Stable business performance and solid results of ENT Group in 2024

• Sales revenue amounted to EUR 249. 5 million, and operating profit amounted to EUR 22.1 million
• Growth of sales revenue in the operator segment in export markets and the Digital Society segment; stable business performance in Ericsson market with growth in R&D activities
• Decrease in sales revenue in the operator segment in the domestic market due to lower investments from customers
• Focus on profitability, cost and operational efficiency, internal digital transformation, investments in employees’ skills development

In her statement about the company’s business results in 2024, Gordana Kovačević, President of Ericsson Nikola Tesla, highlighted: “Last year was another dynamic business year in which we had a stable business performance and provided the best technology solutions and services in all business segments for our customers and partners. We implemented a few demanding projects, signed several strategically important contracts and gained additional responsibilities. We were faced with further significant increase in the cost of living and inflationary pressures in Croatia, which has affected the increase in labor costs. Moreover, we were exposed to pressures on the prices of our products and services, short project implementation deadlines, and unfavorable payment terms related to complex digital transformation projects.  In order to achieve stable business performance, we focused on the areas where we can have an impact; our strategic customers, remaining competitive in the market owing to our technology leadership, retaining employees and developing their strategic competences, investing in the development of new products and services, growing business in new markets and with new customers, and strengthening profitability and cost efficiency.

In November, we marked the 75th anniversary of our business, and on this occasion, we presented the company’s new visual identity, implemented with the aim of expanding business and stronger visualization of our own ICT solutions for the digitalization of various industries and public services.

We have been actively participating in rollout and modernization of communication infrastructure, especially in broadband Internet and 5G technology. In the domestic market, the focus was on modernization and extension of the radio part of mobile network of Hrvatski Telekom (HT), and the implementation of Ericsson dual-mode 5G Core for 4G/5G core network, in line with the strategic agreements signed at the end of 2023, and in the beginning of 2024.

With our partner A1 Hrvatska, in line with the multi-year agreement, we have been working on the extension of coverage and capacity of the 5G radio network and on the modernization of the core network.

We have continued successful cooperation with the operators Telekom Kosovo and IPKO in Kosovo market, and the operators HT Mostar and Crnogorski Telekom on the modernization of their telecommunication networks.

In the Digital Society segment, i.e. ICT solutions for the digital transformation of business and public services, last year we signed several new contracts with various Ministries and other key customers in Croatia. Activities are also ongoing related to the realization of project of the replacement and modernization of the land administration information system of the Department of Lands and Surveys of the Republic of Cyprus.

Our R&D Center, which has more than 1,500 experts, has additionally strengthened its position within the global Ericsson Corporation owing to a great quality of software it delivers and is one of the best rated centers for software development within Ericsson. In 2024, we gained new responsibilities for the development of 5G Radio Access Network (RAN), which is strategically important because it will enable us to build additional E2E capability within networks software/modules. In line with the new responsibilities, the growth of our R&D center continued with more than 100 experts hired, and additional expansion is planned during this year.

Excellent results on the realization of demanding tasks for Ericsson customers were also achieved by our teams working on solutions and services for customers. I would like to highlight new responsibilities for the development of software tools for mobile networks management and optimization.

Total sales revenue amounted to EUR 249.5 million, down by 18% year-over-year, primarily due to lower revenue in the domestic market as a result of non-renewal of the contract with Hrvatski Telekom regarding managed services. For comparable units, if we exclude revenue from managed services with Hrvatski Telekom, the total sales revenue would increase by 11.3% year-over-year. Sales revenue in the operator segment in export markets and the Digital Society segment recorded growth and, together with the stable business performance in Ericsson market, partially offset the decline in sales revenue in the operator segment in the domestic market.

Gross profit amounted to EUR 28.4 million (2023: EUR 31.8 million), down by 10.7% year-over-year, mainly due to lower sales revenue. Gross margin increased to 11.4% (2023: 10.5%) as a result of business mix and activities focused on improving efficiency and cost optimization. Operating profit amounted to EUR 22.1 million, down by 10.6% year-over-year, as a result of lower sales revenue and gross profit. Operating margin amounted to 8.9% (2023: 8.1%). We concluded the end of Q4 with a solid balance sheet and an equity ratio of 37.9%. Cash and cash equivalents, including the short-term financial assets, amounted to EUR 63.1 million, which accounts for 35.1% of the total assets. In line with our expectations, a positive cash flow from operating activities was achieved in the amount of EUR 10.3 million (2023: EUR 16.7 million).

In the next period, our goal is to keep the leading position in the operator segment, R&D and services, and to strengthen the position in the Digital Society segment. Although a decline in the operators’ investments in network modernization is noticeable, we believe that in order to ensure the quality of services to end users, the operators will increase their investments in the future.

In the Digital Society segment, our goal is to use the business opportunities of digitalization of business entities and public services, not only in Croatia and neighboring countries, but also on the broader international market.

We expect the intensification of activities regarding  Mission Critical Networks for national and public safety, as well as the implementation of railway communication network in Croatia based on the latest 5G solutions (FRMCS- Future Railway Mobile Communications System), where we believe our technology leadership will be recognized, as well as the experience of our experts , who have been actively contributing in a quality manner to similar solutions in other EU countries.

In order to secure stable business performance, we are focused on profitability, cost and operational efficiency, cash flow from operating activities, and responsible risk management. We continue to invest in the digital transformation of our business by introducing new automated tools and by optimizing processes using artificial intelligence.

The company has a strong intellectual and innovative potential that we have been continuously developing. Our focus is on the development of employees’ competencies in order to improve their skills and adopt new technologies.

We continue to foster company culture based on integrity, ethics and compliance, and we are convinced that by having the highest standards in compliance we secure additional competitive advantage and sustainability.

Our approach to work, quality execution of assumed obligations, and partnership with customers is what we are recognized for and what puts us in a good position to continue stable business performance and to create added value for all our stakeholders.” concluded Gordana Kovačević, President of ENT.

Communications Ericsson Nikola Tesla