Eltel AB (publ)

A warm welcome to this presentation of LTEL's third quarter. My name is Alexandra Kjernlund. I am the communications director of LTEL. To present the results, we have our CFO, Tarja Leikas, and our CEO and president, Håkan Dahlström. And after the presentations, we will open up for questions. And you can already start asking your questions. You can ask them throughout the presentation by posting them in the chat field. With that, I'd like to hand over to you, Håkan.

Thank you, Alexandra. Good morning, all. Looking at the third quarter, we see solid growth in net sales driven by Finland and Sweden. But we also see an improved and strong adjusted EBITDA, also driven by Finland and Sweden. So we reach a net sales of 210 million euro to be compared with 213 million last year. But when we compare to last year, we need to remember that the high voltage business in poland that we divested during the first half of this year contributed with net sales of 11.8 million during the third quarter last year so that's the background why the growth in the company in the third quarter is four percent when we compare the same scope What I'm happy about is to see that the gross profit continues to improve, also in the third quarter. And summarizing, we see here that this quarter is the best ever, if we look at ELTEL with what I call the current scope. So since 2015 somewhere, we haven't had this amount of profit on adjusted EBITDA. So with that, I see that we now have delivered five consecutive quarters with year on year adjusted EBITDA improvement. So this is, of course, something that we are proud of and that we have the intention to keep. So in the segment, we see that adjusted EBITDA is improved to 9.8 million to be compared to last year's 6.8. So this is good to see that despite that we have headwind and struggles in Norway that continues also in the third quarter, the segment as such delivered 3 million better. On the sales side, I have to say that we are a bit shy. We had 135.7 million to compare 170 last year. But we also recognize that the second quarter was a bit stronger than usually. But nevertheless, a bit shy, I have to say. So that leads us to an order book that had a decrease down to 1.1 billion euro to be compared with 1.2 before. But last 12 months, cash flow has improved in all segments. And this is, of course, something that is high up on our agenda and a very strong focus for us. Other highlights during the third quarter. I would like to point here at the new contract with Hellen, an energy company in Helsinki. Here, this is one of those areas that we have had struggle with during 2023 and 2024 due to poor profitability. Now we have been able to regain this contract and it will come into play starting in April next year. And this is a very important step in the profit improvement work that our Finnish organization are doing. Also in Sweden, we have the third agreement now with the Swedish Armed Forces. And this is also a very good step in our broadening the customer base and build new segment for us. Otherwise, on the market, we see particularly high interest in the battery energy service solutions, where people are asking for a lot of information, a lot of initiatives in the market, and we have been able to secure a few new contracts. And I will do a little bit of a deep dive in this area at the end of the presentation today. But generally speaking, in our new and adjacent business, we see that all Nordic countries are taking new initiatives and that they are doing successfully. So in all solar, BES, e-mobility, we see that the total contract value is coming up. It's really great to see. However, we also have to recognize that there is a delay in customer decision making. I think this is mainly due to the interest rate, and we see that particularly in new energy areas like solar, that decision is pushed forward. And even though we have handshaked large projects, it has not really materialized. So we have to continue the development of our organization, both to enable the strategy execution that we think we have good progress in, but also that we have to adapt to the market dynamics and a bit of hesitation in the market just now. So our financial targets, they remain the same, but the previously stated timeframe of this that we have formulated, like by the end of 2025, that we now have removed. With that, I would like to hand over to you, Tarja, and the numbers.

Thank you. Thank you, Håkan. I'm delighted to report Eltäl's third quarter and January-September result. We have a great quarter behind us. Our organic net sales grew 4%. On the upper right table, you can see the country-specific contributions. Sweden leading the pack with over 9 million euros growth. Finland contributing with almost 5 million euros, quarter growth. In Denmark, we had a quiet quarter in net sales following previous quarters, early closings of the projects. Last quarter, Denmark reported a staggering over 20% growth. In the lower right table, we open the adjusted EBIT-A contributions. Profitability-wise, Finland and Sweden, together with other business, led the profitability improvement. Eltel's third quarter result is the strongest ever with current scope. This result was in line with our own expectation and is yet another step towards our long-term profitability target. Then we take a look at the segments, and as usual, Finland being the first. Finland's share of LTL Group is 42%. Here, our growth was close to 5%. The net sales engines were communication and it's fiber to the home projects. In power, Finland experienced volume decline due to updated market regulation. Also, like Håkan mentioned in his opening words, there were delayed customer decision-making in Finland and it caused some uncertainty. The profitability improved significantly, 52%, and came to 7.3 million euros. Finland has been working and continues working towards efficiency improvement. And then Sweden, which represents a quarter of Eltel net sales. In Sweden we had a very strong quarter. Net sales grew 19% in local currency, this largely driven by successful project closings. In regards of Sweden top line, we are delighted about the customer base expansion. Expansion in industry sectors, public and public infra and defense. I said Sweden delivered a solid quarter, two million euros adjusted EBIT A, largely driven by successful project closings. And then Norway. which share now of LTL business is 14%. In Norway, we have made an active decision to focus on margins rather than volumes. There is some positive development in Norway in the form of new business. This has not been enough to compensate the low investment levels of fibre and 5G. Our net sales decreased 10% in local currency this quarter. Equally, our profitability decreased with 1.4 million euros. In Norway, we are executing a restructuring program. The restructuring will have an impact on personnel, locations and fleet. The estimated value of items affecting comparability is 3.8 million euros, mostly fleet, but also compensations to personnel. Then we take a look at Denmark. Denmark's share of LTEL operations is 11%. Here, our net sales declined 9%, partly due to previous quarter's significant project closings. Previous quarter growth was 18%. Year-to-date, Denmark shows approximately 2% growth. And despite the net sales decline, Denmark succeeded in defending the margin. Adjusted EBITDA margin remained on the same level as previous year. And then other business with share of total is decreasing after the June divestment of high voltage Poland. Quartal net sales decreased almost 12 million and came to 12.2 million euros. The remaining other business entities are SmartBridge Germany, Lithuania and the closing activities of Power Transmission International. Other business profitability improved and came to half a million euros. We will now close the final result, taking a look at the balance sheet items, where we have leverage, net debt and net working capital. In leverage and net working capital, we report major improvement. Leverage is down from previous year's 5.4, now to 3.5, and net working capital from last year's negative 15.5 to this year's negative 33.5 million. Then, our improved profitability brought us stronger cash flow. Advanced payments and accounts payables are on lower level than previous year. This leading to slightly elevated credit facilities usage. Also, leasing debt is now five millions higher due to the fleet renewal. This resulting to higher than previous year's net debt. And lastly, we take a look at Elta's financial target setting. Here we removed year 2025 and otherwise kept target setting unchanged. Our profitability group adjusted EBITDA margin 5%, annual growth between 2 and 4%, the leverage 1.5 to 2.5, and then dividend payout naturally subject to leverage target. And now Håkon continues with the strategy topics.