Ericsson Nikola Tesla Group Business Performance in H1 2017

Gordana Kovačević, the President of Ericsson Nikola Tesla, comments: “In H1 2017, sales revenue of Ericsson Nikola Tesla Group decreased by 2.9 percent year-over-year. Despite continuous sales revenue growth from services in Ericsson market and an increase in sales revenue in the domestic market, we were not able to fully neutralize the decline in sales in CIS market and markets of Southeast Europe. Despite numerous business challenges, we have maintained the position of the largest ICT exporter and the leading exporter of knowledge in Croatia. In line with our expectations, Ericsson market records a positive trend and an increase in revenue, primarily due to expansion of our responsibilities and new competencies of our R&D experts and our other expert centers. We have successfully entered into new technology areas, which resulted in high value added job openings. In H1 2017, we hired 145 new experts. At the end of H1, Ericsson Nikola Tesla Group had 3017 employees.

Gross profit increased by 5.5 percent, while operating profit increased by 3.7 percent year-over-year. Due to operational and financial negative currency effects, profit before tax is lower by 8.2 percent year-over-year, and amounts to MHRK 48.9. Net profit has declined by 26.8 percent to MHRK 37.4. The absence of tax incentives for R&D activities has directly impacted the decrease in net profit year-over-year.

Gross margin increased year-over-year to 13.6 percent. We closed H1 with a healthy balance sheet and an equity ratio of 40.7 percent.  Working capital efficiency, expressed in Working Capital Days (WCD), is 32 days. Total cash and cash equivalents, including short term financial assets at the end of Q2 amount to MHRK 205.4. In line with expectations, we had a negative cash flow from operating activities, mainly due to a decreased inflow from customers. Regardless of quarterly volatility, the annual cash flow projection is as planned. 

Sales revenue realized in the domestic market record growth due to an increase in sales revenue in the Industry & Society segment. We are proud to actively participate in national projects, such as the State Border Control, healthcare digitization and the Joint Information System of Land Registry and Cadaster. The growth in domestic sales has partially neutralized the decline in sales in CIS and Southeast Europe market.

With the aim to create new business opportunities in export markets, we continue with intense marketing and sales activities. At the 20th International Economy Fair – Mostar 2017, we presented the latest technology solutions for the digital economy, with a focus on IoT solutions for agriculture and tourism and at the largest Belarusian International Forum on Telecommunications, Information and Banking Technologies “TIBO-2017” jointly with beCloud operator we presented an innovative corporate ICT transport solution.

Comprehensive transformation is ongoing across Ericsson corporation as well as in our company. Ericsson Nikola Tesla is intensively engaged in transformation and is implementing organizational and structural changes in line with both market and our customers’ demands. We want to strengthen our position in strategic areas: 4G/5G, Managed Services, Operations Support Systems and Business Support Systems (OSS and BSS), Cloud solutions, Industry& Society solutions, and services for Ericsson internal market. To be able to meet the requirements of a very demanding global market in a timely and quality manner, the company has been investing intensely in knowledge, skills and competencies of our experts, and shall continue to do so in the future. We expect that economic and political uncertainty will continue throughout 2017. Therefore, we will focus on strengthening profitability, cost efficiency and responsible risk management. “

Ericsson Nikola Tesla Company Communications