In her statement about the company's business results in H1 2024, Gordana Kovačević, President of Ericsson Nikola Tesla, highlighted: “In H1 2024, we continued to execute our obligations in line with the signed multi-year framework agreements related to the extension and modernization of telecom networks. We worked intensely on new business opportunities in the Digital Society segment and gaining new responsibilities in our Research and Development (R&D) Center. The total sales revenue amounted to EUR 108.9 million, down by 21.1% year-over-year, primarily as a result of lower revenue in Croatian market due to the non-renewal of the contract with Hrvatski Telekom regarding managed services, as well as the operators’ cautious investments in network modernization. Growth in sales revenue was recorded in export markets, where intense activities are ongoing on the contracted projects of mobile networks modernization. We are also pleased to continue successful cooperation with the operator IPKO Kosovo, which has selected us once again as a strategic partner for the projects of 5G core and 5G radio access network implementation and modernization.” 

In the Digital Society segment, in addition to work on the realization of contracted deals, intense presales activities were ongoing as well as activities related to the expansion of our portfolio in order to secure growth in the following years. During Q2, we contracted many projects regarding the digital transformation of the state administration, public services and security, healthcare, as well as extension, modernization and maintenance of the communication infrastructure.

By delivering services to Ericsson, our R&D and other expert centers significantly contributed to the company’s business results. At the regular quarterly evaluation of R&D centers, the representatives of the development units within the Ericsson corporation, with which our R&D Center cooperates, have highly rated the work of our experts in all categories and all business segments. Taking this into account, we are expecting new responsibilities in the development of 5G radio access network (RAN), as well as the opportunity for business growth in areas which are crucial to achieve our strategic target of building an organization with the E2E capability. 

Furthermore, our employees from other expert centers received many recognitions for their work on telecom networks modernization projects for Ericsson's key customers worldwide.

Regarding financial indicators, compared to H1 2023, gross margin increased to 14.5%, as a result of business mix and cost control. However, due to lower sales revenue, gross profit decreased to EUR 15.8 million. As a result of lower gross profit, operating profit decreased by 10.9% YoY to EUR 13.1 million. Net profit was down by 36.8% YoY and amounted to EUR 7.7 million, partially because of additional tax expense from previous years due to change in interpretation of cost eligibility for tax deduction. We concluded the end of H1 with a solid balance sheet and an equity ratio of 33.5%. Cash and cash equivalents, including the short-term financial assets, amounted to EUR 69.7 million, which accounts for 38.7% of the total assets. In line with our expectations, a negative cash flow from operating activities was realized in the amount of EUR 5.1 million, as deliveries on some projects were prolonged by certain customers, as well as the impact of projects with longer implementation that are demanding in terms of work and capital engagement. We expect to achieve a positive cash flow from operating activities until the year-end. 

In her closing remarks on the results, Gordana Kovačević said: “Although we predict that market conditions will remain challenging until the end of 2024 due to the operators’ slow investments, as well as long processes from the recognition of business opportunity to contract signing, we believe that our sales in H2 2024 will be positively affected by the realization of contracts in export markets, stable business performance in Ericsson market, and new business opportunities in the Digital Society segment. Therefore, our strong focus remains on the opportunities ahead of us, and we invest significantly in our employees’ competence development, the development of Ericsson Nikola Tesla’s products and their productization, as well as digital transformation of Ericsson Nikola Tesla Group. Through our activities, we continue to contribute to a better availability of digital technologies and services, as well as society’s further development in the markets where we operate.

This year Ericsson Nikola Tesla marks 75 years of doing business. We will celebrate this jubilee in mid-November, when we will present the company’s new trademark. The refreshment of our visual identity will contribute to our additional positioning within the global corporation and strengthen our step forward in the market of advanced ICT solutions for digital transformation of industries and public services, in line with the growth strategy in the following period. We are proud of our respectable business tradition, the opportunities we have in the further development of innovative solutions, products and services of Ericsson Nikola Tesla, as well as long-term partnership with Ericsson, with whom we continue to cooperate efficiently and effectively on the path of technology leadership.”