Eltel Q2’24 earnings preview: Year-on-year profitability improvement expected

Eltel will publish its Q2 report on Thursday at approximately 8 am CEST. We expect the company’s revenue to be on last year’s level, but adjusted EBITA to improve from the comparison period. In addition to the figures, we are interested in the comments regarding market outlook and strategy execution. 

Flat revenue development expected

We forecast Eltel’s Q2 revenue to increase by 1% year-on-year to 211 MEUR. At the country unit level, we expect Finland to be the main contributor with 7% growth supported by solid investment levels in both Power (excl. distribution) and Communication. Elsewhere, we estimate Sweden’s reported growth to be at 4% and Denmark’s revenue to remain flat compared to last year. In turn, we estimate Norway’s reported revenue to decrease 8% due to the postponements of investments that continued from Q1. Furthermore, we estimate Other business unit’s reported revenue to decrease 15% due to the divestment of High Voltage Poland.

We expect clear improvement in operating result

We expect the company’s adjusted EBITA to land at 2.7 MEUR, corresponding to an EBITA margin of 1.3%. Thus, our estimates see a clear profitability improvement from last year’s red numbers, even though we expect the margin to be still at quite a modest level. At country unit level, we expect the improvement to come from all business units besides Sweden and Denmark, where we expect the margin levels to remain largely flat. We also anticipate group costs to remain basically flat. FX changes should not have a material year-on-year effect on revenue or EBITA. 

At the bottom of the income statement, we expect a normal level of financial expenses (including interest payments on the hybrid bond) and a modest level of taxes, given the low level of earnings. Reflecting this overall picture, we expect reported EPS of EUR -0.01.

Focus on market outlook comments

Eltel doesn't provide numerical guidance at group level. We therefore focus on the company's comments on the market outlook for the country units. In addition, we follow the development of the country units' profitability, especially in Norway, which has recently been affected by fluctuations in demand. 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.