Published: 2019-05-28 05:45
Mindaugas Grinius “Verslo žinios”
Tetas UAB, which designs, builds and maintains electrical and telecommunications structures, increased its revenues by 12% last year, reduced its losses by a factor of 15, and this year launched a new business in Germany.
“2018 has been a busy year, with major changes – terminating unprofitable contracts, reducing headcount and improving the overall health of the company. By cleaning up our organisation, implementing one very large project on time, increasing productivity and getting rid of loss-making contracts, we have managed to significantly reduce our losses,” Gediminas Mažeika, CEO of Tetas, told VŽ.
Last year, Tetas generated sales revenues of EUR 21 million, a 12% increase compared to 2017, when it generated revenues of EUR 18.8 million and made a loss of EUR 161,000. This is 15 times lower than the loss of EUR 2.4 million in 2017, according to audited data submitted to the Centre of Registers.
According to Mr. Mažeika, last year about 90% of the company’s work volume amounted to almost EUR 10 million. The project, by the Energy Distribution Operator (ESO), involved laying more than 200 km of overhead electricity cables underground.
A new direction
“Last year, after making the most money from the ESO grid project, we realised that this would not last and we foresaw the need to refocus and find alternative markets. That’s why this winter we started work in Germany, where we currently have around 70 employees. We are successfully laying fibre optic cables there because we have experience – what happened in Lithuania 10 years ago is now happening in Germany and there is a lot of work going on”, he explains.
According to Mr. Mažeika’s replacement of the redundant staff with other specialisations has allowed the company to increase its flexibility. According to the director of Teto, the number of employees was reduced to around 270 last spring. 27 May this year. 422 employees.
According to the interviewee, the almost 20% increase in the average salary has led to higher motivation and quality of work, which is why the majority of the employees in 2018 were more motivated. the work was carried out on time and penalties were avoided.
“Now we no longer match orders to the people we have, but we look at which jobs make more money and we recruit crews accordingly. Now we don’t sell equipment and thus “inflate” turnover, but we actually sell muscle. This is why the German market is the main driver of the company’s revenue growth this year,” he says.
Different portfolio structure
Mr Mažeika says that this year’s order book will allow him to achieve a similar level of sales as last year, while the German market will allow for more growth.
“The structure of the order book is simply different this year: it is not based on large projects where turnover is boosted by sales of materials and expensive equipment, but rather on jobs. So this year’s turnover is likely to be lower than last year, but we will do more work and should make more money,” says Mr. Mažeika.
2017 m. significant loss p. Mažeika explains that several large projects were completed at a loss, and that almost €1 million was charged to the accounts. interest of €1.5 million.
“I wasn’t working for the company at the time, but I saw the figures and analysed them. It seems that the change in management was not unnecessary, because there was some uncertainty in the figures. The worst results were pushed back to 2017, but in reality both 2015 and 2016 were not good,” says Mr Mažeika, who has been managing Tet since last summer.
The company’s strategy for the next 5 years includes a targeted growth in EBITDA (earnings before interest, taxes, depreciation and amortisation), which was EUR 462,000 last year – 120% higher than in 2017.
“Our main challenge last year was to generate positive cash flow and show that we can operate in a stable financial position. That’s what we have achieved. The nature of our business means that we have a lot of expensive assets and machinery that we do not cover through depreciation. The loss in the financial statement is therefore more of an accounting loss”, explains Mr. Mažeika.
“The CEO of Teto, 100% owned by Litgrid AB, says he does not feel any “greenhouse conditions” regarding the orders he receives.
“Litgrid publishes all tenders through the Central Public Procurement Portal (CPP) and we all compete on equal terms. In general, these competitions feel like a magnifying glass. This potential conflict of interest between the shareholder and the client even hinders us a bit, because the procurement authorities are very careful to be as transparent as possible,” he says.
