Eltel (ELTEL) Q2 2024 earnings summary

Executive summary

• Group net sales grew 3.8% year-over-year to EUR 216.0 million, with segment sales up 5.3% and major new contracts totaling EUR 317 million, raising the order book to EUR 1.3 billion.

• Adjusted EBITA improved by EUR 2 million to EUR 0.5 million, with gross profit up 40% year-over-year.

• Divestment of High Voltage Poland finalized, reducing risk and complexity, with a EUR -23.1 million EBIT impact.

• Rapid shift from Communication to Power, especially in Sweden and Denmark, driven by green energy investments.

• Profitability gains led by Finland and Denmark, while Norway continued to face challenges due to reduced Communication investments.

Financial highlights

• Net sales reached EUR 216.0 million (up from 208.1 million year-over-year); adjusted EBITA was EUR 0.5 million (improved from -1.5 million); gross profit year-to-date increased by 40%.

• Q2 2024 adjusted EBITDA was EUR 8.4 million (up from EUR 5.6 million); adjusted EBITA margin reached 0.2% (from -0.7%).

• Net working capital improved to -EUR 54.3 million; liquidity and cash flow strengthened across all segments.

• Net debt decreased from EUR 141.6 million to EUR 127.9 million; leverage ratio improved to 3.6x.

• Cash flow from operating activities for H1 was EUR -7.1 million, a significant improvement from EUR -25.9 million in H1 2023.

Outlook and guidance

• Financial targets for 2025: adjusted EBITA margin 5%, annual growth 2-4%, leverage 1.5-2.5x net debt/adjusted EBITDA, and dividend payout subject to leverage.

• Focus on strengthening margins, broadening the customer base, and expanding new business areas such as solar, e-Mobility, and energy storage.

• Short-term negative impact from Finnish power regulation expected to be temporary, with volumes anticipated to recover.