Ericsson NT published their Q1 2022 results yesterday, showing a strong 18% YoY increase in sales, a 38.9% YoY increase in EBITDA and a net profit of HRK 59.7m (+46.3% YoY).
In Q1 2022 Ericsson NT posted sales in the amount of HRK 526m, representing a strong 18% YoY increase. The increase in sales came on the back of realized projects both in domestic and foreign markets. Although, the company emphasized the fact that even Q1 results show a positive impact on basically all segments, war in Ukraine will impact the Company’s realized projects and new businesses that planned to be contracted in the Belarus region. All activities with Belarus’s clients are currently being put on hold and the company emphasized that new projects in Belarus were planned, which will also come in question. The impact should be seen in Q2 2022.
Sales Breakdown (HRK m)
Gross profit amounted to HRK 82.9.m, up by 31.3% YoY, due to sales growing faster than COGS which positively impacted gross profit. COGS reported lower growth due to lower transition and transformation costs and the impact of the cost-efficiency program. As a result, the gross margin grew 1.6 p.p. to 15.8%.
EBITDA increased 39% and amounted to HRK 82.8m. During the year, the Company employed 204 new employees (end of period Q1 2021 vs. end of Q1 2022), increase of 6.2% YoY. At the same time, the average monthly gross salaries increased from HRK 21,589 to HRK 22,338, growing by 3.47%. Selling expenses were down 5.1% YoY while administrative expenses were up 7.1% YoY, amounting together to HRK 22.1m. Depreaciation was down 7.7% to HRK 13.3m YoY. All this had a strong influence on the increase of EBIT, which grew by 53.7% YoY (or HRK 82m), amounting to HRK 69.6m.
EBIT amounted to HRK 69.6m marking a 53.7% YoY increase due to an improved gross profit. Meanwhile, selling and administrative expenses decreased by 5.1% YoY due to increased presales activities related to 5G radio access and core networks, and broadband network implementation projects.
Below the operating line, the net financial result more than halved, amounting to HRK 1.5m (-53.6%%) because of lower positive FX movement. Finally, net profit amounted to HRK 59.7m representing a 46.1% YoY increase.
Ericsson Key Financials (HRKm)
Cash and cash equivalents, at the end of Q1 2022, amounted to HRK 407.5m. This cash amount composes 33% of total assets, which is a decrease compared to year end 2021 when cash position stood at HRK 477m. This creates a strong financial cushion for the Company for any developments. Cash flow from operations was negative at -56m due to changes in working capital which amounted to HRK -140m.
