Electronics Production | April 23, 2008
Elcoteq reports lower sales in Q1 2008
Elcoteq net sales between January and March totaled 908.7 million euros (952.5 in January-March 2007). Operating income was -9.5 million euros (-52.4 and excluding restructuring expenses -22.3 in January-March 2007).
Operating income has clearly improved compared to the first quarter of the previous year even with lower net sales. The action plans to improve the company's profitability and competitiveness are proceeding in accordance with expectations. Operating expenses were 15 million euros lower than in the first quarter of 2007 mainly as a result of cost savings from the action plans. Actions to correct production problems in Mexico proceeded as planned and are continuing, but to a great extent the results of these improving actions were not yet visible in the first quarter 2008. The Group's net financial expenses were 6.0 million euros (6.4). Income before taxes was -15.4 million euros (-59.0) and net income totaled -11.6 million euros (-46.9). Earnings per share (EPS) were -0.35 euros (-1.49). The Group's gross capital expenditures on fixed assets between January and March were 27.7 million euros (11.2) or 3.0% of net sales. Depreciation amounted to 17.1 million euros (20.1). Cash flow after investing activities was -1.1 million euros (-40.9). Cash flow received by the Group from sold accounts receivable was 136.5 million euros at the end of March (226.5 million euros at the end of 2007). The solvency ratio was 19.2% (18.1% at the end of 2007 and 22.5% at the end of March 2007) and gearing was 0.8 (0.7). At the end of March Elcoteq had unused and immediately available credit limits totaling 276.4 million euros (296.1 million euros at the end of 2007). These unused credit limits included a 230 million euros syndicated, committed credit facility of which 210 million euros was unused. Since the beginning of 2008, Elcoteq has had three business areas as its primary segments: Personal Communications, Home Communications and Communications Networks. Until the end of 2007 Personal Communications and Home Communications formed one combined business area, Terminal Products. In the first quarter 2008 the Personal Communications contributed 76% (69%), the Home Communications 9% (12%) and the Communications Networks 15% (19%) of the Group's net sales. Net sales of the Personal Communications business area were higher than in the first quarter last year, standing at 688.4 million euros (658.8). The segment's operating income was 5.4 million euros (-25.8 and excluding restructuring expenses -4.4), or 0.8% of its net sales. Operating income improved due to operational cost savings and increased sales. However, profitability is not yet at a satisfactory level due to production problems in Mexico which are expected to be solved towards the end of the second quarter of 2008. Net sales of the Home Communications business area were lower in the first quarter than one year earlier, standing at 81.4 million euros (108.4). The segment's operating income was -0.5 million euros (-11.0 and excluding restructuring expenses -4.1). Profitability has improved due to improvements in cost structure but was still negative due to the lower sales. Net sales of the Communications Networks business area decreased significantly compared to last year's first quarter to 139.0 million euros (185.3). The segment's operating income was -4.2 million euros (-4.7 and excluding restructuring expenses -3.3). Net sales were mainly decreased from previous year due to the divestment of the subsidiary in Germany in mid-January 2008. Operating income effect due to the sales decline could mostly be offset by the operational cost savings.
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