Enea Annual Statement 2020
Strong margin lifts earnings
Fourth quarter 2020
- Net sales amounted to SEK 248.0 million (258.0), equivalent to a 4 percent decrease. Net sales increased by 1 percent in fixed currency rates.
- Operating profit amounted to SEK 64.2 million (57.0), corresponding to an operating margin of 25.9 percent (22.1). Operating profit excluding non-recurring items amounted to SEK 73.1 million (57.0), equivalent to an operating margin of 29.5 percent (22.1).
- Earnings per share amounted to SEK 2.20 (1.32).
- 1st of October, Enea announced the acquisition of Aptilo, a leading provider of policy and access control solutions for carrier Wi-Fi and IoT (Internet of Things), headquartered in Stockholm, Sweden.
Full year 2020
- Net sales amounted to SEK 915.1 million (994.5), equivalent to an 8 percent decrease.
- Operating profit amounted to SEK 188.6 million (254.7), corresponding to an operating margin of 20.6 percent (25.6). Operating profit excluding non-recurring items amounted to SEK 221.5 million (258.4), equivalent to an operating margin of 24.2 percent (26.0).
- Earnings per share amounted to SEK 6.63 (8.47).
Significant events after period-end
- Jan Frykhammar, previous CFO and interim group CEO of Ericsson, will be proposed as regular board member at the AGM May 6, 2021.
Statement by the President and Chief Executive Officer
Net sales were SEK 248 million in the fourth quarter 2020, down by 4 percent year over year, but up by 20 percent on the third quarter of 2020. Operating profit excluding non-recurring items was SEK 73.1 million, equivalent to an operating margin of 29.5 percent. A high share of software revenue and cost rationalization in the year were contributors to the high margin. Others included lower selling expenses, due to travel restrictions and cancelled trade events. Cash flow from operating activities before changes in working capital was SEK 80.8 million. Our financial position remains stable, presenting us with opportunities to invest in growth segments.
Our largest product group, Network Solutions, is becoming more significant thanks to deals in telecom and cybersecurity. This product group represented 70 percent of total net sales in the fourth quarter and was positively impacted by new upgrade contracts in North America and Europe, as well as revenues from Aptilo, an acquisition completed on 1 October 2020.
Revenue from the Operating Systems product group was down by 28 percent in the quarter, as our Key Accounts progressively introduce open source products. This product group represented 18 percent of total net sales, a share that can be expected to keep declining.
The sales in software development services, which were 12 percent of total net sales in the quarter, were negatively impacted by the reduced demand that we have seen during the year from US aviation industry customers. Other customer segments in our service business were either stable or growing.
Aptilo exceeding expectations
Aptilo, acquired on 1 October 2020, contributed SEK 21.6 million of sales in the quarter, somewhat above estimates. A high share of recurring revenue and customers with growing capacity needs contributed to this positive result. In the fourth quarter, the Aptilo portfolio won awards for innovation in Internet of Things (IoT) and Smart Cities. We also signed a major contract with an EU authority for secure subscriber management in public Wi-Fi networks. We are delighted about this new deal, which will generate revenues over the next four years, and serve as a key reference for future business.
Corona pandemic impacting the market
The current corona pandemic continues to cause delays to customer projects and investments, which has had a negative impact on our revenue. This applies to minor software upgrades as well as procurement of new systems like 5G. We expect these obstacles to persist as long as the corona pandemic exerts a significant impact on our core markets.
A leaner organization, and sharper customer focus
In the fourth quarter, we created a more efficient organization, integrating responsibility for our telecom and enterprise solutions into two new business units. This is easing the integration of our product portfolios and driving efficiency through our development and delivery processes. A new unit responsible for service provider sales is sharpening our focus on this key customer segment. Aptilo is being integrated as a separate business unit to ensure continuity for our customers and staff, as we simultaneously implement internal synergies and create new sales opportunities. Restructuring costs of SEK 8.7 million in tandem with implementing this new organization were taken in the fourth quarter of 2020.
New partnerships and collaborations
Enea’s sales model builds on a combination of direct and indirect sales. In the quarter, we signed a partnering agreement with US company Matrixx, a technology leader in telecom charging systems. We are both specialists in cloud-native software, and together, can deliver competitive solutions for 4G and 5G systems. Our ambition is for this new partnership to create more sales opportunities to new customers.
Our mission is to be a world-leading supplier of software components for telecom and cybersecurity. The market for data management in 5G, virtualization, and advanced cybersecurity is entering an exciting phase, where we can challenge established competitors and win market shares with innovative products and new business models. Overall, our ambition is to increase revenue robustly through the coming years, with an operating margin of over 20 percent, through organic growth in Network Solutions, plus complementary strategic acquisitions that advance our market position. This ambition means us passing yearly net sales of SEK 1.5 billion by 2023.
However, due to the corona pandemic, the short and medium-term uncertainties are substantial. Its consequences will probably cause further delays in customer projects, and other negative effects on our businesses, risking impacting earnings through coming quarters. Despite these uncertainties, our target for 2021 is to create sales growth year over year, and an operating margin of over 20 percent.
The full Annual Statement is attached to this press release and has been published on the Enea website (see references below).
Enea is pleased to invite investors, analysts, and media to a presentation of the Annual Statement. The presentation will be conducted in English by Jan Häglund, President and Chief Executive Officer, and Björn Westberg, Chief Financial Officer, and will be concluded by a questions and answer session. It can be attended through a webcast or conference call and the presentation material as well as a recording of the presentation will be published on the Enea website (see details and references below).
- Date: January 29, 2021
- Time: 8.30 a.m. CET
- Link to Audiocast with teleconference: https://financialhearings.com/event/12943
- Phone numbers for conference call:
+46 8 5055 8351 (Sweden)
+44 33 3300 9267 (UK)
+1 833 823 0590 (US)
- Webpage for Enea financial reports
- Webpage for Enea financial presentations
Jan Häglund, President and Chief Executive Officer
E-mail: [email protected]
Lotta Trulsson, Executive Assistant
E-mail: [email protected]
Enea is one of the world’s leading suppliers of innovative software for telecommunication and cybersecurity. Focus areas are cloud-native, 5G-ready products for data management, mobile video traffic optimization, edge virtualization, and traffic intelligence. More than 3 billion people rely on Enea technologies in their daily lives.
Enea is headquartered in Stockholm, Sweden, and is listed on Nasdaq Stockholm.
For more information: www.enea.com