Business results of Ericsson Nikola Tesla Group in H1 2016

Gordana Kovačević, the President of Ericsson Nikola Tesla, comments:„Business results in H1 2016 show a continuation of stable business performance. Sales revenues grew by 7% year-on-year as a result of sales growth in the Ericsson market and in the Commonwealth of Independent States (CIS) market. The Ericsson market registers a continued growth due to business expansion and taking on of new responsibilities in Research & Development and Managed Services segments. In view of that, we continued hiring and employed 119 experts in Ericsson Nikola Tesla Group in H1 2016.

I am glad that our investments into development of new solutions and strong marketing and sales activities bring us success in the Commonwealth of Independent States (CIS). The recently completed implementation of the national healthcare information system of the Republic of Armenia that is entirely cloud-based is a particularly important additional reference for us. We continue to be successful in this market in the operator segment as well with the further expansion of Ucom’s LTE network and the modernization of its 3G network. With the new big eHealth contract in Kazakhstan we reaffirm our leadership in realization of complex ICT solutions in the healthcare segment, which is one of the company’s strategic domains.

In the local market and in the markets of Southeast Europe we record a fall in sales revenue due to negative economic and political trends. Tough competition and consolidation and centralization of procurement processes of global customers/operators pose additional challenges.

Net profit of MHRK 51 is in line with H1 2015 results, and corresponds to 7.0% return on sales. Gross margin continues to be under pressure in comparison to the same period of last year, due to changing business mix and continued price pressure from customers. We exercise firm cost control. Selling and administrative expenses have been reduced by 1.7% YoY. We closed H1 with a healthy balance sheet and a solid equity ratio of 30.2%. Cash flow from operating activities is positive amounting to MHRK 38.2. Following payment of MHRK 132.8 dividend in June, total cash including short-term financial assets amounted to MHRK 163.2 at the end of H1. Working capital efficiency remains strong, expressed in working capital days (turnover) of 27. The cash conversion rate is 47%.

In line with our strategy, we continue to strengthen our position in core business and targeted areas for telecom operators and customers in the Industry & Society segment. We continue to invest into development of new products and solutions. Our strategic focus is also on acquisition of new responsibilities, new projects and strengthening of our global Ericsson market competitiveness. Consequently, and taking into account the need for constant transformation and Ericsson’s organizational and structural changes, we have been adapting our organization, employing new experts and investing into our competence development.

It is expected that economic uncertainty and current sales trends will also prevail in the second half of the year. Therefore, continuing adaptation to market conditions coupled with responsible risk management and cost efficiency remain in the focus of our attention.

Digitalization opens new opportunities with existing and potential customers and we trust that our Networked Society strategy and ongoing activities will create future value for all our stakeholders.” 

Company Communications Ericsson Nikola Tesla