Eltel Group: Half-year report January–June 2021

April–June 2021

• Net sales EUR 210.4 million (245.5). Total growth -14.3% and organic growth¹⁾ in segments -12.5%
• Operative EBITA²⁾ EUR 4.4 million (2.8) and operative EBITA margin 2.1% (1.2)
• Items affecting comparability EUR -0.1 million (20.4) from divestment of business
• Operating result (EBIT) EUR 4.3 million (23.1) and EBIT margin 2.0% (9.4)
• Net result EUR 1.6 million (14.0)
• Earnings per share EUR 0.01 (0.09), basic and diluted
• Cash flow from operating activities EUR 13.2 million (19.2)

January–June 2021

• Net sales EUR 392.4 million (482.1). Total growth -18.6% and organic growth¹⁾ in segments -15.5%
• Operative EBITA²⁾ EUR 3.7 million (0.8) and operative EBITA margin 1.0% (0.2)
• Items affecting comparability EUR -0.1 million (20.4) from divestment of business
• Operating result (EBIT) EUR 3.5 million (20.8) and EBIT margin 0.9% (4.3)
• Net result EUR -1.0 million (9.2)
• Earnings per share EUR -0.01 (0.06), basic and diluted
• Cash flow from operating activities EUR -4.2 million (14.4)
• Net debt³⁾ EUR 88.4 million (86.4)

Significant events after the reporting period

• On 8 July 2021, Eltel announced its commitment to the Science Based Target initiative, SBTi. Committing to the SBTi shows our sustainability ambition is on a high level, we are working towards setting concrete and measurable goals, and we see sustainability as business-critical for Eltel.

1) Adjusted for divested operations and currency effects.
2) Eltel follows the profitability of segments with Operative EBITA. Please see page 24 for definitions of the key ratios.
3) Refers to net debt excluding IFRS 16 leasing liabilities, as defined in financing agreement. See page 12 for calculation and page 24 for definition.   

Comments by the CEO

For the sixth consecutive quarter we improved our operative EBITA compared to the corresponding period the year before, which is a result of staying true to our Operational Excellence strategy. We maintained our healthy levels regarding net working capital and net debt, and improved return on capital employed. We continue to close down old projects in a controlled way and now more than 90% of our business is conducted in the Nordics.

Finland shows good progress with increased net sales as well as improved operative EBITA, benefitting from strong demand in fibre and 5G.

Sweden is still very much in a restructuring phase with decreasing net sales as well as some remaining old, unprofitable projects and contracts. However, the risk level has been reduced and we have accelerated the efficiency and productivity programme. We are also starting to see small improvements in cash flow and in net working capital.

Norway continues to deliver good margins, although somewhat lower compared to the same period last year, largely due to COVID-19 related delays in customer investments. With the situation normalising, we expect to see a pick-up in volumes towards the end of the year.

In Denmark, the second quarter profitability was exceptionally good despite a drop in net sales. The strong result was partly attributable to a positive one-off related to a partial insourcing of business by a major customer. Going forward, this will have a negative impact on net sales.

In Other business, delays in Polish high voltage projects continued, but this was partly offset by good volumes and profitability in Smart Grids Germany.

During the turnaround, we have focused on improving our profitability and control environment, as well as getting our balance sheet on a healthy level. With this on track, the next step is to reverse the downturn in net sales and reach our long-term financial target of 2-4% annual growth in the Nordics from 2022 onwards. We are pursuing different organic growth opportunities by expanding our portfolio and by sharpening our offering to the market. While doing so, we are also preparing for potential future acquisitions.

Being the market leader, we have taken the next step in our climate work by committing to the Science Based Target initiative, SBTi. Committing to the SBTi shows our sustainability ambition is on a high level, we are working towards setting concrete and measurable goals, and we see sustainability as business-critical for Eltel. I am convinced that third-party verified goals in line with the Paris Agreement will soon become a clear customer expectation, while committing to SBTi is at the same time building internal pride.

COVID-19 continues to impact our customers’ investments. Despite this, we have been able to improve our own operations during the first half of the year, as demonstrated by the continued improvement in our profitability. Strengthened by the good results in the second quarter, we stand by our previously stated financial guidance that we expect our operative 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 and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 08:00 CEST on 27 July 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 5,200. Eltel AB is listed on Nasdaq Stockholm.