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Performance
2009 was a challenging year, with the global financial crisis taking full effect and slowing down the market significantly. Despite posting a decline in revenue of 12 percent, Eltek Valere’s performance was satisfactory. The company reached its target of above market performance and strengthened its relative position. Eltek Valere also managed to increase gross margin, reduce operating costs and generate a strong cashflow throughout the year.In EMEA, Eltek Valere’s revenue was NOK 1,357 million in 2009, a decrease of 8 percent from 2008. EMEA’s share of Eltek Valere’s global revenue was 42 percent in 2009.
The mature markets in Europe slowed down during 2009, with sparse newbuilding activity in the telecom infrastructure sector and continued consolidation among operators. The activity in the market was focused around extensions and replacements, where Eltek Valere was well positioned with its high efficiency product line.
In the Nordic region, the slow market in telecom was to some extent countered by higher activity in the industrial sectors marine and railway.
In Russia and the CIS countries, market conditions were also tough; however, newbuilding projects to some extent balanced the market. Eltek Valere confirmed its position as a leader in the segment for low to medium power supplies for mobile operators.
The Middle East and Africa markets are showing a more positive development, due to the fact that mobile telephony and broadband penetration is still fairly low. Eltek Valere’s business in these regions continued growing in 2009, where the company’s strategy is to focus on deliveries to the major telecom players involved in network construction projects. Compared to the mature markets in Europe, the Middle East and Africa are also special in that hybrid solutions are in high demand. A hybrid solution is typically one where input power is a combination of solar power and AC generated by diesel generators or from the grid. Hybrid solutions are used where AC grid is not available, weak or more expensive than alternative energy solutions. Eltek Valere’s hybrid solution offering has helped secure a good performance in the region and will remain a key element in realizing the growth opportunity as networks will continue to be extended across the Middle East and Africa in the years to come.
Total revenue for the Americas region amounted to NOK 935 million, down 9 percent from 1,030 million. This constitutes 29 percent of total revenue.
In North America, Eltek Valere’s performance was positive in view of the fact that expenditure by the major operators was lower than anticipated. The company recorded a positive revenue development and improved its margins. Going forward, government incentives for further broadband network extensions may still give growth signals to the market.
In Latin America, 2009 was a very challenging year with disappointing results for Eltek Valere. Operator expenditure slowed down significantly, not least influenced by the consolidation of the largest two operators in Brazil. Market development remains uncertain for this market in the coming year and Eltek Valere has taken steps to improve its competitiveness and performance.
Revenue decreased to NOK 947 million from NOK 1,151 million, or 18 percent. This constitutes 29 percent of Eltek Valere’s total revenue.
In the Asia Pacific region, too, the mature markets such as Australia and Singapore clearly slowed down, while less mature markets such as Vietnam, Cambodia and Indonesia displayed a positive development.
In Australia, Eltek Valere reorganized its activities in response to very challenging market conditions in 2009. However, towards the end of the year, the sentiment improved significantly and new opportunities have opened up in both the industrial and renewable markets, along with the telecom market.
India remains a high growth market with still low mobile and broadband penetration, however also an increasingly more competitive market. For Eltek Valere, 2009 was a challenging year in India.. The consolidation of network infrastructure owned by different operators into tower companies has reduced overall volumes while buying power has increased. This has sent pricing to an unprecedented low level.. However, Eltek Valere will continue to leverage its strong market position and superior product range and aims to exploit the opportunities presented by a growing market.
In China, too, 2009 was a challenging year for Eltek Valere. In this market, too, larger projects and tougher price pressure is the reality. In addition, there is a growing number of Chinese competitors and it has been confirmed that Huawei, the large Chinese multinational, has set up its own power business.
Hybrid telecom solutions
Renewable energy input is expected to play an increasingly important role in telecom power, as operators look for ways to expand their networks in remote areas as well as reduce their operating costs and environmental footprint. Consequently, hybrid solutions, mainly based on solar energy as one source of power input, are important in the further development of Eltek Valere’s telecom business. In 2009, hybrid solutions already constituted a fair share of the company’s telecom deliveries, In March 2010, Eltek Valere signed a frame agreement with an international mobile operator for deliveries of hybrid power solutions in 6 countries in Africa and one country in Central America.
OEM business
Eltek Valere has fruitful business relationships with leading global equipment manufacturers, in all three regions. This business is generally longer term and entails high-volume deliveries over time. In 2009, the business relationships were confirmed and activity level was stable, and OEM remained a key element of Eltek Valere's business mix.
Industrial business
2009 was a year in which Eltek Valere focused on building a global product range and industrial expertise in local markets. In terms of industrial sectors, the priorities are on power generation, railway and marine. While revenue from industrial sales remained relatively modest in 2009, several promising opportunities have been pursued. With a global, corporate product range in place and trained sales and service personnel in local markets, Eltek Valere is now in a position to leverage the strength of its industrial offering in all regions, with an initial focus on Europe and the Middle East, Australia and India.
Renewable energy solutions
Eltek Valere targets renewable energy markets and in 2009, the company started offering a complete range of inverters for the solar power market. These inverters are essential in large-scale, commercial and residential solar panel installations as they convert the energy produced by the solar panels to mains current. For Eltek Valere, 2009 was a year of product development and positioning for a market with significant growth potential in the years to come.
E-mobility
In 2009, Eltek Valere announced its first contract for power chargers for electrical vehicles. This area represents an interesting new application area for the company’s high efficiency power technology, and a promising long term growth potential.
Copyright 2010 Eltek ASA • Date: 2010.9.4 • Disclaimer • Phone +47 32 20 32 00 eltek@eltek.com