Teleste Corporation half year financial report 1 January to 30 June 2023
Stock exchange release
August 8 2023, at 8.30 a.m. EET
TELESTE CORPORATION: NET SALES AND ADJUSTED OPERATING RESULT INCREASED, STRONG CASH FLOW FROM OPERATIONS, ORDERS RECEIVED DECREASED.
THE SERVICES BUSINESS IN SWITZERLAND DIVESTED.
Unless otherwise specified, the figures in brackets refer to the year-on-year comparison period.
April-June 2023 in brief
- Net sales grew by 4.5%, amounting to EUR 40.1 (38.4) million.
- Adjusted operating result grew by 75.9%, amounting to EUR 0.6 (0.3) million.
- Operating result decreased by 42.1% and amounted to EUR 0.1 (0.2) million.
- Adjusted earnings per share were EUR 0.02 (-0.07).
- Earnings per share were EUR -0.01 (-0.08).
- Cash flow from operations was EUR 9.8 (4.1) million.
- Orders received decreased by 35.3% to EUR 30.3 (46.8) million.
- The engineering and services businesses of the Broadband Networks business in Switzerland were divested
January-June 2023 in brief
- Net sales grew by 12.0%, amounting to EUR 85.4 (76.3) million.
- Adjusted operating result grew to EUR 2.1 (0.4) million.
- Operating result grew to EUR 1.4 (0.3) million.
- Adjusted earnings per share were EUR 0.16 (-0.06).
- Earnings per share were EUR 0.12 (-0.07).
- Cash flow from operations was EUR 11.7 (-0.7) million.
- Orders received decreased by 33.4% to EUR 71.1 (106.7) million.
- The order book decreased by 15.3% and amounted to EUR 117.8 (139.1) million.
- The Belgian tax reassessment decision issued in 2022 was overturned in accordance with Teleste’s request, which resulted in a positive impact of EUR 1.7 million on income taxes in the income statement during the first quarter. Positive impact also on the result for the reporting period and earnings per share (+0.09€).
Outlook for 2023 (unchanged)
Teleste estimates that net sales in 2023 will amount to EUR 150-175 million and that the adjusted operating result in 2023 will be EUR 2-5 million.
This guidance is subject to supply chain problems not becoming worse in 2023 than they are at present.
|Adjusted EBIT 1)||0.6||0.3||+75.9%||2.1||0.4||>100%||2.0|
|Adjusted EBIT, % 1)||1.5%||0.9%||–||2.4%||0.6%||–||1.2%|
|Result for the period||-0.3||-1.5||n/a||2.0||-1.4||n/a||-5.9|
|Adjusted earnings per share, EUR 1)||0.02||-0.07||n/a||0.16||-0.06||n/a||-0.01|
|Earnings per share, EUR||-0.01||-0.08||n/a||0.12||-0.07||n/a||-0.31|
|Cash flow from operations||9.8||4.1||>100%||11.7||-0.7||n/a||-7.8|
|Net gearing, %||41.3%||38.8%||–||61.2%|
|Equity ratio, %||45.3%||46.2%||–||39.7%|
|Personnel at period-end||811||897||-9.6%||844|
1) An alternative performance measure defined in the tables section of the report.
Comments by CEO Esa Harju:
“The second quarter of the year was largely in line with our expectations. Net sales grew and adjusted operating result increased significantly from the comparison period, although profitability was at a lower level compared to the good first quarter. Orders received decreased clearly from the comparison period. Cash flow from operations was strong, and we have managed to gradually release working capital in line with our plans.
In the Broadband Networks business, delivery volumes remained at a reasonably good level in Europe, but the number of orders received fell short of expectations and decreased significantly from the comparison period. The next generation DOCSIS 4.0 products developed for the North American market have entered the final acceptance testing phase with our main customer. Alongside this, we have begun preparations for the production volume ramp-up. Our goal is to make the first product deliveries in North America in the fourth quarter of 2023, but the impact on the net sales for the financial period will still be limited. The production volumes will increase progressively during 2024, as we increase the automation of the production of the new products.
In the Public Safety and Mobility business, several important project deliveries in Europe and the Middle East progressed. Both orders received and net sales increased from the comparison period. The component crisis has begun to gradually ease, and the trend in the overall profitability of projects is positive. We also continued to revise our organisation and processes.
On 28 June 2023, we announced that we had divested the Broadband Networks planning and services unit in Switzerland to the local management and a private investor. With this, we tighten the focus on the broadband networks technology business. The divestment has no impact on Teleste’s service businesses in other countries.
We maintain our full-year 2023 financial guidance. However, we expect the second half of the year to be more difficult than the first half. This is due, in particular, to the temporarily lower demand forecasted by the Broadband Networks business unit for the remainder of the year. During the rest of the year, demand will be affected by the optimisation of European operator customers’ own buffer stocks, as well as the shift of network investments to the next generation technologies from 2024 onwards. Deliveries in North America will start to be reflected in net sales gradually during 2024. Therefore, as well as due to the divestment of the Swiss services business, we expect the net sales of the Broadband Networks business to decrease from the comparison period during the second half of the year. We expect the net sales of the Public Safety and Mobility business to remain at the level of the first half part of the year, although projects in the delivery phase still involve schedule and margin risks. We will continue to adjust all of the company’s expenses, especially considering the more challenging outlook for the second half of the year.
Teleste plans to clarify its legal group structure and arrange the ownership of its two business units, Broadband Networks and Public Safety and Mobility, under separate legal entities. The planned corporate structure clarifies the operational control of the businesses and increases the flexibility of the operations of the business units. This way, the special characteristics of both businesses can be better taken into account in the future.
Linda Kallas joined the company as the new Strategy Director and member of the Management Group on 1 June 2023. Under her leadership, we will continue to advance our program to sharpen our strategy.”
For further information, please contact:
President and CEO
tel. +358 2 2605 611
Teleste offers an integrated product and service portfolio that makes it possible to build and run a better networked society. Our solutions bring television and broadband services to you, secure your safety in public places and guide your use of public transport. With solid industry experience and drive for innovations, we are a leading international company in broadband, security and information technologies and related services. We connect with our customers through a global network of offices and partners. In 2022, Teleste’s net sales reached EUR 165 million and it had approximately 860 employees. Teleste is listed on Nasdaq Helsinki. For more information, visit www.teleste.com.