In the evaluation of the Company’s performance, Gordana Kovačević, the president of Ericsson Nikola Tesla underlined the following:
“During 2010 the ICT industry could not avoid the unfavorable trends present in the wider economy, and the impact of this was manifested in a slower than anticipated realization of planned activities and strategic targets. This was especially evident in a slow down of capital investments by telecom operators, decreased government investments into infrastructure projects within the ICT segment and decreased budget volumes of our business partners and other customers. A 5% year–over-year decline in Orders during 2010 reflects a decrease in volumes from our domestic market, compensated by extended business activities in our export markets, primarily in Belarus and Bosnia & Herzegovina, as well as exports to Ericsson through R&D and other services. A 13% decline in Sales during 2010 further reflects the timing of Orders booked and the impact of industry component shortages and Ericsson supply chain bottlenecks. Despite the challenging environment in which we operated, we managed to maintain a good market position, continued to support our customers in modernization of their networks and in the introduction of new technologies and progressed with investments into new strategic projects and market segments. At the same time, we are able to report improved performance in terms of underlying profitability of operations and cash flow from operating activities and have further improved the strength of our Balance Sheet. As previously announced, the company has written off MHRK 126.5 in respect of Customer Financing balances in Kazakhstan. Even after this write off, the company achieved a Net profit of MHRK 24 during 2010 and the underlying Net Profit (excluding this write off) of MHRK 150.5 represents an increase of 17% year-over-year and a Return On Sales (“ROS”) of 12.3%. Further, with the accelerated collection of MHRK 150 from the remaining part of the Kazakhstan receivables, Cash and Cash equivalents at Dec 31, 2010 increased to MHRK 674. Throughout 2010, we responded to the challenging business conditions and increasingly strong competition by adapting the organization for new market and technology requirements, as well as to new organization models and responsibilities within the wider Ericsson organization. Ericsson Nikola Tesla belongs to Region Western & Central Europe within the global Ericsson group but also retains responsibility within other Ericsson regions, as well as for those segments of business and products which result from development and activities within the Company. The new organization encourages new and innovative ways of working with a common goal to be closer than ever before to our customers, grow business volumes in existing and new segments and drive improved profitability and cash flow” underlined Gordana Kovačević.
