• Orders booked 1.356 MHRK
• Net sales 1.055,3 MHRK
• Gross margin 22,8%,
• Operating profit 117,6 MHRK
• Profit from financial activities 19 MHRK
• Profit before taxes 136,6 MHRK
• Net profit 109,3 MHRK
• Earnings per share 83 HRK
• Return on sales before taxes 13%
• Cash flow from operating activities 191 MHRK
  

The results achieved over the first nine months this year show that the company has continued its successful operations. Compared with the same period last year there is a slight increase (1%) in orders booked and net sales. Measured by achieved net sales Croatia is still the major market with accomplished 291 MHRK, which makes 28% of the total sales revenue. Outstanding results were achieved in the export markets, especially in the internal Ericsson market, in Kazakhstan and Belarus.

The operating profit is lower compared with the same period last year, primarily owing to additional provisions for receivables in high-risk countries. As this concerns provisions related to political risk, the company is now engaged in determining the best risk-assessment method and the amount of provisions. The increase in total operating expenses was slightly influenced by provisions for inventories destroyed in the fire, which broke out at the beginning of September in the store of the company Time Shuttle in Zagreb, where among other things damaged was Ericsson's equipment. The company took prompt actions to ensure continued regular business processes and urgent acquisition of new equipment. Simultaneously, the procedure of damage compensation with the insurance company was initiated.
A considerable item is the costs related to new employment. The growing business volume in the internal Ericsson market was matched by an increase in employment (16% compared with the same period last year). The company now employs over 1200 people and there is the tendency of further increase of headcount. It is particularly important to point out that in September 500th employee was hired in R&D, which confirms the Croatian experts' strength and potential to take part in global development processes.

Furthermore, profit from financial activities increased compared with the same period last year primarily owing to lower foreign exchange losses. The net profit went down by 18% to 109,3 MHRK, resulting from higher provisions for receivables from customers.
The company achieved a positive cash flow from operating activities amounting to 191 MHRK. Till the end of the year a decrease in cash flow is to be expected due to realisation of some major contracts that include customer financing.

The successful company's operation in the home market was continued. The company established partnerships with the market newcomer, Tele2 and some other new operators in Croatia, while at the same time continuing to cooperate successfully with VIPnet and T-HT. As already known, since 2004 Ericsson Nikola Tesla and VIPnet have been working jointly on the introduction of the 3G mobile systems. 3G services are now available to more than 25% of the Croatia's population. Ericsson Nikola Tesla continues to support the development of T-HT's network by continuous deliveries of equipment and services required for building of the IP backbone and the introduction of wideband access (ADSL-EDA) enabling wideband services and the growth of Internet users.

In the markets of the Commonwealth of Independent States, over the third quarter this year the company won business worth more than 220 MHRK. The most important business was contracted in the Belarus market with the company's biggest customer JV MDC Velcom. The contract stipulates the upgrade of the Velcom's GSM system that will be able to serve 2 million of end users after this upgrade. Also, a contract was signed with Rostelecom, operator in the Russian market, for the delivery of an international exchange to be located in Moscow. The delivery of MD110 was contracted in the same market for a special customer from Orenburg.

In the market of Bosnia and Herzegovina the company signed an important contract for the upgrade and modernization of GSM network operated by Eronet, based in Mostar. A contract for the upgrade and optimization of GSM network operated by BH Telecom, based in Sarajevo was also signed in this years' third quarter.

The experts working in the Company's R&D unit worked on development area for Ericsson and a few global operators. The projects related to the implementation of new protocols for the AXE platform, the development of the latest 3G application, as well as the development of the applications for the new generation of British Telecom's IP based network. The results of these projects have already attracted the attention of other operators in the global market.
The experts working in Services unit were involved in the realization of complex projects in Hungary, Tunisia and Bulgaria. 

It is important to mention that Marketing, Customer Solutions & Sales Support unit has increased its business by 16% in the internal Ericsson market, compared to the third quarter last year. The jobs done by experts from this unit include the design of total communications solutions for regional and global telecom operators, as well as for big enterprises all over the world.

Communications Ericsson Nikola Tesla