- Net sales EUR 281.8 million (295.9). Total growth -4.8% and organic growth(1) in Power and Communication -2.9%
- Operative EBITA(2) EUR 4.1 million (0.5) and operative EBITA margin 1.5% (0.2)
- Operating result (EBIT) EUR 3.9 million (-0.2) and EBIT margin 1.4% (-0.1)
- Net result EUR -3.9 million (-9.6)
- Earnings per share EUR -0.03 (-0.06), basic and diluted
- Cash flow from operating activities EUR 6.7 million. The comparable cash flow from operating activities before IFRS 16 impact(3) was EUR -0.1 million (-16.8).
- Net sales EUR 808.8 million (858.1). Total growth -5.7% and organic growth(1) in Power and Communication -3.9%
- Operative EBITA(2) EUR 3.6 million (-5.2) and operative EBITA margin 0.4% (-0.6)
- Operating result (EBIT) EUR 2.5 million (-9.0) and EBIT margin 0.3% (-1.0)
- Net result EUR -13.3 million (-18.9)
- Earnings per share EUR -0.09 (-0.13), basic and diluted
- Cash flow from operating activities EUR -13.6 million. The comparable cash flow from operating activities before IFRS 16 impact(3) was EUR -33.8 million (-66.8).
Significant events during and after the third quarter
- On 6 August 2019, Eltel signed an agreement to divest its Polish Communication business to VINCI Energies. The divestment was completed on 14 October 2019 and the total consideration of the transaction was EUR 12.6 million.
- On 1 September 2019, Mikael Malmgren, Strategy and Business Development Director of Eltel AB, was appointed Chief Financial Officer, CFO, and Chief Operating Officer, COO, of Eltel Sweden and subsequently left the Group Management Team.
- On 24 October 2019, it was announced that Petter Traaholt, Chief Financial Officer (CFO) of Eltel, will leave the company at the end of February 2020, to assume the position as CFO at V.Group. A search process for his successor has been initiated.
|EUR million||Jul-Sep 2019||Jul-Sep 2018||Change, %||EUR million||Jan-Sep 2019||Jan-Sep 2018||Change, %|
|Net sales||Net sales|
|Total Group||281.8||295.9||-4.8||Total Group||808.8||858.1||-5.7|
|Operative EBITA(2)||Operative EBITA(2)|
|Items not allocated(4)||-1.4||-3.3||56.8||Items not allocated(4)||-6.9||-11.6||40.1|
|Total Group||4.1||0.5||682.4||Total Group||3.6||-5.2||169.3|
(1) Adjusted for divested operations and currency effects.
(2) Eltel follows the profitability of segments with Operative EBITA. Please see page 23 for definitions of the key ratios.
(3) See page 22 for more information on IFRS 16 impact on cash flow.
(4) Items not allocated to operating segments consist of Group management and support function.
Comments by the CEO
For the fourth consecutive quarter, we slightly improved the results compared to last year. We improved our operative EBITA margin and the rolling 12-months gross margin continues to gradually recover. Our operating cash flow was stronger, compared both to last year’s quarter and year to date.
As part of the strategic evaluation of Eltel’s operations outside the Nordics, we have divested our Polish Communication business, which will give a total proceeds of about EUR 12 million. A divestment of the German Communication business is ongoing and we have concluded that we will retain the Polish and German Power businesses for the time being, while we continue the work to increase their profitability. The planned divestment of business area Aviation & Security to Luftfartsverket is proceeding according plan and both parties undertake to ensure a definitive agreement is signed no later than the first quarter 2020. The definitive agreement is however conditional on approval by the respective party’s board, the Swedish Competition Authority and the Swedish Government.
In our daily operations, we continue to make improvements in both the Power and Communication segments. We are improving the quality of deliveries and services, particularly to our largest customers and we can see positive results from the Operational Excellence strategy, especially in the Nordic markets. However, these quality improvements have increased our production cost in the short term, especially in the areas where we have had delayed execution of orders.
In Power, the expected lower net sales in Smart Grids as well as write downs in High Voltage and in the Swedish business impacted the result negatively during the quarter.
In Communication, the result improved from last year, despite lower net sales overall. The improvement is mainly driven by increased net sales in Norway combined with product mix and efficiency improvements. Both the Norwegian and the Danish markets are growing, and we see improved efficiency in both countries. In general, we can say that all Communication markets except Sweden contributed positively to the result during the quarter.
In Communication, the Swedish volumes are declining even faster than we anticipated in the second quarter. Our largest Swedish customer has drastically reduced its investment levels and we need to adapt to the situation. In the Power segment, we see a similar trend in High Voltage Poland. We will need to right size both businesses and that will come with a cost and is likely to lead to a prolonged transition period for the Group.
Going forward, we will continue to focus on our Operational Excellence strategy in our daily operations in order to increase profitability. At the same time, we will also continue to strengthen our balance sheet and lower the net debt level.
Casimir Lindholm, President & CEO
For further information, please contact:
Petter Traaholt, CFO
Tel. +46 72 59 54 749, firstname.lastname@example.org
Elin Otter, Director, Communications and Investor Relations
Tel. +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 7 November 2019 at 08:00 a.m. CET.
Eltel is a leading Northern European provider of technical services for critical infrastructure networks – Infranets – in the segments of Power, Communication and Other, with operations throughout the Nordics, Poland and Germany. Eltel provides a broad, integrated range of services from maintenance and upgrade services to project deliveries. Eltel has a diverse contract portfolio and a growing customer base of large network owners. In 2018, Eltel had annual sales of EUR 1.2 billion. The total number of employees currently stands at around 7,000. Eltel AB has been listed on Nasdaq Stockholm since 2015.