Eltel is set to release its Q4 earnings report on Friday, February 14, at 08:00 am CET. We expect the company’s reported revenue growth to be in the red but adjusted EBITA to improve from the comparison period. In addition to the figures, we are interested in the comments on the market outlook and overall strategy execution. 

Revenue growth is expected to be in the red due to divestment and continued challenges in Norway

We forecast Eltel’s Q4 reported revenue to be 226 MEUR (Q4’23: 240 MEUR), reflecting a nearly 6% decline year-on-year. The main contributors to this decline are the divestment of the High Voltage Poland and continued challenges in Norway. In addition, we expect Sweden to show negative growth as more projects than expected were closed in the previous quarter. The only country unit that we expect to show growth year-on-year is Finland (+4% y/y), primarily driven by continued solid demand in Communication, while Denmark is expected to show flattish revenue growth. We do note that the relatively mild winter season in the Nordics could potentially have had a positive effect on Eltel’s operations and overall business momentum during Q4.

We expect another step forward regarding profitability

We estimate the company’s adjusted EBITA to land at 5.4 MEUR, corresponding to an EBITA margin of 2.4% (Q4’23: 1.1%), reflecting a solid improvement year-on-year, but still at a modest level. At a country-unit level, we expect slight year-on-year improvements from all business units, with Finland being the largest contributor to the Group's profitability improvement. We note that there are still uncertainties regarding the development in Norway, however, we expect to see small improvements on margins due to implemented cost reduction measures. Furthermore, we expect continued notable margin improvements in Other reflecting the divestment of the High Voltage Poland. FX changes should not have a material year-on-year effect on revenue or EBITA.

At the bottom of the P&L, we forecast financial expenses to be at the normal level (incl. interest payments on hybrid bond) and taxes to be at a modest level. Reflecting this overall picture, we expect the reported EPS to be at 0.01 EUR.

Focus on comments about the market outlook

Eltel doesn't provide numerical guidance for the Group. We therefore focus on the company's comments on the country units' market outlook. In addition, we follow the development of the country units' profitability, especially in Norway, which has been affected by reduced investments for some time. We also monitor potential comments on strategy implementation (e.g. new markets and businesses, broadening the customer base, new commercial terms, pricing), which is also important for Eltel's strategic goal of achieving a sustainable profitability turnaround. The recent large-scale solar power plant deal in Finland marks a big strategic step toward strengthening Eltel’s presence in renewable energy, and lays a good foundation for further growth in this sector going forward.