Eltel Group: Interim report January–September 2020
- Net sales EUR 226.7 million (281.8). Total growth -19.6% and organic growth1) in Power and Communication -12.3%
- Operative EBITA2) EUR 6.7 million (4.1) and operative EBITA margin 2.9% (1.5)
- Items affecting comparability EUR -0.7 million (0.2) include asset held for sale
- Operating result (EBIT) EUR 5.8 million (3.9) and EBIT margin 2.6% (1.4)
- Net result EUR 3.1 million (-3.9)
- Earnings per share EUR 0.02 (-0.03), basic and diluted
- Cash flow from operating activities EUR -16.2 million (6.7)
- Net sales EUR 708.8 million (808.8). Total growth -12.4% and organic growth1) in Power and Communication -6.2%
- Operative EBITA2) EUR 7.5 million (3.6) and operative EBITA margin 1.1% (0.4)
- Items affecting comparability EUR 19.8 million (0.2) include gain/loss from divested and held for sale businesses
- Operating result (EBIT) EUR 26.7 million (2.5) and EBIT margin 3.8% (0.3)
- Net result EUR 12.3 million (-13.3)
- Earnings per share EUR 0.08 (-0.09), basic and diluted
- Cash flow from operating activities EUR -1.7 million (-13.6)
- Net debt3) ended at EUR 108.9 million (191.4)
|EUR million||Jul-Sep 2020||Jul-Sep 2019||Change, %||EUR million||Jan-Sep
|Jan-Sep 2019||Change, %|
|Net sales||Net sales|
|Power||84.9||103.1||-17.6 %||Power||245.4||284.7||-13.8 %|
|Communication||138.5||176.3||-21.4 %||Communication||451.4||515.4||-12.4 %|
|Other||3.3||3.1||6.3 %||Other||12.1||10.1||20.0 %|
|Total Group||226.7||281.8||-19.6 %||Total Group||708.8||808.8||-12.4 %|
|Operative EBITA2)||Operative EBITA2)|
|Power||0.9||-3.6||124.1 %||Power||-7.1||-5.5||-29.9 %|
|Communication||6.4||9.4||-31.4 %||Communication||17.9||16.1||11.4 %|
|Items not allocated4)||-1.1||-1.4||22.8 %||Items not allocated4)||-6.2||-6.9||11.0 %|
|Total Group||6.7||4.1||62.1 %||Total Group||7.5||3.6||108.9 %|
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) Refers to net debt as defined in financing agreement. See page 9 for calculation.
4) Items not allocated to operating segments consist of Group management and support function.
Comments by the CEO
During the quarter we continued to see gradual improvements in our operational performance. This was reflected in our operative EBITA, which for the quarter improved to EUR 6.7 million (4.1), or 2.9% (1.5%) of net sales. Furthermore, our balance sheet is more stable today than at the end of Q3 last year, as we have reduced our net working capital by EUR 46 million and our net debt by more than EUR 80 million year-on-year.
Net sales continued to decrease. A significant contributor, representing about 40% of the drop from last year, was the divestment of the Polish and German Communication businesses as well as the Swedish business area Aviation & Security.
In the ongoing operations, we saw decreasing net sales particularly from High Voltage Poland, where we are reducing our exposure to large, capital-intensive projects in line with our strategy. Furthermore, COVID-19 continued to cause several project postponements, and the market situation in Poland at large remained challenging. In Communication Norway, earlier indications of reduced and delayed investments by a major customer played out and we were also impacted by unfavourable currency effects. In Communication Sweden the decline came from cuts in customer investments and a reduced order backlog. Partly offsetting the negative development seen elsewhere, net sales in Communication Denmark and Finland continued to increase.
In the Power segment, we saw improved performance for the quarter in all markets and operative EBITA increased by EUR 4.5 million despite the declining net sales. However, the operative EBITA-margin still remains far from Eltel’s targeted levels. In Finland, we successfully ramped up the multi-year contract to construct and maintain the electricity distribution network in Helsinki and completed two challenging Build projects, which had suffered from challenges relating to subcontractor management earlier in the year.
In the Communication segment, Norway continued to produce good and healthy margins thanks to strong commitment to operational excellence. However, the reduced net sales led to lower operative EBITA. During the quarter Sweden also improved and is now showing positive numbers, albeit low. In Finland we can see positive results from increased volumes and improved production efficiency.
Similar to previous quarter, COVID-19 only had a moderate impact on Eltel’s operations. We mainly see delays in project execution and lower levels of investment by certain customers. After the summer, we have started to see a slight increase in short-term sick leaves among our employees, which affects our utilisation rates.
We deliver on our strategy aimed at being the leading field service provider in the Nordic market. Starting in 2021, close to 90% of our overall net sales will be coming from the Nordic markets. We continue to close down non-profitable and non-strategic operations outside the Nordics in a responsible manner, and we expect to have most of that finalised by the end of the first half of 2021.
Implementation of the Nordic strategy, better quality and control, high customer satisfaction and improved productivity are key for Eltel to complete the turnaround and to ensure long-term sustainable value creation for the company and its shareholders.
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
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 persons set out above, at 08.00 CET on 5 November 2020.
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 6,000. Eltel AB is listed on Nasdaq Stockholm.