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ELTEL: Eltel Group: Interim report January-September 2021

July-September 2021

  • Net sales EUR 193.8 million (226.7). Total growth -14.5% and organic growth1) in segments -13.8%
  • Operative EBITA2) EUR 4.1 million (6.7) and operative EBITA margin 2.1% (2.9)
  • Operative EBITA2) in segments EUR 7.7 million (8.6) and operative EBITA margin in segments 4.4% (4.3)
  • Items affecting comparability EUR 0.0 million (-0.7)
  • Operating result (EBIT) EUR 4.0 million (5.8) and EBIT margin 2.1% (2.6)
  • Net result EUR 1.8 million (3.1)
  • Earnings per share EUR 0.01 (0.02), basic and diluted
  • Cash flow from operating activities EUR -7.8 million (-16.2)

January-September 2021

  • Net sales EUR 586.2 million (708.8). Total growth -17.3% and organic growth1) in segments -14.9%
  • Operative EBITA2) EUR 7.8 million (7.5) and operative EBITA margin 1.3% (1.1)
  • Operative EBITA2) in segments EUR 16.9 million (16.9) and operative EBITA margin in segments 3.2% (2.7)
  • Items affecting comparability EUR -0.1 million (19.8) from divestment of businesses
  • Operating result (EBIT) EUR 7.5 million (26.7) and EBIT margin 1.3% (3.8)
  • Net result EUR 0.8 million (12.3)
  • Earnings per share EUR 0.00 (0.08), basic and diluted
  • Cash flow from operating activities EUR -12.0 million (-1.7)
  • Net debt3) EUR 100.4 million (108.9)

Significant events during the reporting period

  • On 20 August 2021, the Finnish Supreme Administrative Court issued a decision by which it dismissed the Finnish Competition and Consumer Authority's (FCCA) proposal to impose on Eltel a fine for an alleged infringement of competition law. The decision brings an end to the proceedings that were opened by the FCCA in 2014.
  • On 27 August 2021, it was announced that Eltel Norway had signed a project agreement with Telenor to upgrade Telenor's telecommunications network with 5G technology during 2022. The agreement is worth EUR 12-16 million.

Key figures
EUR million Jul-Sep Jul-Sep Jan-Sep Jan-Sep Jan-Dec
2021 2020 2021 2020 2020
Net sales 193.8 226.7 586.2 708.8 938.0
Net sales growth, % -14.5% -19.6% -17.3% -12.4% -13.8%
Operative EBITA2) 4.1 6.7 7.8 7.5 11.4
Operative EBITA margin, 2.1% 2.9% 1.3% 1.1% 1.2%
Operative EBITA2), 7.7 8.6 16.9 16.9 22.9
Operative EBITA margin, 4.4% 4.3% 3.2% 2.7% 2.8%
%, segments
Operating result (EBIT) 4.0 5.8 7.5 26.7 24.8
Return on operative 11.6% -4.9% 11.6% -4.9% 13.0%
capital employed
(ROCE), %
Net working capital 9.8 17.3 9.8 17.3 -25.1
Net debt3) 100.4 108.9 100.4 108.9 67.4
Number of employees, 5,057 6,012 5,057 6,012 5,449
end of period

1) Adjusted for divested operations and currency effects.

2) Eltel follows the profitability of segments with Operative EBITA. Please see page 25 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 25 for definition.
Comments by the CEO
Productivity and profitability have improved in our Nordic home market, which is shown in the operative EBITA margin for the segments. However, the operative EBITA for the Group in the quarter was negatively affected by lower net sales, continued challenges in the Polish High Voltage business and increased material prices. Year-over-year we lowered the net debt and improved return on operative capital employed.

The lower net sales is caused by two main issues: previously announced losses of large agreements and reduced customer investments as a consequence of COVID-19. Intensive work is ongoing to reverse the downturn and to win new contracts. We pursue different organic growth opportunities by looking at adjacent business areas and by sharpening our offering to the market. We are also preparing for potential future mergers and acquisitions.

In the segments, we have seen a continued profitability increase in Finland, where we have a good market position in both communication and power. Compared to the same quarter last year, the risk level in Finland has reduced and productivity has improved.

In Sweden, the business has stabilised and is moving in the right direction. Towards the end of the quarter, volumes started increasing.

In Norway, volumes continued to be negatively affected by reduced and delayed customer investments due to COVID-19. Despite the downturn, the Norwegian business is stable and continues to generate good margins.

In Denmark we also have challenges with volumes, mainly due to partial insourcing of a large customer agreement. We can also see weaker demand in the Danish fibre market. However, we note an active market in general and we see new opportunities in the future.

We have significant profitability issues in High Voltage, primarily in Poland. Year-to-date, the business has cost Eltel EUR 7.6 million in operative EBITA. Reasons for the losses include delays and closings of old projects, a challenging market in general, COVID-19 and lately also increased material prices. Given the difficult conditions and our focus on the Nordic market, we are re-evaluating strategic alternatives for the Polish operations.

Our margins are improving for the Nordic market and we have maintained a healthy balance sheet. Year-to-date we have improved operative EBITA and we have a positive outlook for the fourth quarter. Our financial guidance remains: We expect the full-year 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,

Elin Otter, Director, Communications and Investor Relations

Phone: +46 72 59 54 692,

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 CET on 3 November 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 5,100. Eltel AB is listed on Nasdaq Stockholm.

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