Ericsson Nikola Tesla Had a Strong Start in 2019

Ericsson Nikola Tesla Had a Strong Start in 2019

Foto: Ericsson Nikola Tesla

Ericsson Nikola Tesla Group’s business results in Q1 2019 show a continuation of stable business performance. Sales revenue amounted to 388.2 million HRK, up by 13.8% year-over-year. Services to Ericsson increased as a result of business expansion and gaining new responsibilities, primarily in 4G/5G.

"Our experts are engaged worldwide in numerous projects related to 5G, and in addition, part of 5G development takes place in the Company’s R&D Center. The domestic market also recorded a significant growth in sales revenue," said Gordana Kovačević, president, Ericsson Nikola Tesla.

Croatia’s leading operators remain focused on mobile networks modernization, the preparation for introduction of 5G, and digital transformation projects. The revenue growth on the domestic market was also significantly impacted by successful implementation of the State Border Control System of the Republic of Croatia.

In the markets of the Commonwealth of Independent States (CIS) and Southeast Europe, sales revenue is slightly lower compared to Q1 2018. In these markets the company remain focused on implementation of the contracted projects in the field of mobile networks modernization and healthcare informatization.

Compared to Q1 2018, gross profit decreased by 2.6%, due to investments in the development and growth of Research and Development Center, and a significant increase in engagement and working capital on projects with the Group’s key customers. Operating profit is 2.2% lower due to lower gross profit, while profit before tax increased by 3.4% as a result of positive foreign exchange differences.

Net profit increased by 8.6% to 32.9 million HRK. A positive cash flow from operating activities was realized, amounting to 26.8 million HRK, primarily as a result of collection of customer receivables. At the end of Q1 2019, total cash and cash equivalents, including short-term financial assets, amounted to 242.5 million HRK. Group’s Working Capital Efficiency, expressed in Working Capital Days (WCD), was 39 days, and if we exclude services to Ericsson, Working Capital Efficiency was 95 days. Cash conversion rate was 43%.

"In line with our strategy, we are focused on development of solutions and sales in the field of mobile broadband Internet access (4G/5G mobile solutions), Industry & Society segment (healthcare, public safety, e-Business, etc.), solutions for digital transformation and networks management. As we have previously communicated, we have been working on strategic contracts and have been investing in 5G, which will impact margins short term, but will strengthen our market position in the long term," said Kovačević.

"Furthermore, we are focused on strengthening our position in Ericsson market by focusing on maintaining high performance, quality, and cost efficiency. In line with the above, we continue hiring and investing in equipment and development of strategic knowledge and skills. We remain focused on cost and operating efficiency and strategic risk management,“ concluded Kovačević.

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