At the press conference held on 5th March 2007 the business results 2006 of Ericsson Nikola Tesla and outlook 2007 were announced. The conference was attended by journalists from written media, radio and TV and by investors' representatives.

The conference was opened and conducted by Snježana Bahtijari, Communication Director. Gordana Kovačević, ETK president presented the business results 2006 and said that in 2006 Ericsson Nikola Tesla operated within the planned track record - operations were stable showing a tendency toward moderate growth.

It was a significant year in terms of the company's repositioning toward system integration, multimedia solutions and new products and services portfolio. The margins were as expected, somewhat lower than in 2005 as a result of a strong market competition, and the company's investment into strategic projects, new customers and employees' competence development. Owing to the increased business volumes in all major markets, to the highest operational standards and to the high-quality work and innovative solutions of employees the company completely fulfilled its goals.

The stated performance is based mainly on an extended customer base, stronger collaboration with old customers and partners, and on new responsibilities obtained from Ericsson. Also, the company made use of new business models in order to offer to customers best solutions required for their business growth.

The company made a successful turn in its operations and increased the share of services (both in fixed and mobile telephony) in total sales from 42 % to 48 %. It means that almost a half of the sales revenues are achieved by selling various services.

The cash flow from operations is very good and it is a solid base for future growth and business expansion.

The ETK president then spoke about the business situation in major ETK markets. In total sales 2006 the domestic market participates with 30%, export to internal Ericsson market with 22% and export to other countries with 48%. Major foreign markets in 2006 were Croatia, Sweden, Belarus, Bosnia and Herzegovina, Kazakhstan, Russia and Montenegro.

Ericsson Nikola Tesla's sales in Croatia increased by 1.4 percent compared to 2005, totaling 482.6 MHRK. In fixed and mobile systems, including the mobile Internet, the company continued its successful collaboration with its strategic partners Vipnet, T-HT, Tele2. With Vodatel Croatia, the major Internet services provider, the company concluded a contract for building up a TriplePlay infrastructure.

In the enterprise systems sales segment the company concluded contracts with large business users: Ministries of the Republic of Croatia, Electric Power Industry (HEP), Financial agency (FINA), Croatia Railways, Oil Industry INA, etc. It has to be stressed that Ericsson Nikola Tesla put into operation the integrated national primary health care project, entirely developed at the company. With this project the company proved itself to be a provider of sophisticated and complex ICT system integration solutions.

In export markets (excluding the internal Ericsson market), total sales in 2006 amounted to 793.7 MRHK. The sales of fixed, mobile and enterprise systems in the Commonwealth of Independent Countries, CIS, were good as usual, totaling 548.4 MHRK (a 2,8 % increase). Major contracts were signed in Belarus, Kazakhstan and Russia.  In Bosnia and Herzegovina and Montenegro Ericsson Nikola Tesla achieved export sales of 233.2 MHRK.

Services to internal Ericsson market (provided through sales of knowledge of our experts in R&D and in Global Service Delivery Center (GSDC), and also by providing total customer solutions and services) account for an increasing share in the overall business performance of the company. For that reason the recruitment trend continued in 2006. The export sales to internal Ericsson market in 2006 totaled 357.8 MRHK, a 20.7 % increase compared to 2005.

Maria Radtke, Finance director, reported on the financial aspects of business in 2006. The company completely fulfilled its goals, some of them even exceeded, so that the year 2006 was successful again in terms of sales and revenues.

Compared to 2005, Ericsson Nikola Tesla achieved the following results:  a 1 % increase in sales revenue, a 1 % increase of orders booked, gross margin of 17.5 %, cost reduction from 7.0 % to 6.7 % of sales revenue, profit  before tax slightly lower (by 1%), and positive cash flow from business totaling 217.6 MHRK.

End of 2006 a significant rise in ETK share price was recorded (30%).

The company will endeavor to strengthen its position in domestic and export markets with a proactive, consultancy-based selling method and with a broadened product and services portfolio. While doing so the company will focus on global technology trends and its own innovativeness as a competitive asset and a prerequisite for further growth, emphasizes Gordana Kovačević.

Relating to technology trends we expect further development and implementation of IP-based core network. Quite evident are the growing broadband access in mobile (HSPA) and fixed networks  (xDSL), also a gradual transition to new generation networks enabling a large-scale introduction of broadband services and a significant growth of Internet subscriptions/users. In mobile communications the trend is towards Personal Broadband. A prerequisite for this concept are the revolutionary changes resulting in an  increased transmission speed that should reach the hard-to-imagine 100 Mbps u 2012 by means of the "Super 3G" technology.

Ericsson Nikola Tesla is strategically positioning itself in these new focus areas, building on its great experience, knowledge and innovativeness. The employees' competence development is directed accordingly. The company still has to put great effort and common sense in its operations to achieve results in a business environment characterized by a strong competition, further price demands and a permanent necessity to offer to customers precisely what they need when they need it, says the president of Ericsson Nikola Tesla.

Gordana Kovačević also introduced the new Finance director, Oscar Wallenstein. Outgoing director, Maria Radtke, is leaving for Buenos Aires to assume a new post at Ericsson.

Communication Ericsson Nikola Tesla