Elcoteq lower operating income for 2006

Despite its modest increase in net sales, Elcoteq retained its position as the world's fourth largest EMS provider to communications technology companies in 2006 with a market share of roughly 7%. Elcoteq's 2006 net sales showed a slight increase on the previous year to 4,284.3 million euros (4,169.0). Operating income amounted to 43.9 million euros (76.5), or 1.0% of net sales. Income before taxes was 19.2 million euros (59.3) and net profit was 12.1 million euros (41.3). Earnings per share (EPS) were 0.38 euros (1.34). Net sales were below target especially in terminal products, but also in the networks business and in all the geographical areas. The modest growth in net sales was to a great extent due to lower sales to companies within the Nokia group compared with the previous year, owing to an unfavorable product mix and intensified competition. Net sales to other customers than companies belonging to the Nokia and Ericsson groups grew 13% compared with 2005. Fourth-quarter net sales were slightly below the third quarter's level and totaled 1,104.6 million euros (1,182.0 in the fourth quarter of 2005 and 1,169.1 in the third quarter of 2006). The slight decrease on the previous quarter was attributable to lower production volumes for Terminal Products in Europe and Asia-Pacific. Operating income in the fourth quarter was 6.9 million euros (25.5 in the fourth quarter of 2005 and 16.6 in the third quarter of 2006) and income before taxes amounted to -0.8 million euros (19.7). The profitability of Terminal Products weakened compared to the third quarter owing to lower production volumes especially in Europe. The performance of the Communications Networks business area declined as a result of changes in the product mix and costs arising from the ramp-up of certain new products. Click here to download the full report (PDF).