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Electronics Production | May 19, 2010

Elcoteq's operating result improving

Elcoteq recorded net sales of 220.5 million euros between January and March (470.0 million euros in January-March 2009).
Operating loss totaled -12.9 million euros (-38.3) and excluding restructuring costs it was -10.6 million euros (-24.7). Despite the lower sales, the operating result improved due to the cost savings gained from the restructuring actions put in place in the first half of 2009.
 
The Group's net financial income was 75.9 million euros (net financial expenses 11.5 million euros in January-March 2009). Income before taxes was 63.0 million euros (-49.9) and net income totaled 40.3 million euros (-45.6). Earnings per share (EPS) were 1.22 euros (-1.40). Financial income was mainly attributable to one-time gains of approximately 75 million euros related to the hybrid securities transaction executed in January 2010. At the same time the company has incurred significant financial expenses associated with the exchange offer to the debenture holders and the fees related to the revolving credit facility of 100 million euros agreed in November 2009.
 
The Group's gross capital expenditures on fixed assets between January and March were 3.0 million euros (2.0), or 1.4% of net sales (0.4%). Depreciation amounted to 8.1 million euros (18.9). Investments have been reduced to a minimum to increase existing asset capacity utilization ratios. During the review period, investments were earmarked mainly for the test equipment of new customer programs.

"After a very challenging year 2009, the first quarter of 2010 showed clear improvement and progress in many ways. As expected, revenues decreased from the last quarter of 2009 and the operating result was still negative, but continued to improve. We started cooperation with several new, prominent customers, like Inmarsat (satellite phones), Philips Lighting (LED-based lamps and luminaires) and Sharp (mobile phones). We also signed an agreement with Nokia providing after market services globally.

The balance sheet strengthening proceeded according to plan. Elcoteq reduced its gross interest-bearing debt by 105 million euros and increased equity by 85 million euros. We also launched the exchange offer to our remaining debenture holders in April. The exchange offer has now been completed, resulting in a further 21.5 million euros reduction in gross debt and a respective increase in equity in May 2010. Had this transaction taken place in March 2010, the company's gearing would have been 0.7 and solvency 23.5%." said Elcoteq's President and CEO Jouni Hartikainen.

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