Ericsson Nikola Tesla Group - H1 2023 business results
Ericsson Nikola Tesla Group releases H1 2023 business results
Gordana Kovačević, President of Ericsson Nikola Tesla, commented:
“Despite the challenging market conditions, Ericsson Nikola Tesla Group’s business results show a continuation of a stable business performance. In H1 2023, sales revenue amounted to EUR 138.0 million, down by 2.2% year-over-year, while net profit amounted to EUR 12.2 million, up by 34.3% year-over-year.
The delivery of services to Ericsson has continued to grow and has offset lower sales revenue in the domestic and export markets, primarily as a result of operators’ lower capital investments. In H1 we signed several new contracts with the existing and new customers thus securing a continuation of good business performance and a significant level of orders booked.
As we have already informed, the technological unit for construction and maintenance of HT’s network of Ericsson Nikola Tesla Servisi d.o.o. will be transferred to HT as of January 1, 2024, in line with their development strategy. Until the end of 2023 we will work on the realization of obligations under the existing contract for construction and maintenance of HT’s network, while partnership with HT continues in other segments. In managed services segment in the upcoming period, we remain focused on executing contracts for other customers, as well as on the realization of new business opportunities.
With A1 Hrvatska, the activities have continued on the modernization and expansion of the mobile network capacity.
In the Digital Society segment, we have signed new contracts with the Ministry of Tourism and Sport, the Ministry of Justice and Public Administration, the State Geodetic Administration, the Croatian Pension Insurance Institute, and the Ministry of Labor, Pension System, Family and Social Policy. Intense sales activities on new business opportunities are ongoing.
In export markets, we have continued a quality cooperation with the operators HT Mostar, Crnogorski Telekom, Ipko Kosovo, Telekom Kosova, and Ucom Armenia.
In Q2, Ericsson Nikola Tesla’s Research and Development (R&D) Center delivered the agreed projects in a quality and timely manner and maintained its position as the leading R&D Center within the global Ericsson. Such result motivates us to continue fulfilling our obligations at a high level and makes us confident and ready for new responsibilities and activities. Thanks to achieved results in the field of software development, Ericsson Nikola Tesla is the leading exporter of software in Croatia, and the majority of this development takes place in our R&D, which is the largest research and development center in the region.
Compared to the H1 2022, the gross margin increased to 13.3%, primarily as a result of the sales mix and focus on operational and cost efficiency. Accordingly, operating profit increased by 44.3% and amounted to EUR 14.7 million, while net profit increased by 34.3%, amounting to EUR 12.2 million. A negative cash flow from operating activities is due to change in the payment dynamics of certain customers and is in line with our expectations. In H2 2023, we expect improvement and return to positive levels. We have concluded the quarter with a solid balance sheet, with an equity ratio of 38.0%. At the end of Q2, cash and cash equivalents, including the short-term financial assets, amounted to EUR 65.8 million (40.2% of the total assets).
Ericsson Nikola Tesla Technology Days were held with the aim to strengthen the cooperation with the existing and potential new customers and partners, as well as the representatives of stakeholders/academia and regulatory authorities. Numerous innovative technological solutions were presented with a focus on 5G monetization, network slicing, open network interfaces and network functionalities, energy efficiency and 5G private networks. In addition to Ericsson's latest radio products, the industrial application of 5G networks was presented on the example of smart solutions regarding energetics, digital twins and remote 5G robot control. Furthermore, we presented Ericsson Nikola Tesla's ICT solutions for the digital transformation of society, which include the use of geospatial information from public mobile communication networks and the use of virtual assistant, as well as innovative green solutions for industry, cities, and water quality monitoring.
We have been successfully cooperating with the academic community for many years, and in order to connect science and economy as the prerequisite of local and national economic development, we have signed a Cooperation Agreement in the field of information and communication technologies with the Faculty of Electrical Engineering, Computer Science and Information Technology of Josip Juraj Strossmayer, University of Osijek (FERIT) and founded a joint research lab. Our R&D site in Osijek was opened five years ago (in September 2018); the site that started with twenty employees now has more than a hundred, which clearly highlights the strength and the growth of our activities in the research and development segment.
Ericsson Nikola Tesla’s Summer Camp started at the beginning of July, and this time in addition to locations in Zagreb and Split, it also takes place in Osijek. The Summer Camp has been gathering the best students, mostly STEM students, for 22 consecutive years. Among almost 170 students who were interested in participating in the Summer Camp, we have selected 62. Over a period of five weeks, under the guidance of mentors, students will work on interesting digital-transformation projects in the field of analytics and management of large databases. This year the Summer Camp’s theme is “Digital transformation in action: How data changes our world.
In the upcoming period, our strong focus will remain on quality realization of the contracted activities for our customers in the domestic and export markets and business development in all segments with an emphasis on growth in the Digital Society segment. Furthermore, we continue the digital transformation of Ericsson Nikola Tesla Group in order to additionally improve internal processes, efficiently respond to market demands and strengthen our leadership position in ICT industry.
As the largest R&D Center in Croatia and beyond, and the leading Croatian exporter of software, we have many years of experience and great knowledge and innovation potential in many segments. Our experts are engaged on network modernization and provide services for domestic and global operators, develop innovative digital solutions for various industries, smart cities and local and state administration bodies, provide quality services and work on the latest technologies for global Ericsson. Therefore, we are well positioned and ready to respond to all business opportunities and challenges. We are mitigating risks as much as possible and we are focusing on new opportunities ahead of us. Furthermore, we have also been continuously investing in new solutions and products, and our employees’ knowledge. Regardless of the challenging and demanding environment in which we operate, we have been investing in our future in order to secure long-term sustainable business performance for the company, and have been building a motivating and innovative high performance organizational culture.”