Eltel Group: Interim report January–March 2021

January–March 2021

  • Net sales EUR 182.0 million (236.6). Total growth -23.1% and organic growth1) in segments -18.7%
  • Operative EBITA2) EUR -0.7 million (-2.1) and operative EBITA margin -0.4% (-0.9)
  • Operating result (EBIT) EUR -0.8 million (-2.2) and EBIT margin -0.4% (-0.9)
  • Net result EUR -2.7 million (-4.8)
  • Earnings per share EUR -0.02 (-0.03), basic and diluted
  • Cash flow from operating activities EUR -17.4 million (-4.7)
  • Net debt3) EUR 89.2 million (133.8)

Significant events during the quarter

  • On 22 March, Eltel signed an agreement to divest its German high voltage business to ENACO GmbH, a German service provider in the energy sector. The transaction is expected to close during Q2, 2021.
Key figures
EUR million Jan-Mar 2021 Jan-Mar 2020 Jan-Dec 2020
Net sales 182.0 236.6 938.0
Net sales growth, % -23.1% -5.7% -13.8%
Operative EBITA2) -0.7 -2.1 11.4
Operative EBITA margin, % -0.4% -0.9% 1.2%
Operating result (EBIT) -0.8 -2.2 24.8
Return on operative capital employed (ROCE), % 13.5% -6.6% 13.0%
Net working capital -4.8 0.5 -25.1
Net debt3) 89.2 133.8 67.4
Number of employees, end of period 5,330 6,652 5,449
1) Adjusted for divested operations and currency effects.
2) Eltel follows the profitability of segments with Operative EBITA. Please see page 22 for definitions of the key ratios.
3) Refers to net debt as defined in financing agreement. See page 10 for calculation and page 22 for definition.

Comments by the CEO

For the fifth consecutive quarter, we improved our results year-on-year. The Nordic countries delivered according to plan by focusing on operational excellence and good project management and cost control.

As anticipated, net sales continued to decline partly due to the divestments made last year and partly due to lower activity among our customers as a result of COVID-19. Last year’s loss of a major service agreement in Sweden, mainly relating to the copper network, also affected the volumes and will continue to do so throughout the year. On the other hand, ramp up of the Telenor frame agreement in Norway is progressing according to plan and the overall order backlog is on a healthy level. The same goes for Finland, which had a strong start to the year.

We have successfully adjusted the organisation to meet the volume changes, which has contributed to the improved profitability. Thanks to good resource and production planning, we managed to keep our costs down despite the harsh winter conditions. Our continuous efforts to build a solid Nordic platform with a stable underlying business also serves as a base for the improved operative EBITA.

Due to seasonality, net working capital and net debt increased in the quarter, but compared to Q1 2020, we see an improvement, particularly in net debt. The return on operative capital employed continued to improve as a result of our transformation journey and focus on the Nordic countries where we have a market-leading position.

COVID-19 had an impact on Eltel in Q1. However, as vaccination programmes in our Nordic markets are progressing, we expect the related project delays and postponements to gradually ease and our customers to pick up the investment pace. We also anticipate our somewhat increased sick leave rates to normalise.

We continue to work on the efficiency improvements in our operations to drive profitability, and we stand by our previously stated financial guidance that we expect our operational EBITA margin for 2021 to improve compared to 2020.

Casimir Lindholm, President & CEO

For further information, please contact:
Saila Miettinen-Lähde, CFO
Phone: +358 40 548 3695, saila.miettinen-lahde@eltelnetworks.com

Elin Otter, Director, Communications and Investor Relations
Phone: +46 72 59 54 692, elin.otter@eltelnetworks.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 CEST on 28 April 2021.

About Eltel
Eltel is a leading Nordic field service provider for communication and power 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 networks for a more sustainable and connected world today and for future generations. In 2020, Eltel had annual sales of about EUR 938 million. The total number of employees currently stands at around 5,400. Eltel AB is listed on Nasdaq Stockholm.