• Orders booked 1,453 MHRK
• Sales revenue 1,268.8 MHRK
• Gross margin 16.3%,
• Operating profit 90.2 MHRK
• EBIT (Earnings before Interest Expense and Taxes) 132.4 MHRK
• Net profit 105.9 MHRK
• Earnings per share 80.6 HRK
• Return on sales before tax 10.4%
• Cash flow from operating activities 178.8 MHRK
  

„The business results of Ericsson Nikola Tesla during the three quarters 2007 meet planned figures. Our volume growth exceeds, however, the given telecom market growth. Beside the volume growth and stability, our accomplishments are continued business with old customers, positioning in new markets and a broadened customer base. I am very satisfied with the fact that this year we have acquired 11 new customers. Among them I have to mention the mobile operator Megafon Russia, Ipko Net Kosovo and several customers in the enterprise segment, because of their strategic importance for business growth.

 

The company has been positioning itself as a system integrator in our traditional segments but also in new ICT solutions where we concluded significant contracts for integrated information systems in the government administration, health care and business segment.

 

Services in the internal Ericsson market, i.e. knowledge sales mainly in R&D and GSDC account for considerable share in our business results and they show permanent growth. In the first nine months 2007 the company employed over 100 new specialists. Accordingly, considerable funds were invested into their competence development, knowledge exchange, workplace furnishings and purchase of tools (test plants and software aids) required for new products and new business segments. I would like to add that we can hardly compare the profit achieved this year with last year’s profit, because in 2006 the company had a non-recurring extraordinary income on the ground of collected insurance to compensate the fire damage in 2005, which caused a considerably higher deviation when comparing the results. On the whole, our profitability meets planned figures and it is in alignment with our investment into strategic areas, new markets and our employees,” says Gordana Kovačević, company president.

 

Compared with the same period last year Ericsson Nikola Tesla performed as follows. Orders booked are higher 16.1%, and net sales went up 8.3%, resulting from increased volume in nearly all major markets.

 

In domestic market sales revenues increased 14.9%, amounting to 387.1 MHRK.

 

Good results were achieved in Bosnia and Herzegovina and Montenegro where sales revenue increased by 8.7% to 194.5 MHRK. During 3Q the contract performance with Ipko Net, the mobile operator in Kosovo, started; the achieved sales revenue in Kosovo total 58.6 MHRK.

 

In the CIS market the sales revenue went down 15.9% due to present saturation in fixed telephony, changes in the realization of contracts, and the US dollar’s strong fall; the sales revenue amount to 333.1 MHRK.

 

In internal Ericsson market the sales revenue increased 18.2% and amount to 295.5 MHRK

Gross margin is lower compared to the same period year over (it amounts to 16.3%; 9M 2006 17.6%), due to product mix.

 

Earnings before Interest Expense and Taxes (EBIT), amounting to 132.4 MHRK meet planned figures. They are lower compared to last year, primarily due to mentioned extraordinary, non-recurring income in 2006 (compensation for fire damage) of 36.6 MHRK. The lower profit is also due to the cost of treasury shares distribution, carried out within the employees’ award program and amounting to 14 MRHK.

 

The share of selling, general and administrative expenses in total sales revenue remained on nearly the same level, with a tendency toward decrease which points to visible progress in cost-efficiency program.

 

Despite considerably larger interest income from customer crediting, there was a drop in financial result because of the lower release of impairment reserves and higher negative foreign exchange differences.

 

Return on sales before tax is 10.4% and it meets the planned figure.

 

The liquidity is very good, despite the fact that during the year significant funds were invested into the purchase of equipment required for the realization of contracts in export markets; also a dividend totaling 423.7 MRHK was paid.

In domestic market Ericsson Nikola Tesla confirmed the partnership with Vipnet with the introduction of latest communication technologies. In addition to further 3G infrastructure evolution by introducing HSDPA (High Speed Downlink Packet Access) functionalities, Ericsson Nikola Tesla has collaborated with Vipnet in providing the first mobile VoIP service in the Croatian market. Late in the 3rd quarter the company contracted with Vipnet a long-term collaboration in 2G and 3G Core Network, to enable the Vipnet network migration to the latest-generation core network infrastructure.

 

The company has been working with T-HT on the modernization of their fixed network, on building the broadband access, radio and optical transmission systems and IP backbone network.

 

The collaboration with the strategic customer Tele2 in expanding and upgrading the 2G and 3G networks continued. With Metronet the company concluded a contract for the delivery of optical transmission system (DWDM). With Odašiljači i veze (Transmitters and Communications company) Ericsson Nikola Tesla concluded the contracts for expanding the existing and delivering new radio relay communication.

 

In the export structure the cooperation with BH Telecom, the leading mobile operator in Bosnia and Herzegovina, ranks high. With this business partner Ericsson Nikola Tesla signed large contracts for expansion and modernization of Ericsson’s GSM network, which will considerably increase the coverage of the entire B&H territory. Also the tools for software supervision and GSM network management were contracted.

 

In Montenegro Ericsson Nikola Tesla and T-Com Montenegro signed in 3Q a contract for an extension of the broadband fixed network based on Ethernet DSL Access technology. The company also contracted the T-com Montenegro Network Management based on XMATE system. Ericsson Nikola Tesla contracted with the operator T-Mobile Montenegro a delivery of multimedia contact center solution Solidus eCare and its integration into the operator's network.

 

In the CIS market the company signed several agreements both with its old and new business partners. The agreement with the Russian mobile operator Megafon for equipment delivery and for installation and testing service in their fixed transit network and continued business with the Russian national operators Svyazinvest and Rostelecom, are of strategic importance. In Belarus Ericsson Nikola Tesla concluded a contract with Beltelekom for a modernization of the international telecom center. In Armenia, Georgia and Kazakhstan new contracts were signed for enterprise systems and transmission network.

 

In internal Ericsson market company activities continued in the R&D on many significant global projects, in GSDC on extending present and obtaining new responsibilities. Furthermore, a number of specialists from Customer Solutions and Services are increasingly engaged in various projects that are conducted in several Ericsson’s Market Units.

 

Communication Ericsson Nikola Tesla