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Business results of Ericsson Nikola Tesla Group in Q1 2015
Gordana Kovačević, the President of Ericsson Nikola Tesla, comments: “During Q1 2015, Ericsson Nikola Tesla continued its stable business performance. We stay focused on implementing our strategic goals and initiatives related to the business development in all markets and the improvement of profitability through cost efficiency and business excellence. The program of cost reduction is progressing ahead of plan and shows solid results during Q1 2015. As far as sales in targeted areas are concerned, I would like to highlight significant results and an increased operators' interest in the segment of OSS and BSS.
Unfavorable economic trends and customer cautious approach to capital expenditure is still present. Compared to the same time period last year, a significant growth in revenue was realized in the Ericsson market. The markets of the Commonwealth of Independent States and Southeast Europe also record growth, thus partially neutralizing the decrease in revenue in the domestic market. Accordingly, total sales revenues decreased by 2% year-over-year. Currently, the Company has no financial exposure to Russia and Ukraine.
One of important achievements in Q1 is the continuation of the informatization of the state administration bodies. We have signed a contract with the Ministry of Justice and State Geodetic Administration regarding the upgrade and expansion of Joint Information System for Land Registry and Cadaster (JIS) that will enable Croatian citizens an easier and a faster access to data and create better prerequisites for business.
Revenues from research and development activities and services sales to Ericsson market are increasing and now account for more than half of the total revenue. This market segment also includes managed services sales to Hrvatski Telekom. This changing business mix put pressure on profitability but has simultaneously led to lower overall business and operational risks.
Net profit amounting to MHRK 25.2 was achieved, representing 8.1% return on sales (ROS). Gross margin is lower year-over year, as a result of change in business mix (increasing sales to Ericsson markets) and continuous price pressure from the operators. The selling and administrative expenses decreased by 18% year-over-year. We had a clear focus on working capital efficiency and cash conversion. Cash flow from operations amounted to MHRK 50.7 providing a high cash conversion rate of 130%. Cash and cash equivalents, including short term financial assets at the end of Q1, amount to MHRK 269.7.
In line with our strategy, we are focused on sales in mobile broadband access and our targeted areas: IP networks, Cloud, OSS & BSS, TV & Media and Industry & Society. At the recently held Mobile World Congress (MWC) in Barcelona, most of Ericsson key launches were related to the mentioned areas, including the new Router 6000 Series, the Hyperscale Cloud Solution, Expert Analytics 15.0, a new Media Delivery Network solution and Digital Telco Transformation. New Ericsson Radio System was also announced. This year again, Ericsson Nikola Tesla experts have contributed to presented Ericsson solutions, by participating in the development of several innovative solutions and applications.
We shall continue to innovatively contribute to Ericsson technology leadership and strengthen relations with customers and other partners. We continue to employ talented experts and to invest in the development of strategic knowledge and skills.“
Communications Ericsson Nikola Tesla
One of important achievements in Q1 is the continuation of the informatization of the state administration bodies. We have signed a contract with the Ministry of Justice and State Geodetic Administration regarding the upgrade and expansion of Joint Information System for Land Registry and Cadaster (JIS) that will enable Croatian citizens an easier and a faster access to data and create better prerequisites for business.
Revenues from research and development activities and services sales to Ericsson market are increasing and now account for more than half of the total revenue. This market segment also includes managed services sales to Hrvatski Telekom. This changing business mix put pressure on profitability but has simultaneously led to lower overall business and operational risks.
Net profit amounting to MHRK 25.2 was achieved, representing 8.1% return on sales (ROS). Gross margin is lower year-over year, as a result of change in business mix (increasing sales to Ericsson markets) and continuous price pressure from the operators. The selling and administrative expenses decreased by 18% year-over-year. We had a clear focus on working capital efficiency and cash conversion. Cash flow from operations amounted to MHRK 50.7 providing a high cash conversion rate of 130%. Cash and cash equivalents, including short term financial assets at the end of Q1, amount to MHRK 269.7.
In line with our strategy, we are focused on sales in mobile broadband access and our targeted areas: IP networks, Cloud, OSS & BSS, TV & Media and Industry & Society. At the recently held Mobile World Congress (MWC) in Barcelona, most of Ericsson key launches were related to the mentioned areas, including the new Router 6000 Series, the Hyperscale Cloud Solution, Expert Analytics 15.0, a new Media Delivery Network solution and Digital Telco Transformation. New Ericsson Radio System was also announced. This year again, Ericsson Nikola Tesla experts have contributed to presented Ericsson solutions, by participating in the development of several innovative solutions and applications.
We shall continue to innovatively contribute to Ericsson technology leadership and strengthen relations with customers and other partners. We continue to employ talented experts and to invest in the development of strategic knowledge and skills.“
Communications Ericsson Nikola Tesla
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