• Orders booked 354,5 MHRK
• Sales revenue 311,8 MHRK
• Gross margin 18,5%,
• Operating profit 38,8 MHRK
• Profit before tax 35,7 MHRK
• Net profit 28,6 MHRK
• Earnings per share HRK 21,7
• Return on sales before tax 11,5%
• Cash flow from operating activities -29,4 MHRK
  

"The operation of Ericsson Nikola Tesla during the first three months this year is in compliance with our plans. The main characteristics of the company's operation are stability and business growth, company's positioning as a system integrator, strengthening of old partnerships and stronger regional and global positioning within Ericsson. Further pressure on margins, as a consequence of tougher competition in the market, company's investment into strategic projects, new customers and development of employees' competence marked the company's operation in the first quarter." - said Gordana Kovačević, president of Ericsson Nikola Tesla.

Compared with the same period last year, Ericsson Nikola Tesla achieved the following results. 
Orders booked went up by 14%, whereas sales went up by 11%. Rising activities are due to the growing business volume in Croatia, in internal Ericsson market and continued business in the CIS markets.

In domestic market the sales revenue increased by 17%, to MHRK 104,8. The company continued traditionally good cooperation with strategic partners VIPnet and T-HT and records goods results in the Enterprise segment. The continuation of business cooperation with Tele2 had positive effects on the growth of sales. After successful implementation of a GSM network that was put into commercial operation by Tele2 in cooperation with Ericsson Nikola Tesla last year, the company signed a contract for delivery of equipment and total communications solutions for building the UMTS technology, the 3rd generation mobile network.

In internal Ericsson market we recorded excellent results again with realized HRK 76,5 million, an increase of 27,4%. Rising business activities of Ericsson Nikola Tesla in the field of Research and Development and in the Global Service Delivery Center are one of the strategic directions of the company. In this connection continued investment into employees is the key for success. The company's position of one of the leading centers for research and development and total communications solutions and services within the corporation, can be strengthened by developing the employees' competence, by quality of its operation and by doing business on time.

With export to the CIS market we realized HRK 91,5 million. The growth of sales of as much as 127% compared with the first quarter of the preceding year is due to the sales revenue in Kazakhstan with effected HRK 65 million. To maintain a further rise of operations in the CIS market we work on establishing cooperation with new customers, and on a new product and solutions portfolio (multi-service solutions, broadband access, wireless access and data transmission, IP telephony, communications systems of third generation …).

In line with our expectations a tougher market competition and price pressure had effects on the decrease of gross margin. Changes in the company's product mix have also affected margins downward.
Accordingly, the operating profit is lower compared to the preceding year and it amounts to HRK 38,8 million.

As much attention was paid to cost optimization, the share of selling, administrative and general costs in total sales revenue declined compared with the first quarter in 2005.

Results from financial activities have been improved primarily owing to smaller exchange rate variation.

Return on sales before tax was 11,5%, while the targeted goal was 10%.

Profit before tax in the value of HRK 35,7 million is by 10% less than the net profit realized in the first quarter 2005.

Financial situation of the company is still strong though considerable funds were invested in customer financing during the first quarter. Also, the redemption of stock capital by HRK 100 per share was paid out.

On corporate level Ericsson Nikola Tesla extended the old and obtained new responsibilities. In this way the System Integration Unit was assigned the responsibility at the global level to offer hosting services within the health care system. This also includes the contract for hosting services for Ericsson remote-monitoring solutions (Ericsson Mobile Health) i.e. the service that enables the monitoring of patient's body measurements wherever he is.

In the home market, during the first quarter, the company signed a series of contracts with our partners T-HT and VIPnet and a large infrastructure contract with the operator Tele2 for delivery of equipment and total communications solution for UMTS. Also, the company signed a contract with Vodatel Croatia, one of the most important Internet services providers in the county for delivery of total TriplePlay infrastructure covering the area of the city of Zagreb, and as the demand in the market dictates, in the wider area.

Ericsson Nikola Tesla signed a partnership agreement with FileNet, the company for software development. Beginning of the FileNet implementation in the company and the appearance of Ericsson Nikola Tesla on the market as a partner with exclusive right to distribute in Croatia marked the first quarter of 2006.

When speaking of export markets of Ericsson Nikola Tesla i.e. in the Commonwealth of Independent States, the company continued with successful sales of equipment and solutions for fixed and mobile telephony as well as Enterprises for traditional and new customers. 

With WebPlus, a new customer from St. Petersburg, which is the largest provider of services based on the Internet protocol in the Nort West region, Ericsson Nikola Tesla signed a contract for delivery of the first quantity out of the planned ten thousand EDA lines to be realized during 2006. The company also signed an agreement with Bajkalvestk, the mobile operator in eastern Siberia for delivery of new quantities of MINI-LINKS. With Transtelecom, our customer in Tiraspolj, we continued successful several-years cooperation. The company signed an agreement for delivery of the Ericsson EDA solutions for broadband access and the equipment for upgrading the AXE 810 exchanges in Tiraspolj and Benderi.

The sales of  Enterprises are in full swing. An agreement for new MD110 exchange has been signed with the customer Lanit Partner from Habarovsk for the needs of DVŽD (Far East Railway), which is a continuation of the former successful cooperation.

In the market of Bosnia and Herzegovina, Ericsson Nikola Tesla goes on with successful business operation with its business partner BH Telecom.

Company Communication Ericsson Nikola Tesla

Ericsson is shaping the future of Mobile and Broadband Internet communications through its continuous technology leadership. Providing innovative solutions in more than 140 countries, Ericsson is helping to create the most powerful communication companies in the world.

Ericsson Nikola Tesla, as an integral part of the Ericsson Group and the global telecommunications, supports the modern ways of communicating. The company's activities include the research and development, the design of the total communications solutions as well as the services in the multi-service and the mobile networks area, including the mobile Internet.