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Quality results and solid business operations on the domestic and export markets

  Categories: Business Results Investors

The business results of the Ericsson Nikola Tesla Group in 2023 were announced at the press conference.

  • Sales revenue amounted to EUR 304.2 million; up by 2.2% year-over-year.
  • The share of export in the total revenue is 57.2%, which confirms the company’s leading position in the ranking of Croatian exporters. 
  • Operating profit increased by 45.2% and amounted to EUR 24.8 million, while net profit increased by 40.3%, to EUR 22.2 million. 
“In 2023, Ericsson Nikola Tesla Group operated stably and achieved high-quality business results, which showed our ability to efficiently react to market and macroeconomic challenges and respond to customer needs. In accordance with our strategy, we focused on strengthening our leading position in mobile networks, growing in the Digital Society segment, and maintaining and continuously improving our position in the Services and Research and Development segments. The share of export in total revenue remained at a high level of 57.2%, which confirms our leading position in the ranking of Croatian software exporters. Another successful year can be attributed to quality cooperation with customers, investment in technological leadership and the contribution of our employees. Therefore, I would like to take this opportunity to thank the company's management team and all employees for their dedicated work, professionalism and persistence, as well as our customers and partners for their trust”, said Gordana Kovačević, president of Ericsson Nikola Tesla.

Sales revenue recorded increase of 2.2% year-over-year to EUR 304.2 million, owing to higher sales revenue on domestic market and service to Ericsson market segment, while revenue on other export markets decreased year-over-year. Gross profit increased by 30.4% as a result of the sales mix, successful risk mitigation and focus on operational and cost efficiency. Operating profit increased by 45.2% to EUR 24.8 million, while net profit increased by 40.3% to EUR 22.2 million. In line with expectations, a positive cash flow from operating activities was achieved amounting to EUR 16.7 million. We concluded the end of Q4 with a solid balance sheet, with equity ratio of 37.6%. Cash and cash equivalents, including short-term financial assets rose by 3.9% in comparison to the end of the previous year and amounted to EUR 76.9 million (39.9% of the total assets). 
On the domestic market, we continued to provide support to the leading operators Hrvatski Telekom and A1 Hrvatska in the modernization of their mobile networks. At the end of the year, a contract was signed with Hrvatski Telekom regarding cooperation on the implementation of Ericsson dual-mode 5G Core for the 4G/5G core network. We further strengthened our cooperation at the beginning of 2024 by signing a contract based on which Ericsson Nikola Tesla will be the exclusive supplier of the radio part (RAN) of Hrvatski Telekom's mobile network until the end of 2027. 
In the segment of managed services for Hrvatski Telekom until the end of 2023, as in all previous years, we carried out our contractual obligations professionally and maintained the highest quality of service. We also successfully completed all the contracted projects related to the design and construction of broadband Internet in areas where it was determined that there is no commercial interest of telecom operators in the construction of NGA networks. The projects were co-financed by the European Structural and Investment Funds. At the same time, in parallel with the deliveries, we ensured a smooth transition of the technology unit for the construction and maintenance of the HT network, which consists of about 670 employees and accompanying tangible assets, from the company Ericsson Nikola Tesla Servisi d.o.o. to HT Group from January 1, 2024.
Our strategic cooperation with A1 Hrvatska, which has lasts for over 22 years, successfully continued in 2023. In accordance with multi-year framework contracts, we worked on the modernization and expansion of the 5G radio network capacity, the modernization and construction of the convergent core network, and the modernization of microwave transmission systems.
In the Digital Society segment, during the year we signed a number of new contracts in various areas, such as health, public administration, land registers and cadaster, tourism, etc., with the Ministry of Justice and Public Administration, the Ministry of the Interior, the Ministry of Health, the Ministry of Labour, Pension System, Family and Social Policy, the Ministry of Tourism and Sport, the Ministry of Agriculture, State Geodetic Administration, Croatian Pension Insurance Institute, City of Split and CARNET.
With the company Odašiljači i veze d.o.o. we signed a contract for the Design and Construction of the NGN Aggregation Network - Eastern Croatia, which we will implement in the next four years. This project is part of the construction of the national broadband aggregation infrastructure of the next generation (Next Generation Network - NGN) and will provide small towns and rural areas with access to high-speed Internet.
In export markets, we have continued our cooperation with the operators HT Mostar, Crnogorski Telekom, IPKO Kosovo, Telekom Kosova, and Ucom Armenia for the modernization of their telecommunications networks. We would like to highlight the new, multi-year contract with Crnogorski Telekom in the area of the 4G/5G core network, which was signed in December 2023. We worked intensively with the operator Telekom Kosova on the implementation of the contract signed at the end of 2022, which includes the modernization and virtualization of the core network and the introduction of the most advanced equipment in the radio part of the network. At the beginning of 2024, we continued our partnership with Telekom Kosova by signing a multi-year framework contract in the field of modernization and maintenance of this operator's radio network. On the Belarusian market, we fulfilled all contractual obligations in the operator segment signed before the introduction of sanctions, strictly adhering to the measures introduced by the EU institutions, and at the end of 2023, we closed the local company Ericsson Nikola Tesla BY.
The delivery of services to Ericsson is continuously growing, and our R&D Center, due to the continuously high quality of the software it delivers, has strengthened its position in the global corporation, thus ensuring the retention of existing and expansion of new responsibilities in 5G & Cloud technologies. Furthermore, the expansion of R&D center continued with new employment in the offices in Croatia and Kosovo, which was in line with business plans. The significant role that our experts from other expert centers have in the modernization of telecom networks for Ericsson’s customers in the European Union and worldwide should also be highlighted.
In 2023, we employed more than 200 experts who passed a demanding selection program, and with professional mentoring, they quickly acquire new knowledge, improve competencies and integrate into the team. 
In the context of technology development and accelerated digitalization, one of the key challenges is cybersecurity. Digital networks require comprehensive security strategies to protect data and maintain user trust. Ericsson Nikola Tesla, as a leading Croatian ICT company whose experts work on the development of the latest generations of ICT products and solutions, has the responsibility and role of promoting and raising awareness of the importance and opportunities that modern technologies bring to the economy and society. We also take care of the relevant security and regulatory aspects so that the implementation of ICT technologies and solutions is maximally aligned with the stated requirements.
In 2024, we will continue to fulfill our obligations on the domestic market with quality and professionalism in accordance with the signed multi-year framework contracts related to the construction and modernization of telecom networks and the needs of our customers. However, due to the non-renewal of the contract in the field of managed services with Hrvatski Telekom, we expect lower sales revenue in the operator segment. We are focusing on more profitable and strategic areas from our core business and investing in our sustainable future. We remain strongly focused on the Digital Society business segment in which we have numerous references. Our company was one of the first to recognize the importance of digitalization and for many years has been developing and implementing state-of-the-art solutions that enable companies and state institutions to effectively transform processes, which can significantly strengthen their businesses and realize their full potential. In the export markets, we will continue with the implementation of contracted projects for customers in the operator segment, and our undivided attention will be on new business opportunities and new customers. In the R&D segment, our goal is to maintain the position of a responsible and reliable partner to the global Ericsson and we will continue to deliver quality software with a focus on strategic areas and state-of-the-art technologies.
Gordana Kovačević, president of Ericsson Nikola Tesla, concluded her address with the words: “In order to achieve our strategic goals, we invest in new business segments and customers, development of information and communication solutions based on the latest technologies, further development of our products and services, competencies of our employees, potential acquisitions, equipment for development and testing of new technologies and the digital transformation of the Ericsson Nikola Tesla Group. We also remain focused on timely identification and elimination of risks, operational efficiency and tight cost management. 
The company's long-term sustainable and successful operations in the coming period will be founded on strong leadership, the excellence of our experts, innovative products, solutions and services as well as values that are intertwined with all segments of our work.”
Communications Ericsson Nikola Tesla

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