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Introduction & Market Context
Eltel AB (STO:ELTEL) shares fell 7.11% to €10.45 following the company’s Q2 2025 earnings presentation on July 24, despite reporting its eighth consecutive quarter of improved profitability. The market reaction reflected investor concerns about the company’s 6.9% decline in net sales, which overshadowed improvements in gross profit and adjusted EBITA.
The Nordic infrastructure services provider continues to prioritize margin improvement over volume growth, a strategy that has yielded positive results for profitability metrics but has not yet translated into share price gains. The company’s refinancing efforts and new business development initiatives were highlighted as foundations for future growth.
Quarterly Performance Highlights
Eltel reported net sales of €201.0 million for Q2 2025, down 6.9% from €216.0 million in the same period last year. Despite this decline, the company achieved significant improvements in profitability metrics.
Gross profit improved to €22.5 million from €21.7 million in Q2 2024, while adjusted EBITA increased to €2.5 million compared to €0.5 million in the prior year. The adjusted EBITA margin expanded to 1.2%, up from 0.2% a year earlier, demonstrating the company’s focus on operational efficiency.
As shown in the following financial highlights chart:
On a last twelve months (LTM) basis, Eltel’s performance shows even stronger improvement trends. LTM gross profit reached €96.4 million, up from €87.0 million, while LTM adjusted EBITA improved to €17.4 million from €5.2 million previously.
The company’s total group performance data reveals that the share of new business in net sales increased to 10%, indicating progress in the company’s strategy to diversify its revenue streams:
The long-term trend in adjusted EBITA and gross profit demonstrates the company’s consistent progress toward its profitability targets:
Regional Performance Analysis
Eltel’s performance varied significantly across its geographic segments, with Sweden emerging as the standout performer while other regions faced challenges.
Finland, the company’s largest market, saw net sales decline by 8.2% to €85.0 million in Q2 2025. Despite this, adjusted EBITA improved to €3.5 million from €2.4 million, with the margin expanding to 4.1% from 2.6%:
Sweden delivered the strongest performance with 14.6% net sales growth to €58.3 million and improved adjusted EBITA of €1.3 million, up from €1.0 million in Q2 2024:
Denmark & Germany reported an 8.8% decline in net sales to €31.4 million, primarily due to lower volumes in Communication. However, adjusted EBITA improved to €1.5 million from €1.3 million, with the margin expanding to 4.8% from 3.8%:
Norway continued to face challenges, with net sales decreasing by 18.6% to €25.8 million. The segment reported a negative adjusted EBITA of €0.4 million, though this represented an improvement from the €1.0 million loss in Q2 2024:
Strategic Initiatives
A key strategic development during the quarter was Eltel’s refinancing of its debt portfolio. The company secured a senior bond of €130 million and a revolving credit facility of €60 million, providing long-term financial stability. The bond offering was oversubscribed, indicating strong investor confidence.
"The refinancing provides a long-term financial solution and liquidity," stated Tarja Leikas, CFO of Eltel. The investor base for the bond was predominantly Nordic, with Finnish investors accounting for 56% of the allocation.
The company also announced significant new contract wins, including two Power frame agreements with E.ON valued at €42.6 million and a Data Center contract with Hyperco worth €16 million. These wins align with Eltel’s strategy to grow in new and adjacent markets.
Eltel’s strategy execution is progressing with a focus on operational excellence through streamlining the organization, increasing digitalization efforts, and enhancing cross-border collaboration. The company has also implemented new commercial terms since late 2022, which have contributed to protection against inflation and positive development of gross profit and cash flow:
Forward-Looking Statements
Eltel maintains its financial targets, which include achieving a Group adjusted EBITA margin of 5%, annual growth of 2-4%, and a leverage ratio of 1.5-2.5x net debt to adjusted EBITDA. The company’s current leverage has improved from 3.5 to 2.8, moving closer to the target range.
The company aims to increase the contribution from new business to 20% of net sales by 2027, focusing on emerging sectors like solar PV, data centers, and energy storage. Management expects to benefit from underlying trends in digitalization and electrification.
"We have a priority in margin above volume," emphasized CEO Håkan Dahlström during the presentation, reinforcing the company’s strategic focus on profitability improvement rather than revenue growth at any cost.
The next quarterly report (Q3 2025) is scheduled for release on October 30, 2025, when investors will be looking for continued progress on profitability metrics and signs of stabilization or improvement in net sales across all regions.
Full presentation:
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