EUR million Apr Apr Change, EUR million Jan Jan Change,
-Jun -Jun % -Jun -Jun %
2020 2019 2020 2019
Net sales Net sales
Power 86.3 94.7 -8.9 Power 160.4 181.6 -11.7
Communication 152.8 177.8 -14.1 Communication 312.9 339.1 -7.7
Other 6.4 3.9 65.7 Other 8.8 7.0 26.1
Total Group 245.5 276.0 -11.1 Total Group 482.1 527.0 -8.5
Power -4.5 2.4 -288.8 Power -8.0 -1.8 -339.1
Communication 7.3 2.1 247.9 Communication 11.5 6.7 71.0
Other 2.6 0.2 1,334.0 Other 2.3 0.1 3,312.7
Items not -2.5 -2.2 -14.9 Items not -5.1 -5.5 8.0
Total Group 2.8 2.5 14.6 Total Group 0.8 -0.5 242.4
1) Adjusted for divested operations and currency effects.
2) Eltel follows the profitability of segments with Operative EBITA. Please see page 21 for definitions of the key ratios.
3) Refers to net debt as defined in financing agreement. See page 9 for calculation.
4) Items not allocated to operating segments consist of Group management and support function.
Comments by the CEO
We delivered a solid second quarter for Eltel despite the exceptional circumstances amidst the COVID-19 pandemic. We improved our operative EBITA even with declining net sales and we continued to make significant improvements to our balance sheet.
In line with our Nordic strategy announced a year ago, we closed the divestments of our German Communication business and the Swedish business area Aviation & Security. This resulted in EUR 38 million in cash proceeds and a positive result of EUR 20 million on Group EBIT.
In Finland the Power market is strong. Besides winning a large contract with Helen Electricity Network, we have also expanded certain current agreements with improved terms and conditions. However, High Voltage, Finland and Smart Grids had a negative impact on earnings in the Power segment. High Voltage has been affected by delays related to COVID-19 and in addition, difficult working conditions in the Norwegian High Voltage project Reisadalen caused cost overruns. In Finland, challenges relating to subcontractor performance in two Build projects were larger than anticipated in the first quarter and resulted in significant additional work. The two Finnish Build projects and the Norwegian High Voltage project Reisadalen will be completed this year. In Smart Grids, we still have lower volumes, which affects the result.
The Communication segment has increased productivity overall through better planning and therefore a more efficient workforce. During the quarter, we won two significant frame agreements with the Swedish Transport Administration and with Valokuitunen as well as several small and mid-size agreements. However, we also lost three larger service agreements for Telia in Sweden, which will lead to reduced future net sales. It can be noted that these service agreements relate to the declining copper market and we have had difficulties making them profitable. With this in mind, it is a good opportunity for Eltel to reorganise and streamline the Swedish business to create an even more competitive offering for the future.
So far COVID-19 has only had a moderate impact on Eltel's operations. Having said that, we have received indications on reduced and delayed investments from a large customer in the Communication segment in Norway. COVID-19 will thus impact Eltel's business during the second half of 2020. To adapt to this new situation, we are reviewing our cost structure in Norway.
We reduced our net working capital by EUR 79 million year-on-year and during the past year we have reduced our net debt by EUR 103 million to EUR 86 million. Main drivers are divestments, reduction in capital tied up in High Voltage Poland, our focus on improving internal processes and operational excellence. On top of this, we continue to close down non-profitable and non-strategic operations outside the Nordics in a responsible manner. This has required intense efforts from the organisation and I am pleased that the hard work has paid off, and that Eltel now has a healthy balance sheet.
Going forward, implementing the Nordic strategy and improved productivity are key for Eltel to complete its turnaround and thereby ensure long-term sustainable value creation for Eltel and its shareholders.
Casimir Lindholm, President & CEO
For further information, please contact:
Saila Miettinen-Lähde, CFO
Phone: +358 40 548 3695,
Elin Otter, Director, Communications and Investor Relations
Phone: +46 72 59 54 692,
Eltel AB discloses the information provided herein pursuant to the EU's Market Abuse Regulation and the Securities Markets Act. The information was submitted for publication, through the agency of the above contacts, on 23 July 2020 at 08:00 a.m. CET.
Eltel is a leading Nordic field service provider for power and communication networks. We deliver a comprehensive range of solutions - from maintenance and upgrade services to project delivery. This includes design, planning, building, installing and securing the operation of power and communication networks for a more sustainable and connected world today and for future generations. In 2019, Eltel had annual sales of EUR 1.1 billion. The total number of employees currently stands at around 6,200. Eltel AB is listed on Nasdaq Stockholm.