Earnings call transcript: Eltel Q4 2024 sees EBITDA growth amid challenges

Eltel AB reported its financial results for the fourth quarter of 2024, highlighting significant improvements in profitability despite challenges in the market. The company achieved a 1.8% organic growth for the year and doubled its adjusted EBITDA compared to the previous year. According to InvestingPro data, the company's current market capitalization stands at $94 million, with analysis suggesting the stock may be undervalued based on its Fair Value assessment. The stock price saw a modest increase of 0.93%, reflecting cautious optimism among investors.

Key Takeaways

• Eltel achieved organic growth of 1.8% for the full year 2024.
• Adjusted EBITDA doubled in Q4 2024 compared to the previous year.
• The company expanded into renewable energy markets with new projects.
• Employee reductions were implemented in Finland and Norway.
• Net sales faced a decline due to challenging market conditions.

Company Performance

Eltel AB demonstrated resilience in Q4 2024 by focusing on profitability and strategic market expansions. The company reported notable increase in adjusted EBITDA of $14.36 million for the last twelve months, reflecting successful cost management strategies and operational efficiencies. InvestingPro analysis reveals a strong free cash flow yield, though the company maintains weak gross profit margins of 10.5%. The decline in net sales highlights ongoing market challenges, particularly in traditional telecom investments. Subscribers to InvestingPro can access 8 additional key insights about Eltel's financial health and market position.

Financial Highlights

• Organic growth: 1.8% for the full year 2024
• Adjusted EBITDA: SEK 10.5 million for the year
• New contracts: EUR 863 million signed
• Leverage target: Reduced to 2.5 from 3.2 the previous year

Market Reaction

The stock price of Eltel AB increased by 0.93% to 6.54 from the previous closing price of 6.48. Currently trading near its 52-week low with a Price/Book ratio of 0.51, this slight uptick suggests a cautiously optimistic market response, driven by the company's improved profitability and strategic focus on renewable energy. InvestingPro subscribers can access detailed valuation metrics and comprehensive analysis through the Pro Research Report, which provides expert insights into the company's market position and growth potential.

Outlook & Guidance

Eltel remains focused on enhancing efficiency and profitability while expanding its customer base and exploring new markets. The company anticipates growth in the renewable energy sector, contingent on interest rate stabilization. However, no new financial targets were disclosed during the earnings call.

Executive Commentary

CEO Wolfgang Dahlstrom highlighted the company's achievements, stating, "We are now at SEK 10,500,000, a milestone in a way for us, but not where we really want to be." He also emphasized the growing demand for power infrastructure, noting, "We see an increase in power. I believe that there is a lack of resources in this society when it comes to rebuilding and strengthening the grid."

Risks and Challenges

• Declining traditional telecom investments may impact revenue streams.
• Employee reductions could affect operational capabilities.
• Uncertain market conditions could hinder sales growth.
• Interest rate fluctuations may affect renewable energy sector growth.
• Competition in emerging markets could challenge Eltel's expansion efforts.

Q&A

During the earnings call, analysts inquired about ongoing contract negotiations and the progress of the Norway turnaround. Management expressed cautious optimism about the renewable energy market and anticipated gradual revenue growth from new market ventures.

Full transcript - Eltel AB (ELTEL) Q4 2024:

Alexandra Schan Lund, Communications Director, Eltel: Good morning, and happy Valentine's Day. My name is Alexandra Schan Lund. I am the communications director at Eltel, and I have the pleasure to welcome you to this webcast where we will present the results for Eltel's fourth quarter twenty twenty four. After the webcast, there will be some time for questions and you can dial in or use the webcast for that. I'll get back with instructions later on.

The results will be presented by our CEO and President, Wolfgang Dahlstrom. Good morning.

Wolfgang Dahlstrom, CEO and President, Eltel: Good morning.

Alexandra Schan Lund, Communications Director, Eltel: And our CFO, Tarja Leikas. Good morning. And with that, the stage is yours. Let's turn to the third slide.

Wolfgang Dahlstrom, CEO and President, Eltel: Thank you, Alexandra. I will start with the financial highlights of the quarter. And here we can see that it's a good development on profitability, strong sales, and we are in the end of the quarter also reaching our leverage target. So really happy for that. But starting with the net sales, we see that this quite slow market during the autumn, I would claim the whole autumn, led to a decrease on net sales.

And mainly, this is also due to our divestment of the high voltage operation in Poland that you remember we did in the second quarter. So when we compare the quarter to quarter, this is, of course, one important factor. Organic growth in the segment were flat during the quarter and that despite this market. So I'll actually have to say that I'm pleased that we are able to keep it up. Improved gross profit, SEK28 million, an increase in the fourth quarter and also an increase during the full year.

So that's an important step for us. And we can see that we now have a doubled adjusted EBITDA in the fourth quarter compared to last year. And here, it's good to see that all unit contributes except Norway, and it's also so that both Power and Communication is contributing to this. So I think that is well done of all unit and happy to see that development. This means that this is the sixth quarter that we have improved year over year the adjusted EBITA.

And this is, of course, something we intend to do. We don't believe that we are where we should be really yet. So more of this to come. In this quite slow market, I'm happy to see that we still have strong commitment from our customer base and that we also are able to expand the customer base and that they commit more and more to us. So we had a great sales, meaning that we signed contract, new contract during the quarter for a value of SEK308 million.

And that had given us a very strong order book with SEK1220 million in the order book when we go out of the year 2024. And as I mentioned, the leverage here, we reached SEK 2,500,000,000.0, and Talia will talk a little bit more about that in the financial section. On the right side, you can see the improvement on the adjusted EBITDA quarter by quarter. And this is, of course, for us a very strong proof point that we are on the right track here. Going to some operational highlights from this quarter.

I'm pleased to see that we have won and delivered our first best solution, and this is both in Denmark and Finland, but also so that the first utility sized solar installation, a solar park sizable one in Finland, is also delivered and up in full production. In the very end of the fourth quarter, we signed a contract with a customer, Thalri Energia, to potentially build a big solar plant. And now in the beginning of 'twenty five, we have received notice to proceed. That means that all the condition to do this is fulfilled, and we are up running with the work in that now. So really important step and the next level, I would claim, in the solar area.

During the fourth quarter, we signed two very important contracts with the Swedish Transport Administration. This is a very important part of the Swedish business, meaning that we have a really strong foundation with this contract that is very much about services together with our commitment we have won in the telecom business, meaning that the structural cost in Sweden have a great foundation to stand on. We see similar contract one in Finland with Telia (ST:TELIA). We see Norway with Avinor. And here's a good example how we're broadening our customer base also outside the telco sector.

And we have also been able to recruit a new Managing Director, and Ingrid Treschwold will start have started this week actually in our operation in Norway. So really happy for that. And then all of these young guys you see here on the picture to the right side, they saw that early Saturday morning, three weeks ago, we received a call for support from a network owner in Ireland that they had a significant problem after a heavy storm, and they were now calling out in Europe for for support to help them restore the electricity in the society of Ireland. And I'm really proud to see that 38 technicians volunteered and took off to support them. And we are now pleased to see that in the middle of this week, they're all back home safe after a very, very appreciated three weeks work with our friends in Ireland.

So really nice to see our technicians supporting our friends out in Europe. Let's zoom out a bit and look at the full year of 2024. Now when we close that, I can see that we are able to reach organic growth at 1.8% in despite of this very slow autumn. So I must say I'm a little bit happy for that. The adjusted EBITDA have taken important step quarter by quarter during 2024, and we are now at SEK 10,500,000.0, a milestone in a way for us, but not where we really want to be.

So more work to be done on profit improvement. And for the full year of 'twenty four, we were able to sign new contract to a value of EUR $863,000,000. So this is, of course, giving us the foundation for being a bit positive looking forward. When I zoom out and look at The Nordic, what we're doing, we talk about solar and other stuff here. But for sure, the telco sector is the largest for us and the most important customer segment we have in Neltel.

And here, I can clearly see that we are by sure the largest provider in The Nordic when it comes to mobile five gs technology and fiber to the homes. So really good to see that development that we are defending that position. But of course, we need to broaden the customer base also, and I see great progress in the public infra segment. And here is a handful of agreement that has been won during the year that is, of course, important for this. In the communication area, as I mentioned, still the most important segment we have, and we have been able to renew contract of significant value also during 'twenty four.

So really well done as I see it from the different countries here. Happy for that. And then that we are able to build the new business also. And here we have a few examples from power and the renewable energy on the lower right side. And I would particularly would like to point out that this agreement with Hellen Electricity Network in Finland is one of those contract that we earlier have talked about that we have profitability issues with or problem low performance.

The team have month by month, quarter by quarter improved this. So in the end of twenty twenty four, we are in a much better situation. But nevertheless, now we have a new contract for the coming years, and this we will start delivering on the new contract by April 1. So that's also a very important milestone for us. As Ole said, Solar Park is the first one delivered in Finland and Battery Energy Storage Solutions, both in Denmark and Finland, both won and delivered during 2024.

And this is, of course, important proof point for us and also giving fantastic experience now when we continue this development into new areas. With that, I would like to hand over to you, Talia, and more about the numbers. Thank you. Thank

Tarja Leikas, CFO, Eltel: you, Hakan. I'm delighted to report Eltel's fourth quarter and January result. We have a good quarter behind us. Despite flat organic growth in net sales, we were able to improve our profitability significantly. On top line, Finland and Sweden have continued to grow.

In Norway, communication volume driven decline has continued. And in Denmark, the strong growth in power wasn't quite enough to compensate the communication decline. Profitability wise, Finland, Sweden, Denmark and other business report improvement. Eelta's fourth quarter's five point seven million adjusted EBITA result is more than double compared to previous year and is yet another step towards our profitability target. And with our 10,500,000 full year result, we need to go couple of years back to see profitability comparable this year's result.

Then let's take a look into our segments. First, we have Finland. Finland's share of Airtel now is 48% 45%. Here, our growth exceeded 3%. The net sales engine continued to be communication, where the customer investment into fiber remained high.

In power, the volumes continued to be slightly lower than previous year due to the updated market regulation. Net sales into renewables increased. The first scale large scale solar park as well as the first best project were finalized. Our Finnish operations report major profitability improvement. Adjusted EBITA nearly doubling to €6,000,000 We are very happy that the hard work in efficiency improvement is bearing fruit.

And despite the net sales decrease in power, also power improves profitability. Resizing measures in Finland have resulted 74 persons headcount reduction. Then we take a look into our second largest segment, Sweden, which represents 26% of LTL net sales. Sweden continued to develop positively. Top line growth now fastest in in LTL countries exceeding 5% and full year close to 7%.

We are particularly happy that communication business with the advancement in public infra was a major contributor. The growth in Sweden continued being profitable growth. This was tenth consecutive quarter of positive adjusted EBITA. Both communication and power contributed to the improved profitability, and all this with a smaller headcount than previous year. Then we take a look at Norway, which share of Eldel is now 13%.

The customer investments in communication continued to be low in Norway, this resulting EUR 4,000,000 decline in net sales. Activities broadening the customer base have continued, result not yet compensating the traditional customer volume decrease. Equally, our profitability declined euro wise 1,500,000.0. The efficiency measures in Norway have continued, resulting now headcount reduction of approximately 200 employees. It is notable that the measures do not limit to personnel and include, for instance, the fleet.

And the work around profitability improvement will continue. Then we take a look at Denmark, which share of LTL operations is 11.5%. In Denmark, the general volume shift from communication to power has continued strong. Power growth and communications decline, the top line result being 8% decline. Profitability improvement continued.

Here we report over 8% adjusted EBITA compared to previous year's 4.6%. We are especially pleased for both communication and power contributing the improvement. And then our other business, where net sales have decreased following the June divestment of High Voltage Poland. With the divestment, we reduced our risks significantly. The divestment also leads to improved profitability and lower operating costs.

Fourth quarter, we see profitability improvement of €600,000 This divestment has also given us possibility to review our segment structure. And we have updated our segment structure from the beginning of this year. The operations in Denmark and Germany will be presented in one segment named Denmark at Germany. The remaining part of other business and group functions will be combined and named as group support functions. The segments are now Finland, Sweden, Denmark and Germany, and Norway.

And then we complete the financial report and take a look into our balance sheet items. Well, we have positive news to share. In leverage, we have reached our financial target. From last year's 3.2 leverage, we go down to 2.5. We report major improvement also in our net working capital.

From previous year's negative 49.8, we go down to this year's negative 61.3. Our net debt was 114,000,000 when previous year 106 100,600,000.0. The net debt increase is largely driven by our fleet renewal and this knowing our sustainability commitment. Our team term loan is now €4,000,000 less than the previous year. And then I'd like to remind the audience Aelto's unchanged financial target setting, our profitability, adjusted EBITA margin 5%, growth between 24%, and leverage 1.5% to 2.5%.

And like we mentioned, we have reached leverage target this year. Thank you all. Oken?

Wolfgang Dahlstrom, CEO and President, Eltel: Thank you, Thijer. Thank you very much. And then just remind all of us about our strategy. And in very short, the most important part in the strategy is to improve our efficiency and profitability in the current business, meaning the core business of Eeltel. And this is, of course, a big portion of this is also on the commercial side.

It's operation is excellent, but also commercial questions like pricing, invoicing and payment condition and all of this. We also have the ambition here to broaden the customer base. We have mentioned that a few times today, and this is a significant part of the work we are doing. And then on top of this, enabled by the core business we have and the great competence there is in Neltel, we have possibility to build new and adjacent market. And here, as example, we have talked today about solar and best, but there is also other units in that or other areas in that.

So then looking a little bit how we are doing on this most important part of the strategy. On the improved profitability, we can see that we now year on year have 21% improvement in gross profit and the largest improvement is in Power Services Finland, even though they are pushed on net sales due to the regulation. There's a change of regulation that we have talked about in a previous quarterly report, and this has impacted the net sales over the year of 2024. But despite that, I'm happy to see that the team is delivering better profitability. And it's actually so that profitability improvement are there visible in all different segment in communication except Norway.

So this is giving us confidence that we are on the right track and we will continue this work, of course. I mentioned before six consecutive quarters with year on year improvement and the leverage in line with our target. Coming to the customer base, as mentioned, the order book is strong and we are now happy to see EUR $1,220,000,000 in the order book. And part of this is, of course, in our new Nascent market and that part for '24 has been 13%. So I can see here that we are able to convert the pipeline into contract and contract into revenue even though the revenue size of 24% is 4%, but we also know that this will take some time.

But happy to see that we have revenue of SEK 31,000,000 during last year in this new and adjacent market. The signed contract value in new and adjacent market is SEK 111,000,000, and that is, of course, giving us reason to be optimistic about 2025. Then a little bit more meat on the bones in one of these cases. And here is so that in the very end of 'twenty four, we got a conditional contract with the customer Talleri Energia. And this is about building a solar plant in Finland.

It's a big one. It's 129 megawatt in peak. So the size of this, if you try to visualize this, is two seventy soccer fields, that's the surface that this park will cover. And this commitment that we have here is to build an overhead line, a grid connection and a substation together with the solar park. So really perfect fit for our Finnish power organization, and this will then generate power and energy to roughly 18,000 households.

Great to see. So the construction has already started, and you can see on the right side a picture from the field where we have de cut the trees, de trees the area, and now the team is on a high intensity in the work there to to get this done because all of these have to be done up running by mid of twenty twenty six. So this is a turnkey contract, perfect fit for us being able to help the customer with everything from overhead line to the solar park and everything in between. So very exciting to follow this project, and this is the single largest order that we have received for our business in Finland. With that, Alexander, I think we are ready to take questions.

Alexandra Schan Lund, Communications Director, Eltel: Yes. Thank you, Wolfgang and Tharja. We have a few questions coming in through the webcast. But before that, I would like to see if we have any questions on the phone. If you want to ask a phone question via the phone, please dial 5 on your telephone key part key part pad.

I think we have one. Right? The next question comes from Adrian Gelloni from ABG Sundal Collier. Please go ahead.

Adrian Gelloni, Analyst, ABG Sundal Collier: Yes. Hello. I would like to just first of all ask a question on the contract terms for the annual contracts because presumably we are around the point where many of the annual contracts are sort of being rolled over onto the new terms. So can you give us some update on when those will happen and what kind of price increases you're pushing for in those negotiations?

Wolfgang Dahlstrom, CEO and President, Eltel: When you say annual contract, I'm not 100% sure what you mean, Adrian. There is in all our frame agreement, there is sort of three or four years commitment and then there is one or two years options. And this is something that then is a negotiation dependent on what exactly that contract says. Some of the contract have already this cleared out from the beginning what the conditions are and some contracts are a bit more open. But I don't see any drama in this.

This is business as usual, and we see that our ambition or pricing as we have had now for two years is working well for us.

Adrian Gelloni, Analyst, ABG Sundal Collier: Okay. Understood. And I was perhaps referring to the type of contracts that are from the older business where you have the annual indexation classes. What we can expect from those?

Wolfgang Dahlstrom, CEO and President, Eltel: Yeah. Each contract have sort of their own indexes dependent on the business mix. So if there is more material, there is indexes that is sort of correlated to that. But I would say that this is something that is happening all the time. There is not a certain date that this is happening more or less than any other period of the year.

Many of these have sort of a yearly update, as you say, and then they are measured up to November. So the outcome of that will be implemented here in the beginning of this year. But we think that they works well and they are covering our cost increase, yes.

Adrian Gelloni, Analyst, ABG Sundal Collier: Okay. Understood. And then just diving into the segments a bit. In Finland, you previously talked about two big contracts that sort of had these profitability issues. And I believe you mentioned that one of them is out of the books as of April 1.

Can you give us an update on the other one? Is that still on the books and for how long if that's the case?

Wolfgang Dahlstrom, CEO and President, Eltel: Yes. That's still with us and will be sold during the whole 2025 and a bit into 2026.

Adrian Gelloni, Analyst, ABG Sundal Collier: Okay. Thank you. And then in Norway, seems to be the biggest problem area right now. Do you feel you've done what's needed on the downsizing front in Norway? Or could it be the case that there's still more restructuring measures to go?

Wolfgang Dahlstrom, CEO and President, Eltel: We still have things to do when it comes to fleet and that sort of thing. I think we have come to the level of size in the organization that is in line with what we see in the forecasting from our customers and how we read the market. So the actions are done, but we will have a bit of a tail in the cost of this. It doesn't happen overnight, so to say, when we do downsizing. So the activities are done.

The costs have a bit of tail into the first quarter. So we don't see the full effect of this until, I would say, the later part of second quarter. But month by month, the cost is reduced due to less cost of staff. But we also have fleet, as you know, and tools and sites. But we are looking at all of this, of course.

Adrian Gelloni, Analyst, ABG Sundal Collier: Okay. Makes sense. And then just on the costs in the group functions. I mean, they have grown a bit from EUR 9,000,000 roughly in 2023 to EUR 11,000,000 in twenty twenty four million. Were there any sort of one off restructuring costs at the on the group function level as well?

Or that were of a one off character? Or is this sort of the new run rate?

Wolfgang Dahlstrom, CEO and President, Eltel: Yes. No, this is not a new run rate. We had the divestment of the high voltage operation in Poland as a one off that is impacting those numbers.

Adrian Gelloni, Analyst, ABG Sundal Collier: Okay. Okay. Yes. Okay. That was in there.

And I guess a final one from me on the new businesses. Now that you're sort of starting to sign bigger contracts and you showed the pipeline was roughly fiftyfifty, how much of that do you think could come through already in 2025? So how much of revenue roughly can be from new businesses in 2025?

Wolfgang Dahlstrom, CEO and President, Eltel: I don't have any guidance like that for you, but I have been very transparent showing you the pipeline, the one contract and the revenue for some quarters now. We will continue on that, but I think you could see how pipeline is converted into contract and contract converted into revenue. But of course, it takes one year until TCV becomes revenue.

Adrian Gelloni, Analyst, ABG Sundal Collier: Yes. And I agree. I think that the charts are very transparent, but it's always worth asking for more info. Of course.

Wolfgang Dahlstrom, CEO and President, Eltel: Of course.

Adrian Gelloni, Analyst, ABG Sundal Collier: Yes. I guess that was all for me. So thank you for taking my questions.

Wolfgang Dahlstrom, CEO and President, Eltel: Okay. Thank you, Adrienne.

Alexandra Schan Lund, Communications Director, Eltel: Thank you, Adrienne. All right. No further question on the phone. So we have a few questions coming in online. Joakim, can you elaborate on a high level the degree of diversification within your current backlog across business segments, country units, sectors?

What's in there?

Wolfgang Dahlstrom, CEO and President, Eltel: I would say that we have a very healthy mix in the backlog, in the order book. There is some areas where we have a need of more contract, of course, and some areas are sort of in a much better situation. Overall, I would say that the situation is very good. I'm very confident and positive when I look at the order book and see what the team have achieved during last year. So I think it's it's, yeah, it's a strong order book.

I don't see any big hiccups or problem. I would love to see a broader customer base in Norway.

Alexandra Schan Lund, Communications Director, Eltel: Mhmm.

Wolfgang Dahlstrom, CEO and President, Eltel: That's for sure. I see also that we have been able to catch the potential in power in Finland, in Sweden, in Denmark. Can we do more? Most likely, we can. Most likely, we can.

I see public infra coming up strong, particularly Sweden, but we would love to see a bit more public infra in other countries. We see that there is a very nice and good potential in data centers. This is something that we would address more going forward.

Alexandra Schan Lund, Communications Director, Eltel: Along those lines, the second question, and these are questions from our analyst, Kristofer Janellen in Indres, by the way. How do you see the demand outlook, like you were starting with, across LTL's country units? And what are the key revenue drivers, challenges each unit face going into 2025?

Wolfgang Dahlstrom, CEO and President, Eltel: We see an increase in power. I believe that there is a lack of resources in this society when it comes to meeting the need to rebuild and strengthen the grid overall, both on transmission and distribution network, but then also this new energy solution like we have talked about best today solar. I believe that we not during 2025 maybe, but after 2025, I will also expect to see an increase in wind. All of this is, of course, also taking resources. And here, we will see that there is lack of resources in market, meaning that the demand is higher than the supply.

In the communication area, my perception is that in the telco community or the customer segment of telecommunication operators, here we see a small decline in demand, but that is compensated by an increased demand from public infra. So we see more and more activity partly driven by the NATO membership, partly driven by the situation in Europe with the security situation and the war we have in Europe. So we believe that this demand will be here for quite long time, and we see that that compensate for the lower demand in telecommunication.

Tarja Leikas, CFO, Eltel: Traditional.

Alexandra Schan Lund, Communications Director, Eltel: Yeah. And the third question from, Christopher. I know that you were referring a little bit to a wait and see markets in in your comment in the report. Yeah. Now the Swedish Riksbank and ECB have have cut their policy rates by a hundred basic points and 50 basic points respectively

Adrian Gelloni, Analyst, ABG Sundal Collier: since

Alexandra Schan Lund, Communications Director, Eltel: your last earnings report. Have you noticed that previous hesitation within new and adjacent market, particularly within renewables, have started to shift in q one? Or do you see a strong year for the renewable segment in 2025 on the back of these lower interest rates?

Wolfgang Dahlstrom, CEO and President, Eltel: What a

Alexandra Schan Lund, Communications Director, Eltel: high level again then?

Wolfgang Dahlstrom, CEO and President, Eltel: Yeah. I think it takes a bit of time until we until the effect reach us. But I think you're on something here. Most likely, this will happen. And particularly, when the interest rate went up, it was became very difficult for the win cases.

It was obvious that they couldn't get the business case together, and all of those discussions sort of was put on hold. We hope that the interest rate have now come down to a level where where those gonna be picked up again, but that has not happened yet.

Tarja Leikas, CFO, Eltel: This has been something that we have mentioned in our webcasts earlier that there has been delayed customer decision making. You were refer or the person asking was referring only to Sweden. Sweden is quarter of our business. Yes. In Sweden also, but especially in Finland, we saw the late decision

Alexandra Schan Lund, Communications Director, Eltel: made. Yeah. Let's hope.

Wolfgang Dahlstrom, CEO and President, Eltel: Mhmm.

Alexandra Schan Lund, Communications Director, Eltel: It will pick up shortly. Last question from Christopher. And this is regarding the Tolari Energy Ideal that you were talking about. Yep. Can you provide some more details on the key financials and risk aspects of this solar park project, including payment terms, revenue split, 25, 20 six, price adjustment mechanism for material costs, FX, risk distribution in case of cost decreases or delays, and expected margins margins.

Wolfgang Dahlstrom, CEO and President, Eltel: What I can say is that the contract is milestones based and giving us the right to invoice when we have reached certain milestones, but also so that there is a mechanism in the contract that make it sort of cash flow positive for us since it's a big portion of material in this and we are not financing those materials. So this is built into the contract. We're happy for that. I think the whole contract is very balanced and good. It has been built between two parties, and I think that discussion have been very fruitful and good.

So I'm not sort of super worried about this contract. It's for us normal conditions. We're happy for the milestones, happy for the invoicing conditions we have there. Since we will be ready with this in the mid of twenty six, a majority of the revenue will come '25.

Alexandra Schan Lund, Communications Director, Eltel: Yep. To be continued. Yes. And Martin has a question. Have all unprofitable oh, yeah.

Have all unprofitable orders now matured? How do you ensure that new orders deliver profitable margins? When will you update your financial targets? Should we start with those? Because there is one more question then.

Wolfgang Dahlstrom, CEO and President, Eltel: Okay. We have no new information about financial targets. We have the 5% adjusted EBITDA as our target. We have the 2% to 4% growth and 1.5% to 2.5% in leverage. That's what we have, and we have no sort of forecasting when we either would reach them or when we will update them.

But I see that since we increased our commercial ambition, as I have chosen to phrase it, we see that that has an effect on all our orders and the portion of the sort of new contract and new commercial terms is growing month per month, of course. But as you know, we have four years frame agreement as more or less an average on four years. So it would take some time until everything is based on this. But I think if we see this when we follow the gross profit that this is actually working, and we are getting there. Yes, it takes some time, absolutely.

But I would claim that we now, quarter by quarter, have been able to show you that we are on the right track.

Alexandra Schan Lund, Communications Director, Eltel: Mhmm. And what can be done to lower your cost base, your admin costs, around 10% of sales?

Wolfgang Dahlstrom, CEO and President, Eltel: Mhmm.

Alexandra Schan Lund, Communications Director, Eltel: And how will you handle the increased cost from the hybrid loan in 2026?

Wolfgang Dahlstrom, CEO and President, Eltel: I'll leave the hybrid loan to you. And I'll say that this is a never ending story, of course, to work with our cost structure. And this is something that we continuously work on. We try to do all the classic steps here from benchmarking and so on. So a tight follow-up and question the way we are working, discussing that internally.

Can we find a smarter way? Can we use new technology? What can we automate and so on? I think we are taking the normal measurements to improve the profitability there. Are we where we want to be?

No, not yet. Absolutely not. But, this is high up on our agenda, I would claim.

Tarja Leikas, CFO, Eltel: Just to comment, the hybrid loan has been with with us now year and a half, and the costs are part of our financial planning. So I don't see any change in that.

Alexandra Schan Lund, Communications Director, Eltel: Okay. Asla had similar question regarding the EBITDA of 5%. I think we answered that. But you also have a question regarding Norway. How long will Norway take to be turned around?

Wolfgang Dahlstrom, CEO and President, Eltel: That's a that's a good question. We we are not prepared to give any forecast of that today. We have now Ingrid in place since Monday this week, and she has had a very intensive first week, I can promise you, together with the Norwegian team, and they are now sort of dealing with a challenge to turn this around. I would claim that the downsizing of roughly 200 roles in the Norwegian organization is an important step that has been executed. Yes, we will have a tail of cost from that also coming into this year, but the actions are done and more has to be done in many dimensions.

And Ingrid and the team is on that. I'm, of course, talking with them frequently about this and following this so we could do this together. But I don't really have a time plan for you that we are prepared to share.

Tarja Leikas, CFO, Eltel: I can only say that Ingrid and the team, they sounded really determined Yeah. Earlier this week.

Alexandra Schan Lund, Communications Director, Eltel: Yeah. Yeah. High activity level for sure when it comes to sales. I believe there are no more questions. So we that means that we have reached the final question, and this will then conclude the call.

The full report, obviously, as well as the recording of this webcast and the presentation are available on our website, altelnetworks.com. We will present our q one report on the April 30. So hopefully, you will join us then as well. Feel free to reach out to us in the meantime, of course, if you have any further questions. So thank you, Joaquin and Tarja.

Adrian Gelloni, Analyst, ABG Sundal Collier: Thank

Alexandra Schan Lund, Communications Director, Eltel: you, Alexandra. And thank you for participating

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.