Eltel Group: Interim report January–March 2022
January–March 2022
- Net sales EUR 184.0 million (182.0). Total growth 1.1% and organic growth1) in segments 0.2%
- Operative EBITA2) EUR -2.4 million (-0.7) and operative EBITA margin -1.3% (-0.4)
- Operative EBITA2) in segments EUR 0.7 million (2.4) and operative EBITA margin in segments 0.4% (1.5)
- Operating result (EBIT) EUR -2.5 million (-0.8) and EBIT margin -1.4% (-0.4)
- Net result EUR -4.4 million (-2.7)
- Earnings per share EUR -0.03 (-0.02), basic and diluted
- Cash flow from operating activities EUR -8.8 million (-17.4)
- Net debt3) EUR 135.8 million (146.8)
Significant events during the reporting period
- On 2 February 2022, it was announced that Eltel Denmark signed a frame agreement with Banedanmark regarding installation of hardware and equipment. The agreement is worth about EUR 33 million.
- On 8 February 2022, it was announced that Eltel Finland signed a contract with VALOREM, to build a 110 kV transmission line for a wind farm. The contract is worth about EUR 15 million.
- On 16 February 2022, it was announced that Håkan Dahlström was appointed new President and CEO of Eltel AB effective 1 September 2022. Håkan will succeed Casimir Lindholm, who will remain in his position until Håkan joins Eltel.
- On 1 March 2022, it was announced that Eltel Finland signed a continuation of a current frame agreement with DNA, a leading Finnish telecom service provider, regarding fixed telecom services. The agreement is worth about EUR 30 million.
Financial guidance
- Given the significant uncertainties in the market due to the war in Ukraine and increased inflation, Eltel is no longer in position to give financial guidance for 2022 and therefore removes such guidance. The previous guidance stated that the company expects the full-year 2022 operative EBITA margin to increase compared to 2021.
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Key figures |
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EUR million |
Jan-Mar 2022 |
Jan-Mar 2021 |
Jan-Dec 2021 |
|
Net sales |
184.0 |
182.0 |
812.6 |
|
Net sales growth, % |
1.1% |
-23.1% |
-13.4% |
|
Operative EBITA2) |
-2.4 |
-0.7 |
14.8 |
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Operative EBITA margin, % |
-1.3% |
-0.4% |
1.8% |
|
Operative EBITA2), segments |
0.7 |
2.4 |
24.2 |
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Operative EBITA margin, %, segments |
0.4% |
1.5% |
3.3% |
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Operating result (EBIT) |
-2.5 |
-0.8 |
14.5 |
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Return on operative capital employed (ROCE), % |
17.4% |
13.5% |
23.6% |
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Net working capital |
-6.7 |
-4.8 |
-16.0 |
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Net debt3) |
135.8 |
146.8 |
122.6 |
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Number of employees, average |
5,031 |
5,368 |
5,176 |
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1) Adjusted for divested operations and currency effects. 2) Eltel follows the profitability of segments with Operative EBITA. Please see pages 22–23 for definitions of the key ratios. 3) From Q1/2022 onwards, Eltel presents net debt including IFRS 16 leasing liabilities. |
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Comments by the CEO
Over the past years, we have transformed Eltel into a financially stable company with operational excellence, lower risk and fewer capital-intensive projects, thus laying the foundation for growth. Therefore, I am pleased to see that we for the first time since Q1 2017 turned to growth and increased net sales, despite the currently uncertain market environment.
Going into the quarter, we knew harsh winter conditions and record-high sick leave rates would affect the result year-over-year. We did not, however, foresee the war in Ukraine and the extraordinary inflation, taking down our operative EBITA margin to -1.3% (-0.4). The inflation is hitting all our markets, especially the higher fuel and asphalt prices. In Finland and Poland, where we have a sizeable power business, inflation is additionally seen in materials such as steel.
We are in dialogue with our customers to seek compensation for the unforeseen cost increases. We have had some positive initial discussions and we are cautiously optimistic about the outcome. However, despite the ongoing mitigating actions, there is a risk of the overall impact of inflation remaining negative in 2022.
In Finland, there is a high demand for fibre and 5G in communication. The power transmission market also remains strong.
In Sweden, the growth continued. Ramp up of the smart metering projects progressed and communication revenue grew in local currency. We are also making investments into the efficiency programme “One Eltel”, which will improve our productivity in the future.
Also Norway showed growth again and the order backlog is strong as investments are increasing after a year tainted by delays and postponements of projects.
As we already knew, Denmark suffers from the partial insourcing of a major customer, which took place in Q2 2021. The volume recovery is taking longer than expected and while we are awaiting Denmark to re-enter the growth path, an overview of the cost structure has been initiated.
In Other business, Smart Grids Germany continues to deliver healthy margins in a favourable market. High Voltage, particularly Poland, is moving in the right direction operationally. However, the inflation, mainly steel prices, and lack of resources due to the war in Ukraine, deteriorate the result.
Entering 2022, we continued our committed journey towards leadership within sustainability, in close collaboration with our customers, partners and our supply chain. Planning and preparing for coming development and requirements are key and a competitive advantage going forward.
Our core markets are healthy, and we continue to be a leader in communication throughout the Nordics and in the Finnish power market. In the communication market, 5G and fibre are the main drivers, as well as work to dismantle 3G and copper networks. In power, there is a clear demand to upgrade and modernise power grids in the Nordics.
However, there are significant uncertainties in the market due to the war in Ukraine and increased inflation. Even though we are working hard to mitigate the effects of the inflation, we are no longer in position to give guidance for the operative EBITA margin and therefore remove such guidance. The previous guidance stated that the company expects the full-year 2022 operative EBITA margin to increase compared to 2021. We have also, as a consequence, extended the long-term financial targets for operative EBITA margin and leverage until 2025. The growth target in the Nordics from 2022 onwards remains intact.
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 person set out above, at 08:00 CEST on 4 May 2022.
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 2021, Eltel had annual sales of EUR 812.6 million. The total number of employees currently stands at around 5,000. Eltel AB is listed on Nasdaq Stockholm.