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2016-11-09

ELTEL: Eltel Group: Interim Report January-September 2016

January-September 2016

· Net sales amounted to EUR 1,012.7 million (857.6), up 20.6% in
local currencies, organic net sales increased by 3.5%*

· Operative EBITA amounted to EUR 16.7 million (41.7) or 1.6% of net
sales (4.9)

· No items affecting comparability (-1.7)
· EBITA amounted to EUR 16.7 million (40.0) or 1.6% of net sales
(4.7)

· EBIT amounted to EUR 5.9 million (30.1)
· Net financial expenses decreased to EUR -8.1 million (-12.2)
· The net result amounted to EUR -1.8 million (25.9)
· Earnings per share was EUR -0.04 (0.42)
· Operative cash flow was negative at EUR 30.5 million (-44.6), cash
conversion was 160.8% on a rolling 12-month basis

July-September 2016

· Net sales amounted to EUR 356.2 million (310.8), up 16.2% in local
currencies, organic net sales increased by 4.0%*

· Operative EBITA amounted to EUR 7.8 million (22.5) or 2.2% of net
sales (7.2)

· EBITA amounted to EUR 7.8 million (23.3) or 2.2% of net sales
(7.5)

· EBIT amounted to EUR 4.1 million (19.6)
· Net financial expenses amounted to EUR -2.0 million (-2.6)
· The net result amounted to EUR 1.9 million (25.2)
· Earnings per share was EUR 0.02 (0.39)
· Operative cash flow was positive at EUR 22.6 million (-7.4)
Unless otherwise stated, figures in brackets refer to the same period
in the previous year

* Organic net sales excludes Vete acquisition in 2015, U-SERV
acquisition in 2016, and the Norwegian Communication business until 1
September 2016 (Eltel Sønnico) and is presented using comparable
exchange rates.

Comments by the CEO

Focus on restoring financials

My first few weeks as CEO of Eltel has without doubt been hectic. The
performance deviations in certain projects have been top priority for
the management team. We take these performance deviations,
communicated after the summer, very seriously and address them
accordingly.

These challenges mainly affected profitability in the third quarter,
with only a minor impact on net sales. Net sales growth amounted to
16% in the quarter. Growth was mainly driven by acquisitions but also
by organic growth, especially within our fibre business in the
Communication segment. The EBITA for the quarter amounted to EUR 8
million, in line with our communicated guidance on 14 October, most
significantly burdened by the performance in Power segment and
especially by certain electrification projects in Africa.

As earlier communicated, these challenges are expected to also impact
net sales and profitability in the fourth quarter. Eltel estimates
that EBITA for the full year 2016 will be in the range of EUR 27-32
million, indicating an EBITA for the fourth quarter in the range of
EUR 10-15 million. In the estimate for the fourth quarter, management
has also considered the increased impact of delayed customer
investments in the Polish and German power markets and in the German
communication sector as communicated in connection with the second
quarter 2016 interim report.

Regarding 2017, management is now taking a more cautious stand
concerning Eltel's project business within power transmission in
Africa and rail and road in Norway. Within the Power segment, it is
estimated that net sales from power transmission will decrease in
2017 compared to the level in 2016.

Eltel's management is currently carrying out a thorough review,
including planning of permanent corrective actions, to restore the
situation in this part of our business. The conclusions and an action
plan will be in place during November.

Despite the challenges, the vast majority of Eltel's operations are
performing well. The project business, which accounts for
approximately one third of total Group volumes, has demonstrated a
profitable track record over many years. We have a sizeable committed
order backlog that is well supported by both smart meter
installations and fibre rollouts. In a longer term perspective,
Eltel's position within both the projects and service business for
Infranets will remain strong.

-Håkan Kirstein, President and CEO

For further information:
Ingela Ulfves
VP - Investor Relations and Group Communications
Tel: +358 40 311 3009, ingela.ulfves@eltelnetworks.com

This information is information that Eltel AB is obliged to make
public pursuant to the EU Market Abuse Regulation and the Securities
Markets Act. The information was submitted for publication, through
the agency of the contact person set out above, at 08.00 CET on 9
November 2016.

About Eltel
Eltel is a leading European provider of technical services for
critical infrastructure networks - Infranets - in the segments of
Power, Communication and Transport & Security, with operations
throughout the Nordic and Baltic regions, Poland, Germany, the United
Kingdom and Africa. Eltel provides a broad and integrated range of
services, spanning from maintenance and upgrade services to project
deliveries. Eltel has a diverse contract portfolio and a loyal and
growing customer base of large network owners. In 2015 Eltel net
sales amounted to EUR 1,255 million. The current number of employees
is approximately 9,600. Since February 2015, Eltel AB is listed on
Nasdaq Stockholm.

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http://news.cision.com/eltel/r/eltel-group--interim-report-january-septe...
http://mb.cision.com/Main/11435/2118670/587083.pdf

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