Ericsson Nikola Tesla reports solid business results

In the first nine months of 2023, Ericsson Nikola Tesla Group has recorded a continuation of a stable business performance, which is confirmed by the achieved financial results.

• Sales revenue: EUR 205.9 million
• Gross margin: 14 %
• Net profit: EUR 20.5 million

In her statement about the achieved results, Gordana Kovačević, President of Ericsson Nikola Tesla, highlighted: “In the first nine months of 2023, Ericsson Nikola Tesla Group achieved solid business results, which showed our resilience and strength to respond to challenges and new business opportunities in a quality manner. Sales revenue recorded a slight increase year-over-year to EUR 205.9 million owing to continuous growth of services to Ericsson, which offset lower revenue in the domestic and other export markets.”

Compared to the first nine months of the previous year, the gross margin increased to 14.0%, primarily as a result of the sales mix and focus on operational and cost efficiency. Operating profit increased by 81.7% to EUR 24.7 million, while net profit increased by 94.6% to EUR 20.5 million. A negative cash flow from operating activities is due to payment dynamics of customers and the delay in the final realization of certain projects. We expect to achieve a positive cash flow from operating activities until the end of the financial year. Q3 was concluded with a solid balance sheet, with an equity ratio of 38.7%. Cash and cash equivalents, including the short-term financial assets, amounted to EUR 59.5 million (32.5% of the total assets) at the end of Q3.

“As regards services to Ericsson, we are proud that at the regular half-year R&D Management Business Review meeting, a high-quality level of our R&D Center was confirmed once again in all categories and all business segments.” stated Gordana Kovačević, and continued: “Efficient delivery of high-quality software and speed deliveries of key features that ensure Ericsson’s technology leadership were especially highlighted. We have also positioned ourselves in new, strategically important areas such as Cloud RAN, which provides an opportunity to further work on the latest technologies in telco industry. Furthermore, our experts in other expert centers achieve notable results in the implementation of global projects, such as a successful project of testing applications' functionalities in Ericsson 5G core network on the distributed Google Cloud platform.”

In the domestic market, after a period of increased investments in network infrastructure, conditioned by the growth in demand for telecommunication services and the allocation of 5G spectrum, the operators are focusing on 5G network monetization and are slowing down capital investments. Our company, as the leading local and regional provider of telecommunication solutions and services, has continued to provide quality support to our partners, operators Hrvatski Telekom and A1 Hrvatska, in the further modernization of telecom networks with an emphasis on the implementation of 5G. Furthermore, we are focused on the implementation of the existing contractual obligations with Hrvatski Telekom in the field of ​​managed services, and providing support in the transfer of the technological unit for the construction and maintenance of the HT’s network from Ericsson Nikola Tesla Servisi to Hrvatski Telekom, as of January 01, 2024.

In export markets, we have continued a quality cooperation with the operators HT Mostar, Crnogorski Telekom, IPKO Kosovo, Telekom Kosova and Ucom Armenia, focusing on timely delivery of the contracted activities and new business opportunities. I would like to highlight the finalization of the first phase of the modernization of radio and transmission part of Telekom Kosova's network, as well as the first phase of 5G base stations implementation in the network of operator IPKO, which will enable our long-term partner IPKO to provide its users with the first 5G signal in all major cities in Kosovo.

We are pleased that this year once again our partners in the domestic and export markets have won the awards for the best results for their mobile networks' performance, which confirms the quality of the solutions and services we deliver.

Furthermore, we have marked the finalization of two important projects: e-Culture (digitalization of cultural heritage) and WaterQ (a solution for digital transformation of water quality monitoring). In the national security segment, we have continued the cooperation with the Ministry of the Interior of Montenegro by signing a contract on the maintenance of 112 Center.

Due to the great interest of our customers and partners, beginning of October, we organized Technology Days for the second time this year. In addition to Ericsson's latest radio products, we presented numerous innovative solutions with a focus on 5G monetization (network slicing, open network interfaces), the possibilities of 5G private networks (solutions for energy and digital twins and remote 5G control of robots), infrastructure for critical communications and ICT solutions of Ericsson Nikola Tesla related to sustainability (green solutions for industry, cities, water quality monitoring, ESG reporting module).

In her closing remarks on the results for the first nine months of 2023, Gordana Kovačević, President of Ericsson Nikola Tesla, highlighted: “In Q3, we have continued to invest in key competencies, development of solutions, products and services in strategic areas, and digital transformation of Ericsson Nikola Tesla Group. Considering the current market environment, until the year end we remain focused on profitability, cost and operational efficiency, cash flow from operating activities and responsible risk management. Furthermore, we are focused on strategic planning for the period until 2026, analyzing in detail the situation in our markets, trends in ICT industry and our customers’ needs. Our goal is to strengthen the leading position in mobile networks, to grow in the Digital Society segment, and to keep and continuously improve the position in the segment of services and Research and Development. We have great intellectual capacity and innovation potential in many technology areas, which makes us a reliable partner to our customers in the development and implementation of the latest ICT solutions.”

Communications Ericsson Nikola Tesla