Tecnotree improves profitability in Q2 but liquidity remains critical

Friday 11 August 2017 | 12:22 CET | News

Finnish company Tecnotree turned to a net profit of EUR 0.7 million in the second quarter from a net loss of EUR 2.6 million a year earlier, but net sales slipped to EUR 15.1 from EUR 16.2 million and it said its financial situation and liquidity remain critical. Cash flow after investments was a positive EUR 0.6 million, after a negative EUR 0.4 million in Q2 2016, but parent company shareholder equity remains negative.

The adjusted operating profit was EUR 3.6 million in Q2 2017, up from EUR 1.0 million, and the operating profit was EUR 3.1 million. The adjusted net profit for the quarter was EUR 1.2 million and earnings per share were EUR 0.01, after negative EPS of EUR 0.02 last time.

The order book stood at EUR 30.4 million on 30 June, up from EUR 24.9 million on 31 December. Orders won this quarter include support and maintenance for existing customers in Latin America and the Middle East. Alsp, Mauritius Telecom and Nepal Telecom went live on the Tecnotree BSS Stack and Tecnotree Whole Sale Billing platforms respectively.

CEO Padma Ravichander said the second quarter figures reflect that the path undertaken by the company in the last few quarters is in the right direction. Its cost optimisation measures have begun yielding positive results but without adversely affecting the revenues for this quarter. At the end of June 2017, the group’s shareholders’ equity of stood at EUR 8.6 million. However, the shareholders’ equity of the parent company was EUR 5.4 million negative.

Given the vagaries of the business, though, Tecnotree intends to carry on optimising costs. It will focus on cutting operating expenses, consolidating and rationalising its product portfolio, and building a greater level of “productisation” and re-use.

Looking ahead to the 2017 full year, the company estimates that its net sales will be less than in the previous year, but the operating result will improve. Tecnotree will continue to implement more cuts in opex of approximately EUR 5 million announced in March 2017. Mostly, the cost savings will realise in 2018.

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