Eltel Q3’24 preview: We expect gradual profitability improvement to continue

Eltel will publish its Q3 report on Thursday at approximately 8 am CET. We expect the company’s reported revenue to be at last year’s level, but adjusted EBITA to improve from the comparison period. In addition to the figures, we are interested in the comments on the market outlook and strategy execution. 

We estimate Group revenue to remain flat

We forecast Eltel’s Q3 reported revenue to be at last year’s level at 213 MEUR even though we expect country units to achieve organic growth. Main reason contributing to this is the divestment of the High Voltage Poland during Q2’24. Reflecting this we expect reported revenue in Other to decrease by 40%. At the country unit level, we expect Finland and Denmark to be the main contributors with 7% and 10% growths respectively, supported by solid investment levels in Power in both countries (excl. Power distribution in Finland) and Communication in Finland. Furthermore, we estimate Sweden’s reported growth to be at 2% and Norway’s revenue to decrease still by 2% due to the postponements of investments that continued in the Q2.

We expect improvement in EBITA margin

We expect the company’s adjusted EBITA to land at 7.9 MEUR, corresponding to an EBITA margin of 3.7%. Thus, our estimates see a profitability improvement year-on- year, even though we expect the margin to be still at a modest level. At country unit level, we expect slight improvement from all business units and slightly larger from Sweden due to soft comparison period. Furthermore, we expect clear margin improvement in Other reflecting the divestment of the High Voltage Poland. We also anticipate group costs to decrease slightly. FX changes should not have a material year-on-year effect on revenue or EBITA (Sweden slight tailwind and Norway slight headwind). 

At the bottom of the P&L, we forecast financial expenses to be at the normal level (incl. interest payments on hybrid bond) and taxes to be at a modest level. Reflecting this overall picture, we expect the reported EPS to be at 0.02 EUR.

Focus on the comments about the market outlook

Eltel doesn't provide numerical guidance for the Group. We therefore focus on the company's comments on the country units' market outlook. In addition, we follow the development of the country units' profitability, especially in Norway, which has been affected by reduced investments for some time. 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.