Eltel Group: Full-year report January–December 2018

October–December 2018

  • Net sales EUR 330.9 million (374.2). Total growth -11.6% and organic growth* in Power and Communication -5.1%

  • Operative EBITA** EUR 2.9 million (2.2) and operative EBITA margin 0.9% (0.6)

  • Operating result (EBIT) EUR -0.2 million (1.2) and EBIT margin -0.1% (0.3)

  • Net result EUR -3.3 million (-7.7)

  • Earnings per share EUR -0.02 (-0.05), basic and diluted

  • Cash flow from operating activities EUR 70.0 million (42.3)

January–December 2018

  • Net sales EUR 1,188.9 million (1,329.9). Total growth -10.6% and organic growth* in Power and Communication 0.3%
  • Operative EBITA** EUR -2.2 million (-25.5) and operative EBITA margin -0.2% (-1.9)

  • Operating result (EBIT) EUR -9.2 million (-184.6) and EBIT margin -0.8% (-13.9%)

  • Net result EUR -22.2 million (-204.6)

  • Earnings per share EUR -0.15 (-1.56), basic and diluted

  • Cash flow from operating activities EUR 3.2 million (-65.2)

Significant events during and after the reporting period

  • On 14 December 2018, it was announced that Leif Göransson was appointed Managing Director (MD) of Country Unit Sweden starting 1 January 2019. Leif succeeded Casimir Lindholm who since October was acting MD for Eltel Sweden.

  • On 1 January 2019, Elin Otter, Head of Communications and Investor Relations was appointed new member of the Eltel Group Management Team.

  • Eltel signed six contracts of significance to a value of about EUR 158 million during October 2018–January 2019.

EUR million Oct-Dec 2018 Oct-Dec 2017 Change, % EUR million Jan-Dec 2018 Jan-Dec 2017 Change, %
Net sales Net sales
Power 115.1 130.7 -11.9% Power 438.8 470.4 -6.7%
Communication 207.1 215.6 -3.9% Communication 727.3 756.8 -3.9%
Other 3.6 27.6 -87.1% Other 23.1 103.8 -77.7%
Total Group 330.9 374.2 -11.6% Total Group 1,188.9 1,329.9 -10.6%
Operative EBITA** Operative EBITA**
Power -1.9 -0.5 -309.2% Power -0.5 -0.3 -99.6%
Communication 9.7 12.9 -24.6% Communication 24.8 34.5 -28.1%
Other -1.1 -5.8 81.3% Other -11.1 -43.7 74.5%
Items not allocated -3.8 -4.4 13.5% Items not allocated -15.4 -16.1 4.2%
Total Group 2.9 2.2 34.4% Total Group -2.2 -25.5 91.2%

*Adjusted for divested operations and currency effects
** Please see page 20 for definitions of the key ratios 

Comments by the CEO

The fourth quarter showed a strong cash flow of EUR 70 million and improved operative EBITA on Group level. At the same time, our net sales decreased according to plan. However, looking at the quarter and year-on-year we are not satisfied with the overall performance of the underlying business.

In the Power segment, we can see that the measures taken in High Voltage to improve efficiency, strengthen control and finalise low margin projects have started to show effect. We continue to reduce risk in the overall High Voltage portfolio and we produce a handful projects with very low gross margin. Poor project execution in Finland affected the result negatively while Smart Grids showed strong performance with high net sales and operative EBITA. However, Smart Grids is a cyclical business and we expect lower volumes in 2019.

The Communication segment became somewhat a disappointment for the quarter, but even more so for the full year. In the quarter, we experienced good and stable performance in Norway, Finland and Denmark. However, this was offset by Sweden underperforming, primarily due to higher costs than anticipated at project closing. During the autumn, we changed the Swedish management and the new team is taking measures to improve the performance. We will continue to work with operational improvements throughout the organisation.

Our operational excellence strategy is all about improving our day-to-day activities and ensuring we are our customers’ first choice. The strategy will help us to simplify things by going back to basics in terms of how we operate and execute our work. This is supported by our country-based organisation where we stay close to our customers. By implementing operational excellence, Eltel has positioned itself for a turn-around.

Our long-term goal is to return to an EBITA-margin of 5% with a stable cash flow and a healthy balance sheet. This will require a focus on the customer interface, flawless execution, production planning as well as efficiency in our operations, including strengthening our financial situation and reducing our net debt over time.

Casimir Lindholm, President & CEO

For further information, please contact:
Petter Traaholt, CFO
Tel. +46 72 59 54 749, petter.traaholt@eltelnetworks.se

Elin Otter, Head of Communications and Investor Relations
Tel. +46 72 59 54 692, elin.otter@eltelnetworks.se

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 14 February 2019 at 08:00 a.m. CET.

About Eltel
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 7,400. Eltel AB has been listed on Nasdaq Stockholm since 2015.