“With an income statement roughly in line with expectations, the cash flow miss is the most important point in the report,” writes Kepler Cheuvreux in a comment.
“Free cash flow for the first quarter of 2024 came in significantly below consensus expectations,” notes Citi, which has a neutral recommendation for Telia.
The structural part of the operational free cash flow fell to SEK 0.4 billion (0.6) in the first quarter, which was clearly lower than the consensus, which according to the analysts was SEK 1.1 billion.
“A considerable part of the shortfall can be explained by an outflow of working capital of -1.2 billion kroner,” writes Citi.
However, Telia repeated its forecast for the full year 2024 that the structural part of the operational free cash flow is expected to be SEK 7-8 billion, with a cash flow generation that has a preponderance towards the second half of the year.
As the weaker cash flow appears to be related to phasing with cash flow generation shifted to the second half of the year, and the 2024 guidance is reiterated, Kepler Cheuvreux does not expect any significant changes to the full year cash flow estimates.
Kepler Cheuvreux, who has a buy recommendation for Telia with a target price of SEK 31, would however use a price weakening in Telia to buy the share, according to the comment.
The analysts also highlight that Telia’s ebitda results came in slightly lower than the consensus.
“Overall, underlying developments appear to be in line excluding non-recurring and regulatory effects,” writes Citi, which believes in minor downward revisions to the consensus for ebitda.
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