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2021-11-04

Teleste 1-9/2021: Adjusted operating result on par with the reference period, net sales decreased, component availability restricted deliveries, strong growth in orders received.

TELESTE CORPORATION         INTERIM REPORT 4 NOVEMBER 2021 AT 8:30 EET


TELESTE CORPORATION INTERIM REPORT 1 JANUARY TO 30 SEPTEMBER 2021


ADJUSTED OPERATING RESULT ON PAR WITH THE REFERENCE PERIOD, NET SALES DECREASED, COMPONENT AVAILABILITY RESTRICTED DELIVERIES, STRONG GROWTH IN ORDERS RECEIVED


July-September 2021

- Net sales amounted to EUR 32.3 (35.7) million, a decrease of 9.5%
- Adjusted operating result was EUR 2.3 (2.2) million, an increase of 2.6%
- Operating result amounted to EUR 2.3 (2.2) million, an increase of 2.6%
- Earnings per share, including discontinued operations, amounted to EUR 0.10 (-0.38)
- Cash flow from operations, including discontinued operations, was EUR 3.0 (-2.8) million
- Orders received totalled EUR 44.1 (29.8) million, an increase of 48.3%
- Order backlog at period-end totalled EUR 96.0 (73.1) million, an increase of 31.4%


January-September 2021

- Net sales amounted to EUR 105.1 (105.8) million, a decrease of 0.6%
- Adjusted operating result was EUR 4.9 (3.8) million, an increase of 29.5%
- Operating result amounted to EUR 8.1 (3.2) million, including non-recurring income from insurance compensation of EUR 3.2 million, an increase of 150.2%
- Earnings per share, including discontinued operations, amounted to EUR 0.35 (-0.57)
- Cash flow from operations was EUR 15.3 (8.5) million, an increase of 80.6%
- Orders received totalled EUR 124.0 (105.7) million, an increase of 17.4%

The income statement figures presented in this interim report only include continuing operations, except where otherwise noted. The figures in the balance sheet and the cash flow statement include both continuing and discontinued operations.


Outlook for 2021 (updated)

Teleste estimates that the net sales of the continuing operations in 2021 will reach the level of 2020 and that the adjusted operating result will exceed the adjusted operating result of 2020. The net sales of the continuing operations in 2020 were EUR 145.0 million, and the adjusted operating result was EUR 5.1 million.

Global supply chain disruptions and component availability issues have restricted the deliveries of Teleste's products and cause uncertainty to the deliveries of the remainder of the year in spite of the strong order backlog.


Comments by CEO Jukka Rinnevaara:

“The most positive aspect of the third quarter was the strong growth in orders received. Orders increased in access network products as well as public transport information solutions and video security solutions. Consequently, our order backlog grew to a record-high level. At the same time, net sales for the quarter declined year-on-year in all of Teleste's businesses. This was partly due to component availability problems but also the timing of customer deliveries. The operating result increased slightly year-on-year mainly due to the improved gross margin. Cash flow from operations developed favourably. Component availability problems were a key challenge during the quarter and they affected our delivery capacity. We have been able to partially pass the increased freight and material costs on to our sales prices. While the pandemic is not yet entirely over in our markets, business is gradually returning to normal unless new COVID-19 variants complicate the situation again.

Data communications operators started investments in distributed access architecture. In order to increase the capacity of their networks, major operators have also increased their orders for Teleste's next-generation products. The deliveries of traditional HFC technology products declined slightly, as expected. Net sales also decreased in the services business, but we expect demand to pick up during the remainder of the year. During the quarter, we focused on the strategic development of capabilities and resources required by the technological transformation. In particular, we continued the development of products in accordance with distributed access architecture and the DOCSIS 4.0 standard. We introduced new smart next-generation amplifiers in the North American market. The new energy-efficient and environmentally friendly products are a key part of our sustainable solutions for building a connected society.

During the quarter, we received significant new orders from major train manufacturers, public transport operators and public authorities, which further strengthened our order backlog. Geographically, the most significant orders for train solutions are delivered to Germany, the UK and Canada, while a follow-up order for video surveillance solutions was received in the Middle East. The record-high order backlog provides a good foundation for business growth. Our aim is to improve profitability and, as one development measure, we have started an investment to expand our production facilities to increase our own production in Littoinen. The expansion will be completed in the latter part of next year. Component availability problems and price increases also affected the video security and public transport information solutions businesses during the third quarter.

In spite of the strong order backlog, the most significant risk pertaining to the achievement of the targets set for this year is related product deliveries and the availability of electronic components. We expect the component shortage and problems with the availability of materials to continue and affect our capacity to deliver products also in 2022. We will continue our efforts to source the necessary components for our product deliveries.

As announced in the stock exchange release on 3 November 2021, I will step down as CEO of Teleste at the end of this year and will retire in accordance with the contract during the next year after the transition period. I wish Esa Harju the best of luck and success in his new, interesting post as CEO. As a long-term member of the Management Group, he knows the company well. Together with Esa, we will ensure that the transfer of responsibilities will take place smoothly.


Group Operations, July-September 2021

Key figures7-9/20217-9/2020Change
Net sales, EUR million32.335.7-9.5%
Adjusted EBIT, EUR million 1)2.32.2+2.6%
Adjusted EBIT, % 1)7.1%6.2% 
EBIT, EUR million2.32.2+2.6%
EBIT, %7.1%6.2%
Författare GlobeNewswire