Business results of joint stock company Ericsson Nikola Tesla in first nine months 2015

Gordana Kovačević, the President of Ericsson Nikola Tesla, comments: "Sales revenues in the first nine months 2015 increased by 6.2% year-over-year. A significant increase in revenue was recorded in Ericsson market, thus neutralizing revenue decrease in other markets. During 2015, Ericsson Nikola Tesla Group employed 410 new professionals.

Almost all the key financial performance indicators show positive trends. Operating profit increased by 10% year-over-year to MHRK 61.2, while net profit increased by 3% to MHRK 60.9. Gross margin is lower year-over-year, as a result of change in business mix (increase in services to Ericsson) and a continuous price pressure. This change in business mix results in lower margin, however, at the same time it reduces exposure to business and operating risks. Our continuous focus on cost efficiency brings good results. Sales and administrative costs decreased by 11% year-over-year, thus ensuring a solid operating profit growth. A strong cash flow from operating activities of MHRK 138.1, allowed build-up of the total cash balances, including short term financial assets to MHRK 195.8. The working capital efficiency, measured by the performance indicator Working Capital Days (WCD) is 33 days. The cash conversion rate is at high 138%.

In the domestic market, together with the intensive activities with our key customers in the operator segment, I believe that the role of Ericsson Nikola Tesla is recognized in the informatization of national healthcare system and the realization of projects that ensure a more efficient management at the state administration level. Sales revenues decreased year-over-year, because our customers in the radio access network and eSystems segments postponed their investments or delayed contract signing. As far as the export markets are concerned, new business opportunities, primarily in Bosnia & Herzegovina, are expected in the next period. In CIS market, marketing and sales activities are ongoing on several projects in the telecom, as well as in the Industry & Society segment (eHealth).

End of September, we marked the 15th Anniversary of Ericsson Nikola Tesla Summer Camp. This project is one of the successful examples of bringing together education and economy, launched in collaboration with the Faculty of Electrical Engineering and Computing in 2001. To this day, more than 600 students participated in the Summer Camp and together with the support of their mentors from Croatia and abroad, they realized more than 400 projects. In this way, we find top talents and strengthen our position in a demanding global market, and at the same time, we provide an opportunity for students to work in teams on innovative high-tech projects.

During the third quarter we launched a new cycle of strategic planning for the period up to 2018, by analyzing the current situation in all relevant markets and trends related to the future developments in the ICT industry. Our goal is to strengthen the position in strategic business segments (4G/LTE, OSS/BSS, TV & Media, Managed Services, Industry & Society). Moreover, on the Ericsson market, we want to keep and extend our responsibilities, while maintaining a high quality of delivered services.

With our strategic initiatives, we are well positioned to create values to our customers in a transforming ICT market.”

Communications Ericsson Nikola Tesla