Q3e: cost reductions should be in full effect
We expect Eltel to report Q3 sales of EUR 201m, down 3% y-o-y, of which +2% organic and -5% FX-driven on the strong EUR. On margins, we expect EBITA to turn positive, following three loss-making quarters, for two reasons: first, we believe announced cost reductions that contributed partially in Q2 should now be in full effect (EUR 10m p.a. gross savings, not accounting for lost revenues). Second, unprofitable contracts are being renegotiated to move high input costs to customers, but we note this is a gradual process that will likely continue for some time (as we have noted before there will be no quick fix to cost inflation for Eltel). All in all, we expect an EBITA of EUR 1.6m (4.1m in Q3'22, -1.5m in Q2'23), for a margin of 0.8% (2.0% in Q3'22, -0.7% in Q2'23).
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