Ericsson Nikola Tesla FY 2022 Conference – Key Takeaways

Yesterday, Ericsson Nikola Tesla held a conference for media and analysts regarding the Group’s FY 2022 results. In short, in 2022 Ericsson NT reported an increase in sales revenue of 1.7% YoY, an EBITDA decrease of 27%, and a net profit of EUR 15.8m, a decrease of 32.8% YoY.

Ericsson NT’s sales revenue amounted to EUR 298m in FY 2022, representing an increase of 1.7% YoY, mainly driven by the increase in services to Ericsson and sales in the Digital Society segment in the domestic market. Out of the total sales, the domestic market accounted for 43.3%, services to Ericsson accounted for 45.7%, while other export markets accounted for 11%. On the domestic market, sales decreased by 7.7% and amounted to EUR 128.9m. Out of these, Ericsson notes continued cooperation with HT, on delivering 5G and fiber optic solutions, based on multi-year agreements. Further, all FY targets regarding fixed and mobile telecommunications were met. Also, the contracts co-financed by the European Structural and Investment Funds are ongoing as planned. With A1 Hrvatska, they are also continuing their activities related to the expansion of the 5G network with a few other projects on top of that that are co-financed by the Operational Programme Competitiveness and Cohesion funds. Nevertheless, due to the negative global trends, such as rising energy prices, the operators had adjusted the investment dynamics, which directly influenced Ericsson’s sales revenue slightly offsetting the mentioned growth. Meanwhile, revenue from services to Ericsson amounted to EUR 98.3m, a 14.6% increase YoY. Finally, sales from other export markets amounted to EUR 32.8m, a 2.3% YoY decrease.

Breaking the sales down by segments, the Networks segment increased by 8.3%, to EUR 137.6m, the Digital Services segment increased by 12.5%, to EUR 85.7m, while at the same time, Managed Services decreased by 15.6%, to EUR 73.8m. Gross profit amounted to EUR 24.4m, a decrease of 27.7% YoY, mainly as a result of higher costs of termination of the eHealth implementation project in Belarus, as well as the increase in salaries, prices of services, energy, raw materials, and materials. Gross margin also decreased to 8.2%, down 3.3 p.p. YoY. Selling and administrative expenses increased by 2.5% YoY, amounting to EUR 12.6m, with the share of these expenses in the sales revenue at the previous year’s level of 4.2%.

Sales breakdown by market (EURm)

As a result of the mentioned higher expenses, EBITDA decreased by 27% YoY and amounted to EUR 23.6m. In Q4 EBITDA amounted to EUR 5m, noting a YoY decrease of 44.7%, with the EBITDA margin decreasing by 4.7 p.p. to 5.4%.

Moving further, financial income amounted to EUR 1m, while the financial expenses amounted to EUR 464.5k, leading to a net financial result of EUR 500k – down from EUR 1m. Lower net financial results occurred mainly as a result of lower FX differences.

The positive net financial result did somewhat offset the negative impact of the higher expenses lowering the EBITDA, but EBT still recorded a notable decrease, lowered by 31.9% to EUR 17.6m. The income tax for the period amounted to EUR 1.7m. Finally, the net profit of the Company decreased by 32.8% and amounted to EUR 15.8m. On a Q4 2022 basis, the net profit decreased to EUR 3.3m, a decrease of 58.4% YoY. This would also mean that in 2022, the net profit margin decreased by 2.7 p.p. and amounted to 5.3%, while in Q4 2022 it amounted to 5.7%, a decrease of 3.6 p.p. YoY.

Ericsson NT key financials (FY 2022 vs. FY 2021, EURm)

Looking over at the balance sheet, the total assets increased by 4.3% YoY and amounted to EUR 166.6m, as a result of higher short-term assets, which make up the majority of the Group’s total assets. Cash and cash equivalents amounted to EUR 74m (including short-term fin. assets), an increase of 9.2%, in line with the Company’s planned regular activities. Looking at the other side of the balance sheet, the total equity amounted to EUR 57.8m, an increase of 7.8% YoY, mainly as a result of higher retained earnings. Meanwhile, short-term liabilities increased to EUR 58.4m, an increase of 15.3% YoY, mainly coming from higher short-term liabilities to the suppliers.

In 2023, the Group expects the trend of growing demand for ICT solutions to continue. Therefore, the Company continues to implement its strategy, with an emphasis on investing in research, development and implementation of modern ICT solutions, the development of employees’ knowledge and skills, and its own digital transformation.

Domagoj Grčević
Category : Blog

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