Hello everyone, and welcome to this live webcast. My name is Casimir Lindholm, and I'm the President and CEO of Eltel. With me, I have our CFO, Saila Miettinen-Lähde. We will today present Eltel's Q3 report for 2021. Saila and myself will present the result, and after that, we open up for questions. Throughout the presentation, you can email your questions by clicking on the envelope icon next to the presentation. With that, let's move to page three, and I will tell you a bit about Eltel. Eltel was founded in 2001, and we are celebrating our 20th anniversary this year. We're the leading Nordic field service provider with communication and power, and we operate throughout the Nordics, Poland, Germany and Lithuania. For Eltel, sustainability is about building a strong, profitable company for the future and delivering lasting financial, social, and environmental value to our stakeholders.
Currently, we are about 5,100 employees. Let's move to page four and look at the highlights of the third quarter. Productivity and profitability have improved in our Nordic home market, which is shown in the improved operative EBITA for the segments. However, the operative EBITA for the group in the quarter was negatively affected by lower net sales, continued challenges in the Polish high-voltage business, and increased material prices. Year-over-year, we lowered net debt and improved return on capital on operative capital employed. Let's move to page five and talk about how COVID-19 impacted Eltel's business. During the year, COVID-19 has impacted our business, and even more so during the third quarter. As said before, we mainly see lower investment levels by certain customers, primarily in Norway.
During the quarter, we have also seen an increase in material prices, which is also affecting our power business. Polish high-voltage project postponements and delays continue, also partly because of COVID-19. We have also seen a slightly increased sick leave rate, partly due to quarantine situations. However, we anticipate the rates to normalize going forward. Let's move on to page six and talk about us taking the next step in our sustainability work. We are committed to a number of sustainability frameworks and reporting tools that help us meet the expectations of our internal and external stakeholders. During the summer, we took the next step in our climate work by committing to Science Based Targets initiative, SBTi. Now our work is ongoing to set concrete and measurable goals. This morning, Eltel Norway announced that they will have a fully electrified fleet by end of 2026.
With this, we are now moving on to page seven, while I hand over to Saila, who will take us through the financials.
Thank you, Casimir. In the third quarter, our net sales did continue to be impacted by COVID, as Casimir mentioned. This primarily came through the lower investment levels by our customers, along with the mentioned quarantine situations to go with that. Compared to last year, we also saw the impact of certain lost contracts and the divestments of the German communication business and the Aviation & Security in Sweden. All in all, our net sales for the quarter amounted to EUR 194 million, and for the first nine months, we came to EUR 586 million. This figure is 17.3% down from a year ago. On operative EBITA for the quarter, we reached EUR 4.1 million with a margin of 2.1%, which unfortunately is below last year's levels.
This said, however, and despite the decrease in the top line, both our year-to-date operative EBITA and the EBITA margin improved, and respectively, these amounted to EUR 7.8 million and 1.3%. This improvement came despite the continuing challenges that we are unfortunately facing in high voltage, and this is primarily Poland. This is of course encouraging, and it in part shows that in the rest of the business, our efforts on improving productivity and efficiency are paying off. Let's now move to page eight and look at our performance in the segments. In segments, this meaning the Nordic countries of Finland, Sweden, Norway, and Denmark, our net sales for the quarter amounted to EUR 174 million and for the first nine months, EUR 527 million.
The year-to-date figure was at that level, 14.3% lower than last year. As with the whole group, much of the decline was related to COVID-19, certain lost contracts, and a divestment which we have communicated previously. Despite the lower volumes, the operative EBITA year-to-date was on par with last year, at EUR 16.9 million, and the EBITA margins improved slightly for the quarter, from 4.3% to 4.4%, and actually somewhat more, for the nine months from 2.7% to 3.2%. This again shows the progress in our operational excellence strategy in these core markets. Let's now move to page nine and look at segment Finland. Finland continued to perform very steadily, producing slightly improved net sales year- to- date at EUR 280 million.
This was largely fueled by our strong market position in communication and the good demand both in fiber and 5G. Power, on the other hand, had somewhat lower net sales due to certain project completions since last year. On operative EBITA, Finland improved over last year, both for the quarter and year- to- date. The figure for the first nine months was EUR 8.6 million, and the respective margin was 4.0%. We can thank both the improved project management and cost control for the increased result. We also do have to note that part of the improvement came from the fact that last year we had some rather significant write-downs in certain power projects, whereas this year that has not been the case. Let's now move on to page 10 and look at segment Sweden.
In Sweden, we continued to see lower volumes than last year, with year-to-date net sales amounting to EUR 126 million, which is 27.5% down from 2020. The main reason for the decline have been already previously reported harsh winter conditions in Q1 this year, the loss of a large service contract, which was mainly on copper networks, and the divestment of the Aviation & Security business unit, which happened in 2020. The lower volumes have naturally also impacted our operative EBITA, which for the nine months was -EUR 2.6 million. This is versus -EUR 1.3 million in 2020. Other contributing factors to the result included a write-down on an old power project this year, versus a positive one-off in the comparative period.
All this said, we feel that we're finally starting to see the light at the end of the tunnel in Sweden, as we saw increasing volumes, especially towards the end of the quarter. On top of this, we see clear improvement opportunities through the efficiency and productivity program that is ongoing in the country. Furthermore, our assessment of the situation in Sweden going forward has enabled us to conclude that no impairment of goodwill is necessary this year, which of course is very good news. Let's now move to page 11 for segment Norway. In Norway, we have seen the biggest impact from COVID-19, both in quarantines that have hindered business and through the delays and decreased volumes of investments by our customers.
In the early months of the year, we also saw net sales being impacted by the tough winter conditions and the ramp-up of the new Telenor frame agreement. With these impacts, the net sales for the first nine months came to EUR 114 million, which is 16% down from last year. Operative EBITA in Norway for the first nine months was EUR 6.8 million, which is 10% down from 2020. The effect of the lower volumes naturally shows here, but also partly the production mix. This said, improved efficiency partly offset the decrease, and the EBITA margin remains at a very good level at 6%. Let's now move to page 12 for Denmark.
Denmark has unfortunately shown decreased volumes both for the quarter and year- to- date, and this is largely due to a partial insourcing of business by a large customer. Also, in general, in the marketplace, fiber activity has been lower compared to a very strong 2020. Operative EBITA in Denmark for the quarter was EUR 0.2 million, largely due to the low volumes. On the other hand, EBITA for January to September was EUR 4.1 million, which is at par with last year, despite these lower volumes. This was partly helped by a positive EUR 0.8 million one-off in Q2, but also in part demonstrates the improved project management and efficiency. Let's now go to page 13 and look at other business. In other business, we have some 11% of our revenue year-to-date .
However, the impact of this other business on profitability is, for the time being, larger than its share of the top line. On a positive note, we're happy to report that Smart Grids Germany has continued a strong performance in also a favorable marketplace. On the other hand, we are still seeing challenges in High Voltage, and this is mainly Poland, where the project delays and postponements have continued and the market environment overall is difficult. As a consequence of COVID-19, material prices are also impacting us in a rather significant way. The challenges that we're seeing in Poland are largely focused on the old project portfolio, which originally dates back to, say, largely years 2014 to 2016.
These projects in question are shown in the chart on the right side of this page, and the delays in them mean that a handful of these projects are still active, although mostly in their closing stages. While we continue our work in closing the remaining old projects, we are, however, pleased to also note that two of these projects were closed during the quarter. Also, our last remaining project in Africa was operationally closed this past summer, which shows that the PTI ramp down is progressing according to plan. Our financial performance in other business amounted to EUR 65 million in net sales year- to -date, compared to EUR 100 million last year. Operative EBITA was -EUR 3.6 million overall, but within this we do note that High Voltage alone had a -EUR 7.6 million impact.
As said, this largely stems from the issues with the older project portfolio in Poland. Both Smart Grids Germany and PTI made positive contributions to the operative EBITA. Finally, let's still take a brief look at the development of some of our key trends on page 14. As we have noted previously, we have worked very hard on improving our balance sheet and are happy to note that we have reached quite stabilized and steady levels. Our leverage has increased over the last three quarters, but this is largely reflecting the typical seasonality in our business. Our net debt also shows the impact of seasonality, but nevertheless, it stayed on quite a healthy level at EUR 100 million and below last year's level of EUR 108 million. This figure is excluding the leasing liabilities.
Return on operative capital employed or ROCE landed at 11.6% on a rolling 12- months basis. While the last quarter had some negative impact on ROCE, the development since last year nevertheless is quite positive because last year's figure was still a -4.9%. This completes the financial section of our presentation, and I will now hand the word back to Casimir as we move to slide 15.
Thank you, Saila. We can directly go to page 16 and have a look at group financial targets. As we have communicated earlier, we are making continuous progress towards the 5% operative margin. During the turnaround, we have focused on improving our profitability and control environment, as well as getting our balance sheet on a healthy level. The next step is to reverse the downturn trend in net sales. Intensive work is ongoing to win new contracts. We pursue different organic growth opportunities by looking at adjacent business areas and by sharpening our offering to the market. We are also preparing for potential future mergers and acquisitions. Having said that, we are still in our transformation journey, focusing on here and now, and deliver what we're supposed to deliver in 2021.
We can move to page 17 and take a look at our deliverables. During the transformation journey, we are now in the midsection, and we have worked a lot around operational excellence during the last couple of years. When this is done, we'll enter to the final part of the journey, investing in sustainable, profitable growth, where mergers and acquisitions will be part of that journey in 2022 and 2023. Let's move to page 18 and look at the focus areas for the rest of the year. No changes here. We'll continue to focus profitability, and we'll do that through our operational excellence strategy. We are in 2021, we are continuing to focus on operational improvements in order to become profitable and reach our targets. We'll continue to work in the strategic parts.
This of course, the aim here is to lead to improved profitability, improved quality, higher customer satisfaction, engaged employees, and cash generation. In all these areas, we have made improvements and clear improvements during the last three years. When we have achieved this, Eltel is then ready for the next step on the journey, and that is growth. Let's move to the next page on page 19. Our margins are improving for the Nordic market, and we have maintained a healthy balance sheet. Year- to- date, we have improved operative EBITA, and we have a positive outlook for the fourth quarter. Our financial guidance remains. We expect the full year operative EBITA margin for 2021 to improve compared to 2020. With that conclusion, we'll move to page 20 and open up for any questions that you might have.
Thank you, Casimir and Saila, for this presentation. As Casimir said in the beginning, you can email questions by clicking on the icon next to the presentation. We have received some questions already, so I will start with: You mentioned increased material prices. How much does that affect the results?
The main effect we have seen in our Polish market, it is mainly around steel prices. Steel prices have doubled during the last 12 months. We have entered into projects, for example, last year, and those are with fixed prices. Now when the steel prices go up, if we don't have back-to-back in those areas, then of course that has a negative impact for those projects. I n Poland we talk about almost EUR 2 million in negative effect regarding material prices.
Thank you. We have also received questions from Max Bacco at ABGSC. Strategic alternatives for the Polish operations, do you see a potential divestment there? If so, in what time frame?
We stated that we are looking for strategic alternatives for the Polish operations. That is true. Then what time frame? Of course, we are looking into that business and different options going forward. That will take some time. We haven't set a time frame for it when to happen. It's more that we have a good process and that the end result is good for us.
Thank you. What would the operative EBITA margin for the rolling 12 months have been if the Polish high-voltage business not would've been included in the group for the last 12 months?
We stated that High Voltage as such made a -EUR 7.6 million result so far year- to- date, and Poland and High Voltage was loss-making a year ago as well.
Could you elaborate on what adjacent business areas you are looking at?
We are mainly looking at the areas where we have business today in one country, that could be street lighting, for example, in Finland, and see if we can be active in a similar business in the other Nordic countries. That's just an example of what we are looking at. Of course, we are looking at also broadening our portfolio towards existing customer base, and then also looking at business that we do today in one market and use that in other parts of a local market towards other customers locally.
Have you started to build up an M&A pipeline, or what do you refer to when saying preparing for potential future M&As?
Yes. We have looked upon the Nordic market and looked upon potential candidates regarding mergers and acquisitions on a country level, and in that sense, prepared for future potential M&A activities.
Thank you. We have received some questions from Jussi Koskinen, and he wants a comparison from Q1 in 2020 where we said that Eltel is gaining market share. Since then, what has been the development in the different markets?
Yes. If we start from east and go to west and then to south, we have gained market share in Finland. If we take out the wind power projects that we were active in a couple of years ago, also regarding foundation work and we're the sole provider of wind parks. That business we are not in today anymore. We take out that, then we have more than 10% growth in Finland today. If we include that, we have a slight growth in Finland, and we have taken market share towards some key customers. In Sweden of course, we have a different situation and we lost one big service contract, so that has impacted the top line.
That has been a restructuring in Sweden now for a couple of years. Going to next year, I think we have a baseline for Sweden and can start to grow from there. In Norway, the impact for us on the fiber side has been negative this year, partly because of COVID-19 and postponed investments. I think Norway will come back next year on the fiber side. In Denmark as such, we have a positive market, but then of course the event when TDC insourced a contract and a business from us, that is the main reason for the negative growth in Denmark as such.
Denmark is a good market that I think will come back going into next year.
Thank you. We are receiving quite a few questions on Poland, regarding strategic reevaluation. When do we expect to reach some decision around that?
I mean, first, we are doing our internal work and looking at the market and potential strategic alternatives will then be evaluated. To be realistic, we are talking about evaluations and decisions potentially during next year.
What strategic options do you have for Poland?
I think we'll come back to that when we have done the homework and look at the different options. I think we'll come back to that as part of Q4.
This is from Joonas Ilvonen at Evli. Could you discuss how cost inflation plays out across geographies? i.e., Finnish inflation is probably pretty low, but how about other countries?
Yes. Inflation regarding material prices, of course, impacting a lot of businesses and companies around the world at the moment. For us, it's mainly about power, and it's mainly about the Polish market and partly the Finnish market. The reason is in communication, most of the materials that we are using in our projects, in our service and maintenance are provided by our customers. So we don't have the material in that sense, in this case, material risk in our communication business. On the power side it's different, and there we in some cases we are purchasing the materials, in some cases, the customers are providing the materials.
In the cases where we have entered into fixed projects with fixed prices, for example, a year ago, then there we have seen the negative impact on mainly the steel prices that have doubled during the last 12 months. That's where we mainly can see the impact, and then mainly in overhead line projects, and those we have only in Poland to a larger extent and some projects in Finland.
Okay. How do you see Norwegian and Danish volumes developing in Q4?
As we mentioned in the report, we believe in a good finish to the year and a good Q4. In that sense, we don't see in front of us a drop in net sales for Q4 for Norway or Denmark.
Thank you. Next question from Stefan Lindblad, what will happen with overhead costs as based on the current size of the business?
We have adjusted our cost base during the last three years. We have on group level, we are targeting and we are at that level of on 1% overhead on group. Regarding the businesses, it differs a bit, but fixed overheads on a country level is then adjusted locally to be competitive in this business. That is one of the key areas I think we have been successful there and adjusting locally. I would say that Sweden is the last country where this has been done and that we can see then in next year and onwards also improving profitability.
Based on new projects and new orders won in 2021, Eltel should have added close to EUR 150 million in sales. How much of that has been added today? If so, is there a delay, and why?
I would say the main projects that we have won over the last couple of years, and that's typical for this business, that when we communicate a project, it might take six months sometimes, 12 months sometimes, 18 months before that actually becomes net sales. An example of that is the smart metering project that we announced, I think it's a year and a half ago already, regarding Vattenfall, EUR 50 million in Sweden, and now that project is starting. That's just an example of how long lead times can be from the actual announcement until we can see net sales and results from a certain project.
Net working capital inflow of EUR 40 million it was in Q4 2020. Should we expect similar levels in 2021?
I think, I mean, as we stated in the report, we have had some favorable, like companies in general in our business as well, I mean, favorable terms and conditions during COVID-19, both from customers but also from governments. We have a bit of a positive effect of that in the 2020 numbers.
Okay. Here is the final question. Could you go through Poland and explain future costs and time to completion? It looks like many projects in Poland look to close during Q4. What should we expect?
Regarding our project portfolio, three years ago we had 120 projects in our project portfolio. Now we have a handful of them left, and then mainly a handful in Poland. The target has been to close those during this year. Some postponements we have seen partly to COVID-19, partly to end negotiations and discussions with our main customers in Poland. As seen from that picture, we are targeting to close a few more in Q4.
Thank you. There are no further questions.
Okay. Thank you all for listening, and thanks for very good questions. Please continue to follow us, and feel free to reach out to Elin Otter, our Head of Investor Relations, if you have any further questions. We present our Q4 report on the 17th of February. Hopefully you join that presentation as well. Until then, stay healthy, and thanks for watching.