Eltel: Margin lift highlights operational improvements - ABG

Earnings lift on better contract terms and cost savings
5% margin-driven EBITA upgrades for '24e-'25e
Renegotiating contracts the main margin driver ahead


Earnings up notably on better contract terms and cost savings

Eltel reported Q4 net sales of EUR 240m (+4% vs. ABGSCe 230m), up 7%, with impressive organic growth of 10% (ABGSCe 6%). The main growth drivers were the Finnish communications business and renewable energy transition projects, as well as strong demand in Denmark for both power and communications. Also, Eltel significantly improved its profitability, with adj. EBITA of EUR 2.8m (ABGSCe 4.4m), for a margin of 1.2% (-1.8%), including a small positive one-off of EUR 0.1m. The y-o-y earnings lift was driven mainly by 1) the ongoing cost-saving programs, the effects of which will increase somewhat into Q1, and 2) continued work on improving prices and terms on its contracts, which will be a gradual process over the coming years. 2023 was a year of two very different halves for Eltel, as earnings and cash flow improved notably in H2, causing lease adj. net debt-to-EBITDA to come down to 2.1x at year-end (vs. 3.0x at YE'22).

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/eltel/Equity-research/2024/2/eltel---margin-lift-highlights-operational-improvements/