Business results of joint stock company Ericsson Nikola Tesla in H1 2014

Gordana Kovačević, the President of Ericsson Nikola Tesla, comments:

“Despite the demanding market environment, during H1 2014 our business performance was solid. Sales were driven by growth in the domestic and Ericsson markets, while other export markets decreased.

Total sales revenues decreased by 3% year-over-year. Sales revenues in the domestic market increased 19%, as a result of a good market position and a proactive approach in working with our customers. With Hrvatski Telekom, activities in network managed services segment are ongoing. Furthermore, a non-binding Letter of Intent on outsourcing services regarding HT infrastructure construction and maintenance was signed at the end of June. Vipnet and Ericsson Nikola Tesla were recognized and awarded by Global Telecom Business Innovation Award 2014 in London in May, for their innovativeness in the radio access network segment, by introducing Psi coverage energy efficiency solution. I would also like to highlight the successful realization of the One Stop Shop project for Joint Information System of Land Registry and Cadaster, financed by the European Union Programme IPA 2008.

A significant part of our activities and the income achieved refers to research and development activities and other expert contributions in the global organization. In H1 2014, this market segment recorded an additional growth, and thus accounts for 45% of sales revenues. We have succeeded to achieve this by expanding our portfolio and due to responsibilities we were awarded in realization of numerous complex projects.

During the second quarter, the situation in other export markets has not improved. Due to political and economic uncertainty, the operators' investments slowdown and postponement is still present. Intensive marketing and sales activities and arrangements regarding further projects with our customers are ongoing, which will gradually impact the sales in the second half of this year. 

A net profit of MHRK 49.3 was achieved, which represents 7.5% return on sales. The gross margin is lower year-over-year, primarily due to price pressure and investments in product and services development. The end of H1 2014 was concluded with a solid balance sheet and an equity ratio of 49.4%. A positive cash flow from operating activities was achieved, amounting to MHRK 72.6. After the dividend payment, of MHRK 424.9, total cash balances, including short term financial assets at the end of H1 2014 amount to MHRK 145.3, which is 23.9% of the total assets.

In line with our strategic agenda, we continue to strengthen our position and sales in new and targeted areas for telecom operators and in the Industry & Society segment. Furthermore, we are strategically focused to gain new responsibilities, new projects and strengthening competitiveness in the global market. Accordingly, we adjust our organization, employ new experts and invest in competence development.

It is certain that economic uncertainty and business challenges will mark the second half of the year as well. Thus, a continuous adjustment to market conditions, as well as managing risks, is in the center of our attention. In a transforming ICT market, we are well positioned to continue supporting our customers and partners in recognizing new market opportunities.”
 
Communications Ericsson Nikola Tesla