Eltel (ELTEL) Q3 2024 earnings summary

Executive summary

• Achieved record adjusted EBITA and five consecutive quarters of year-on-year improvement, mainly driven by strong performance in Finland and Sweden, despite divestment of the Polish high-voltage business and headwinds in Norway.

• Net sales for Q3 2024 were EUR 210.3 million, down slightly year-over-year, with organic growth of 4.0% in segments.

• Signed significant new contracts, including a five-year deal with Helen Electricity Network and a framework agreement with the Swedish Armed Forces, supporting profit improvement and customer base expansion.

• Strong interest and contract wins in Battery Energy Storage Systems (BESS) and adjacent markets, with Denmark leading in turnkey contracts.

• Ongoing restructuring in Norway, including significant personnel and fleet reductions, due to market challenges.

Financial highlights

• Net sales for Q3 2024 were EUR 210.3 million (EUR 213.4 million last year); organic net sales grew 4% year-over-year when adjusted for divestments.

• Adjusted EBITDA improved to EUR 19.0 million (13.6), and adjusted EBITA in segments was EUR 9.8 million (6.8); overall adjusted EBITA reached EUR 8.2 million (up 39%).

• Gross profit increased to EUR 24 million from EUR 22.3 million year-over-year.

• Net leverage improved to 3.5x (from 5.4x), and net working capital improved to negative EUR 33.5 million.

• Cash flow strengthened due to improved profitability, though net debt increased to EUR 144.8 million (133.4) due to fleet renewal and divestment impacts.

Outlook and guidance

• Financial targets remain: adjusted EBITA margin 5%, annual growth 2–4%, leverage 1.5–2.5x, and dividend payout subject to leverage; the previous timeframe for reaching the 5% EBITA margin by end of 2025 has been removed due to market uncertainty.

• Management expects a longer time to reach financial targets due to macroeconomic uncertainty, recession, and operational challenges, especially in Norway.

• Market hesitation and delayed customer decisions, particularly in new energy, are expected to persist until interest rates decline.