements.
Our strategy aims at increasingly focusing on the Nordic countries and is progressing according to plan. Firstly, we signed agreements to divest our German Communication business as well as our Swedish business area, Aviation & Security. The divestments will also substantially improve the overall financial position of the company. Secondly, in 2020 we are looking to finalise 10 large capital-intensive projects in High Voltage and Power Transmission International. In accordance with our strategy, we are no longer entering this type of large capital-intensive projects.
In the quarter, sales in the Power segment were down, mainly due to the weaker market in High Voltage Poland and partly due to our strategy to reduce our exposure towards larger projects. Better project and cost control improved the operative EBITA.
The Communication segment showed a 5.5% increase in organic net sales despite the substantial volume drop we have had in Sweden. This is a result of increased net sales in all other markets, especially in Denmark. Norway continues to perform well, and Finland is making good progress.
The current pandemic outbreak of COVID-19 had a minor impact on Eltel in the first quarter, resulting from decreased availability of workforce due to travel restrictions and somewhat increased rate of sick leaves. We also had a few project postponements and work restrictions imposed by customers. However, because the lifelines of societies must be secured at all times, the overall impact remained limited. Authorities and customers have declared Eltel a critical provider that has permission to deliver services despite critical lockdown conditions.
Going forward, we will continue to focus on our Operational Excellence strategy and on increasing our Nordic market share. Improved productivity and profitability are key elements for Eltel to reach our long-term goal of an EBITA-margin of 5% with a stable cash flow and a healthy balance sheet.
Casimir Lindholm, President & CEO
For further information, please contact:
Saila Miettinen-Lähde, CFO
Phone: +358 40 548 3695, firstname.lastname@example.org
Elin Otter, Director, Communications and Investor Relations
Phone: +46 72 59 54 692, email@example.com
Eltel AB discloses the information provided herein pursuant to the EU’s Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the above contacts, on 29 April 2020 at 08:00 a.m. CET.
Eltel is a leading Nordic field service provider for power and communication networks. We deliver a comprehensive range of solutions – from maintenance and upgrade services to project delivery. This includes design, planning, building, installing and securing the operation of power and communication networks for a more sustainable and connected world today and for future generations. In 2019, Eltel had annual sales of EUR 1.1 billion. The total number of employees currently stands at around 6,700. Eltel AB is listed on Nasdaq Stockholm.