In 9M of 2020, the company recorded an increase in sales of 15.2%, a decrease in EBITDA of 12.7% and a decrease in net profit of 16.8%.
In the first 9M of 2020 Ericsson Nikola Tesla sales revenue amounted to HRK 1.44bn, representing an increase of 15.2% YoY (or HRK 190.2m). Of the total sales, domestic market accounts for 46%, services to Ericsson account for 43.9%, while other export markets account for 10.1%.
To be specific, in the domestic market, sales doubled to HRK 664.6m compared to HRK 306.2m in 9M 2019. The company notes that their strategic partner HT and Ericsson Nikola Tesla Servisi signed an extension of the Management Services Agreement for the construction and maintenance of fixed and mobile telecommunications infrastructure, supervision of the telecommunications network, and field maintenance of the active access and passive network. The Agreement is in force until the end of 2023, and its value is over HRK 1.6bn. The most significant project within the Agreement is an intensive deployment of fiber to the home (FTTH).
In Ericsson market, the company’s second largest market, sales stood at HRK 633.1m, representing a decrease of 16.7% YoY. Such a decrease could be attributed to the change of business model regarding managed services of HT’s network in 2020. For comparable units, excluding manages services, sales revenue increased by 2.3%.
Ericsson Nikola Tesla’s R&D Center continued with the ongoing business activities and projects. Despite the fact that most R&D employees work from home, all work and deliveries are going according to plan.
Turning our attention to operating expenses, they amounted to HRK 1.38bn, representing an increase of HRK 200.9m or 17% YoY. Of that, selling and administrative expenses increased by 17.4% (to HRK 62.1m), due to an increased engagement on presales activities related to 4G/5G radio access and core networks and an increase of costs related to managed services for HT.
As a result of the above mentioned, EBITDA decreased by 12.7% to HRK 118.6m, which puts the EBITDA margin at 8.1% (-2.6 p.p. YoY). Meanwhile, operating profit decreased by 14.6% to HRK 76.24m. Such a result puts the EBIT margin at 5.2% (-1.8 p.p. YoY).
The company’s bottom line was further lowered by a net financial result of HRK -1.1m compared to HRK 4.3m in 9M 2019, which could be mainly attributed to FX losses in 9M 2020.
In the first 9M of 2020, the Ericsson NT recorded a net profit of HRK 67.15m, representing a decrease of 16.8%. Therefore, profit margin stood at 4.6%, representing a decrease of 1.8 p.p.
Looking at the balance sheet, as of end of Q3 2020, the Company has a solid balance sheet with total assets of MHRK 1.12bn, which is an increase of 17.7% compared to the end of 2019. Such an increase came primarily as a result of increase in total cash and cash equivalents due to significant collection of current customer receivables, and decrease of inventory due to a high level of realization of certain network modernization projects.
The company recently proposed a dividend of HRK 49 per share, with the ex-date being 11 December 2020. To read more about it click here.
