In 2021, Ericsson NT recorded an increase in sales of 8.9% YoY, an EBITDA increase of 52.1%, and a net profit increase of 87.6%, amounting to HRK 177.3m.
In 2021, Ericsson Nikola Tesla recorded a sales revenue of HRK 2.2bn, an increase of 8.9% YoY (or HRK 180.9m). This increase was recorded on all market segments (domestic, export, and Ericsson). Of the total sales revenue, the domestic market accounted for 47.7%, services to Ericsson accounted for 40.8%, while other export markets accounted for the remaining 11.5%. On the domestic market, sales increased by 13.4% YoY and amounted to HRK 1.05bn. This was supported by the signing of three contracts with HT, as well as the focus on activities related to 5G technology implementation. With A1 Hrvatska, the Company signed an important multi-year agreements in 2021. In the export markets, revenue grew by 8% YoY, amounting to HRK 253.2m. This was supported by the signing of contracts with HT Mostar in Q4 2021 for the upgrade and expansion of LTE RAN network, expansion of transmission network and software upgrade, and expansion of wireline switching system. In the Ericsson market, sales revenue amounted to HRK 899.5m, growing by 4.4% YoY.
Sales breakdown (HRKm)
Gross profit increased by 45.9% (or HRK 79.9m), as a result of business mix, lower transition and transformation costs, and the effect of operational and efficiency programs. This would mean that the gross margin also increased to 11.5%, an increase of 2.9 p.p. YoY.
EBITDA increased 52.1% and amounted to HRK 243.5m. During the year, the Company employed 234 new employees (end of period 2021 vs. end of period 2020), an increase of 7.23%. At the same time, the average monthly gross salaries increased from HRK 21,881 to HRK 22,749, growing by 3.96%. Selling and administrative expenses were up 10.6% YoY, amounting to HRK 92.7m. Together, this had a strong influence on the increase of EBIT, which grew by 78.6% YoY (or HRK 82m), amounting to HRK 186.4m.
Net financial result during the year amounted to HRK 7,764m, an increase of 246.5% YoY, as a result of positive exchange differences and interest income. In total, the Company’s net income increased 87.6%, amounting to HRK 177.3m.
Cash and cash equivalents, at the end of 2021, amounted to HRK 510.5m. This cash amount composes 42.4% of total assets, as compared to HRK 314m (or 31.6% of total assets in 2020). This creates a strong financial cushion for the Company for any developments.
The total assets amounted to HRK 1.2bn, an increase of 21.1% YoY. This increase is mainly contributed to the work-in-progress (WIP) conditioned by the contract execution dynamics, new receivables, as well as a strong increase in cash and cash equivalents.
Ericsson Key Financials (HRKm)
The escalation of conflict between Russia and Ukraine has sent the equity markets spiraling into the red.
With yesterday’s news of the Russian invasion of Ukraine, the escalation of conflict has sent the whole market spiraling. The main German index DAX declined by 3.96% since the beginning of the invasion, CAC 40 declined by 3.83%, FTSE declined by 3.88%, ATX declined by 7.21%, WIG declined by as much as 10.7%, while the MOEX (the main index on the Moscow Stock Exchange declined by as much as -50% intraday, recovering to around -33% by the day’s close.
Turning our attention to the US, S&P 500 ended the day on +1.50%, while Nasdaq Composite increased by 3.34%. The indices started the day in red, but the news of harsh US sanctions to Russia gave investors some assurances, causing the indices to bounce back.
Looking over to the region, BET declined by -4%, SOFIX declined by -1.9%, MB10 declined by -8.65%, SBITOP decreased by -7.35%, while CROBEX declined by -6.48%.
If we were to look at the companies which were affected the most in Croatia, AD Plastik decreased by almost 18%, Ingra decreased by 11.8%, Dalekovod decreased by 11.84%, Atlantska Plovidba decreased by 11.5%, Viktor Lenac decreased by 11.2%, while Petrokemija decreased by 10%. On the flip side, Kraš did not lose any value (0% change), Optima Telekom decreased by 1.15%, while HT decreased by 2.66%.
Influence on CROBEX (%)
Meanwhile, Slovenia marked the 4th worst day on the equity market since 2007. Krka was the most affected company, having a decrease of 10.3%, followed by NLB with 8.5%, Triglav with 7.1%, while Cinkarna Celje, Sava Re, Telekom Slovenije declined by over 5%, with Petrol and Luka Koper declining by slightly less than 5% (-4.9% and -4.8%, respectively).
Influence on SBITOP (%)
With the current situation extremely volatile, and developments happening at very fast intervals, it is difficult to say how the situation will develop or how it will influence further market movements. However, further conflict escalation will have more dire consequences on the equity markets, especially on the companies which have some part of their business in Eastern Europe, and especially Russia (e.g. Krka, AD Plastik).
The Croatian CPI continued its growth in 2022, achieving an increase of 5.7% YoY in January.
According to the Croatian Bureau of Statistics, which releases CPI (Consumer price indices) every month, in January 2022, the prices of goods and services for personal consumption, grew by 5.7% YoY on average. This sets a new all-time high in CPI numbers, the highest since January 2013. This is slightly higher than the Eurozone inflation rate, which reached 5.1% in January.
CPI for the trailing 12 months of compared to the same period last year showed an increase in consumer prices of 3.1%. This growth was driven by several factors: Food and non-alcoholic beverages (which account for 26% of the whole CPI) increased by 9.4% YoY. Following them, we have transport prices, which as the 3rd largest component of the CPI (14.7% of the total weight), increased by 10.8% YoY.
CPI (January 2013 – January 2022)
Looking over at the main groups by the purpose of consumption, in January 2022, the highest relative increase was noted by the transport segment, which as we mentioned, increased by 10.8% YoY (a decrease of 0.6 p.p. MoM). At the same time, Food and non-alcoholic beverages increased by 9.4% YoY, an increase of 1.5 p.p. MoM. Alcoholic beverages and tobacco experienced an increase of 6.2% YoY. Housing, water, electricity, gas, and other fuels, which even though it constitutes 16.9% of the total CPI, only had an increase of 2.7% YoY, which is slightly lower (0.5 p.p.) than December 2021. Furnishings, household equipment and routine household maintenance increased by 5% YoY.
On the flip side, Clothing and footwear increased by only 0.8%, Health costs increased by 0.2%, Communication grew by 0.7%, and Education increased by 0.4%.
CPI Sector Increase/Decrease Breakdown – January 2022 (%)
If we were to look at the CPI by selected groups, there was also a significant increase of 4.7% noted in Restaurants and hotels. Meanwhile, the Total, without energy increased by 4.8%. If we were to exclude food as well as energy, the CPI increase amounted to 2.7%. Looking at CPI without energy, food, beverages and tobacco, the CPI increased by 2.3%.