Eltel Group: Interim Report January–June 2017
- Group net sales amounted to EUR 627.6 million (656.6), down 3.8% in local currencies
- Group operative EBITA amounted to EUR -30.7 million (8.9)*
- EBIT amounted to EUR -183.0 million (1.7) including a goodwill impairment of EUR 145.6 million
- The net result amounted to EUR -185.9 million (-3.7)
- Earnings per share were EUR -1.76 (-0.04)
- Operative cash flow was EUR -77.1 million (-53.1)
- Group net sales amounted to EUR 329.8 million (369.0), down 9.5% in local currencies
- Group operative EBITA amounted to EUR -21.0 million (5.7)*
- EBIT amounted to EUR -23.2 million (2.1) including EUR 1.0 million of net items affecting comparability**
- The net result amounted to EUR -24.5 million (-0.1)
- Earnings per share were EUR -0.23 (-0.00)
- Operative cash flow was EUR -10.7 million (-15.7)
- Preferential rights issue of EUR 150 million fully subscribed
|Business operations||Jan-Jun 2017||Jan-Jun 2016||Change, %***||Apr-Jun 2017||Apr-Jun 2016||Change, %***|
Unless otherwise stated, figures in brackets refer to the same period in the preceding year
* Items not allocated to segments consist of Group management function including development projects
** Items affecting comparability consist of acquisition and sale of business and cost related to reviews and investigations
*** Change in local currency
Comments by the CEO
Successful rights issue and transformation focus in a weaker second quarter
In June, we successfully completed a preferential rights issue of EUR 150 million. The strong support from our owners has restored the balance sheet to healthy debt levels. This will enable us to continue the execution of Eltel’s new strategy with the goal to focus on our core competences and markets, reduce operational risk, leave non-core markets and increase efficiency. We will further develop our positions in the Group’s core business within Power and Communication in the Nordics, Poland and Germany, which represent approximately 90% of Eltel’s operations. The operations outside Eltel’s core business will be divested or ramped down.
The transformation of Eltel is going according to plan. We have merged the power distribution and power transmission units in Power and the mobile and fixed communication units in Communication. During the summer, we divested the unprofitable part of our communication business in Poland and our business operations in Latvia.
During the second quarter, net sales declined by approximately 10% to EUR 329.8 million. The decrease is mainly due to the ongoing discontinuation of our unprofitable non-core Power Transmission International business, and our decision to ramp down low-margin sub-station operations within the Power segment. Net sales in our core business – segment Power and Communication – declined by approximately 3% to EUR 297.3 million. The underlying market of our core business continues to be good, although we see temporary lower and delayed investment activity within the power transmission business, which contributed to lower net sales. In segment Communication, volumes both in fibre and mobile in Germany increased, while volumes in the Nordic market declined.
Operative EBITA amounted to EUR -21.0 million. The operative EBITA in Eltel’s core business amounted to EUR 6.1 million, but the result in Power was weakened by lower net sales and costs for internal measures to increase efficiency. The non-core businesses accounted for a loss of EUR 22.5 million, including a negative contribution of EUR 18.4 million from Power Transmission International due to the ongoing ramp down of the business. During the first six months of 2017, EUR 26.4 million of the estimated total EUR 40 million of costs and provisions related to the ongoing discontinuation of this business was recorded.
The transformation agenda for the remainder of 2017 and 2018 is clear. We will continue the organisational transformation in order to improve efficiencies and adapt the organisation to the new strategy to secure our long-term profitability targets. In addition, we continue our efforts to strengthen internal governance and control. By the end of 2018 we expect to see effects of synergies and growth within our core business areas.
Håkan Kirstein, President and CEO
For further information:
VP – IR and Group Communications
Tel: +358 40 311 3009, email@example.com
This information is information that Eltel AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 08.00 CET on 17 August 2017.
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 and integrated range of services, spanning from maintenance and upgrade services to project deliveries. Eltel has a diverse contract portfolio and a loyal and growing customer base of large network owners. In 2016, Eltel net sales amounted to EUR 1.4 billion. The current number of employees is approximately 8,700. Since February 2015, Eltel AB is listed on Nasdaq Stockholm.