• Orders booked 1,074.4 MHRK
• Sales revenues 795.4 MHRK
• Gross margin 18.3%
• Operating profit 76.9 MHRK
• Profit before tax 92.8 MHRK
• Net profit 74.2 MHRK
• Earnings per share 56.4 HRK
• Return on sales before tax 11.7%
• Cash flow from operating activities 237.5 MHRK

„The results achieved in the first half-year show that Ericsson Nikola Tesla conducted its operations successfully and in line with the expectations. We achieved a considerable increase in sales revenues and profit and we managed to maintain a stable gross margin level. Cash flow from operating activities is good and represents a solid foundation for future development.

 

All contracts concluded in the reported period and also all actions taken to strengthen our position in domestic and foreign markets speak in favor of our focused areas and partnership with the customers. Among other things, Ericsson Nikola Tesla and Tele2 Croatia confirmed their partnership with an exclusive contract regarding the 2nd and 3rd generation of mobile telephony. We continued our outstanding collaboration with the customer FE VELCOM from Belarus. I am also very satisfied with the collaboration we have developed with BH Telecom in mobile telephony as it offers new prospects for further large, joint projects. Our continuous efforts to find new customers and new business opportunities resulted in a system integration contract (total integrated ICT solution for European Emergency Service – introducing Emergency Number 112) with the Ministry of the Internal Affairs and Public Administration of Montenegro.

 

Our goal is to secure long-term profitability and market position to the benefit of all stakeholders; accordingly, we actively work on expanding customer base and we encourage and support innovative ideas with our Innovation Management Process. I wish to emphasize that the company is transforming itself into an innovative organization and all employees can do their share to improve existing business processes and develop new products and services. Accordingly, the company has been highlighted as one of the Innovation Process frontrunners on the corporate level”, says Gordana Kovačević, company president.

 

Compared to the 1H 2007, Ericsson Nikola Tesla performed as follows.
Sales revenues increased 13.5%, to 795.4 MHRK, whereas orders booked recorded a 1.1% increase. Business growth was largely influenced not only by the Croatian market but also by the markets of Bosnia and Herzegovina and Kosovo.

 

In domestic market sales revenues increased 11.4%, to a total of 284.3 MHRK.
In the region (Bosnia and Herzegovina, Montenegro and Kosovo) we achieved 218.2 MHRK sales revenues; 112 MHRK of the sum was made in Bosnia and Herzegovina.Sales revenues in these markets increased 87.5% year-over-year.

Sales revenues in the Commonwealth of Independent States total 81.8 MHRK, which is 34.8% less, because the realization of several major deals (concluded in 2nd quarter) is planned for the 2nd half-year. In this connection, business deals in Belarus play a significant role.

In Ericsson market the company repeatedly has good business results. Sales revenues increased 3.7% to a total of 211.1 MHRK.

Operating profit is considerably higher compared to the same period last year (+24.8%), resulting from a higher business volume and a slightly increased gross margin; operating profit amounts to 76.9 MHRK.

 

Operating costs (SG&A) total 69.1 MHRK and are 9% higher than last year, mainly due to additional marketing and selling expenses in the Kosovo market and due to intensive work with potential customers in other markets.

 

Financial revenues increased 13.7% to the amount of 36 MHRK. Despite this, net financial income is lower than last year, due to higher negative exchange rate differences, and amounts to 15.9 MHRK.

 

Profit before tax is 13.6% higher compared to the same period last year, amounting to 92.8 MHRK.

 

Company's liquidity continues to be good, despite the fact that end of 2nd quarter the dividend totaling 355.3 MHRK (20 HRK regular and 250 HRK extraordinary dividends per share) was paid out. Positive cash flow from operations amounts to 237.5 MHRK, primarily due to excellent receivables collection.

In the last three months Ericsson Nikola Tesla continued its good collaboration with telecom operators in the Croatian market. With Vipnet the company contracted a capacity extension in radio access network for the 2nd and 3rd mobile system generation and a packet network upgrading. With T-HT the company signed frame agreements securing orders in optical transmission systems and broadband access.

 

In mid June two significant frame agreements were signed with Tele2. Pursuant to them Ericsson Nikola Tesla shall as an exclusive supplier provide this operator with communication solutions and services required for GSM and UMTS upgrading and also deliver transmission equipment.

 

In the neighboring countries Ericsson Nikola Tesla also continued a good collaboration with local operators. With BH Telecom, the leading operator in Bosnia and Herzegovina, the company concluded new, important contracts for GSM network expansion and modernization as well as the contract for mobile positioning system delivery and integration.

 

In Montenegro, a contract for establishing an Emergency Service Center in Montenegro – Center 112, was signed (end of June). The contracted „turnkey“ solution shall include all required hardware and network components as well as system and application software based on Ericson’s Coordcom solution for emergency situations.

 

In the Commonwealth of Independent States, the continued long-standing collaboration with FE VELCOM, the first GSM operator in Belarus, has to be pointed out. The company contracted a significant GSM network expansion, i. e. delivery of switching, radio and transmission equipment and services. With the customer Svjazinvest the company signed a contract for a telecom network reconstruction (Ericsson exchange solutions to replace Alcatel and Siemens exchanges) in the North-West Region of Russia and also a fixed network expansion and modernization in several cities of Siberia. With the Russian mobile operator BaykalWestCom the company contracted a delivery of equipment and control systems for mobile telephony. New contracts were signed in Moldova on behalf of the operator Interdnyestrcom, for a delivery of the latest fixed broadband network solution and for a core network expansion and modernization.

 

In Ericsson market, the company’s Research and Development Center has retained and broadened its responsibilities and carries out its defined operational plan for this year. Major development activities are relating to the latest-generation network nodes and MSS and TSS for mobile and fixed users. Research is focused on several company and EU-related projects that also include designing solution prototypes.

 

Global Service Delivery Center Croatia further strengthened its position in mobile telephony by obtaining a global Ericsson's authorization for service delivery in mobile core networks. The GSDC also obtained a new responsibility as a global competence center for improving IMS (IP Multimedia Subsystem) network parameters. Pursuant to this, beside service delivery the Center shall develop strategy and provide respective support to sales units in numerous Ericsson markets.

 

In addition to its current responsibilities, ETK Customer Solution Center obtained a new one for global sales support to be provided for Network Contact Center. It is a significant item in Ericsson portfolio, based on AXE system and present in more than 150 locations worldwide.

 

Company Communication of Ericsson Nikola Tesla