Second quarter highlights
* Sales were flat YoY at SEK 55.3 b. For comparable units and adjusted for FX,
sales increased 7% YoY and 6% QoQ.
* Operating income incl. JV was SEK 2.5 (2.1) b. with an operating margin of
4.5% (3.8%).
* The quarter was negatively impacted by one-time items of SEK -0.9 b. from
losses due to divestments and exiting the telecom and power cable
operations.
* Net income was SEK 1.5 (1.2) b.
* EPS diluted was SEK 0.45 (0.34). EPS Non-IFRS was SEK 0.88 (0.78).
* Cash flow from operating activities was SEK 4.3 b.
-------------------------------------------------------------------------------
Q2 Q2 YoY Q1 QoQ 6 months 6 months
SEK b. 2013 2012 Change 2013 Change 2013 2012
-------------------------------------------------------------------------------
Net sales 55.3 55.3 0% 52.0 6% 107.4 106.3
-------------------------------------------------------------------------------
Of which
Networks 28.1 27.8 1% 28.1 0% 56.3 55.1
-------------------------------------------------------------------------------
Of which Global
Services 24.9 24.1 3% 21.5 16% 46.3 44.7
-------------------------------------------------------------------------------
Of which
Support Solutions 2.3 3.5 -33% 2.4 -4% 4.8 6.5
-------------------------------------------------------------------------------
Gross margin 32.4% 32.0% - 32.0% - 32.2% 32.6%
-------------------------------------------------------------------------------
Operating income
excl JV 2.5 3.3 -24% 2.1 17% 4.6 13.8
-------------------------------------------------------------------------------
Operating margin
excl JV 4.5% 5.9% - 4.1% - 4.3% 13.0%
-------------------------------------------------------------------------------
Of which
Networks 5% 5% - 6% - 5% 5%
-------------------------------------------------------------------------------
Of which Global
Services 6% 6% - 3% - 5% 6%
-------------------------------------------------------------------------------
Of which
Support Solutions -12% 12% - -1% - -7% 6%
-------------------------------------------------------------------------------
Operating income
incl JV 2.5 2.1 19% 2.1 17% 4.6 11.2
-------------------------------------------------------------------------------
Operating margin 10.5%
incl JV 4.5% 3.8% - 4.0% - 4.3%
-------------------------------------------------------------------------------
Net income 1.5 1.2 26% 1.2 26% 2.7 10.0
-------------------------------------------------------------------------------
EPS diluted, SEK 0.45 0.34 32% 0.37 22% 0.82 3.10
-------------------------------------------------------------------------------
EPS (Non-IFRS),
SEK(1)) 0.88 0.78 13% 0.99 - 1.88 3.91
-------------------------------------------------------------------------------
Cash flow from
operating activities 4.3 -1.4 - -3.0 - 1.3 -0.6
-------------------------------------------------------------------------------
Net cash, end of 25.9
period 27.4 25.9 6% 32.2 -15% 27.4
-------------------------------------------------------------------------------
(1)) EPS, diluted, excl. amortizations, write-downs of acquired intangible
assets and restructuring
-------------------------------------------------------------------------------
COMMENTS FROM HANS VESTBERG, PRESIDENT AND CEO
"Sales for comparable units, adjusted for FX, grew 7%. Reported sales were flat
YoY, due to continued currency headwind," said Hans Vestberg, President and CEO
of Ericsson (NASDAQ:ERIC).
"There was continued high project activity in Europe as well as in North America
where two large mobile broadband coverage projects have peaked in first half
2013. North East Asia had another challenging quarter following continued
structural decline in GSM investments in China, FX in Japan and lower business
activity in South Korea due to spectrum delays.
The business mix, with a higher share of coverage projects than capacity
projects, started to shift slightly towards more capacity during the quarter.
We implemented our strategy to capture new market share in the network
modernization projects in Europe starting in 2010, despite their initial lower
margins. Now that these projects gradually come to an end, we can conclude that
we have been successful in gaining market share and regained leadership in
Europe. It is also encouraging to see that we are now starting to engage in new
business, based on this footprint, regarding capacity and LTE projects in
Europe.
We continue to strengthen our leading position in 4G/LTE. The vendor selection
processes for 4G/LTE in Russia and China continue and to date we have been
awarded contracts by two large operators in Russia.
During the quarter we also reached one billion subscribers in networks managed
by Ericsson. This clearly shows the confidence our customers have in our ability
to create value for them.
Profitability improved YoY, adjusted for one-time effects related to exiting the
telecom and power cable operations and the divestment of Applied Communication
Sciences (ACS). The improvement was driven by higher gross margins and lower
operating expenses. This was partly offset by currency headwind.
With the announcement in April and July of the intended acquisitions of
Microsoft's Mediaroom and Red Bee Media, we continue to strengthen our position
in TV and media. As TV and media converge with telecom we can leverage our
strength in media management and managed services. Video is already the single
largest contributor to traffic in mobile networks and is expected to grow by
60% annually until 2018.
While the macroeconomic situation in Europe remains challenging and the
political uncertainty in parts of Region Middle East, such as Egypt, increases,
the long-term fundamentals in the industry remain attractive and we are well
positioned to continue to support our customers in a transforming ICT market,"
concludes Vestberg.
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or by following
this link:
www.ericsson.com/res/investors/docs/q-reports/2013/06month13-en.pdf or go to:
www.ericsson.com/investors
Ericsson invites media, investors and analysts to a press conference at the
Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), July 18, 2013. An
analysts, investors and media conference call will begin at 15.00 (CET).
Live webcast of the press conference and conference call as well as supporting
slides will be available at www.ericsson.com/press and
www.ericsson.com/investors
Video material will be published during the day on
www.ericsson.com/broadcast_room
FOR FURTHER INFORMATION, PLEASE CONTACT
Helena Norrman, Senior Vice President, Communications
Phone: +46 10 719 34 72
E-mail: media.relations@ericsson.com
Investors
Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 39 28
E-mail: investor.relations@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 20 39
E-mail: investor.relations@ericsson.com
Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 54 00
E-mail: investor.relations@ericsson.com
Media
Ola Rembe, Vice President, Head of External Communications
Phone: +46 10 719 97 27
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Ericsson discloses the information provided herein pursuant to the Securities
Markets Act. The information was submitted for publication at 07.30 CET, on July
18, 2013.
[HUG#1717283]
