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2015-04-23

Ericsson: Ericsson reports first quarter results 2015

FIRST QUARTER HIGHLIGHTS

* Sales in the quarter increased by 13% reaching SEK 53.5 (47.5) b.
Significant currency movements impacted sales positively. Sales, adjusted
for comparable units and currency decreased by -6% YoY, driven by slower
mobile broadband activity in North America.
* With current visibility we anticipate the fast pace of 4G deployments in
Mainland China to continue and the North American mobile broadband business
to remain slow in the short term.
* Professional Services had a strong quarter.
* Gross margin decreased YoY to 35.4% (36.5%), due to lower capacity business
in North America and continued fast pace of 4G coverage deployments in
Mainland China, increased restructuring charges and a higher share of
Global Services sales.
* The cost and efficiency program, announced in November 2014, is progressing
according to plan. Savings of SEK 9 b. is expected, with full effect during
2017.
* Operating income was SEK 2.1 (2.6) b. Excluding restructuring charges of
SEK -0.6 (-0.1) b., the operating income was flat YoY.
* The net currency effect contributed positively to the operating income,
despite a negative currency hedge effect of SEK -1.4 (-0.1) b.
* Cash flow from operating activities was SEK -5.9 (9.4) b. mainly due to
increased working capital.

----------------------------------------------------------------------------------------------------------
| SEK b. Q1 2015 Q1 2014 YoY change Q4 2014 QoQ change |
| Net sales 53.5 47.5 13% 68.0 -21% |
| Sales growth adj. for comparable units and currency - - -6% - -28% |
| Gross margin 35.4% 36.5% - 36.6% - |
| Operating income 2.1 2.6 -19% 6.3 -66% |
| Operating margin 4.0% 5.5% - 9.3% - |
| Net income 1.5 1.7 -14% 4.2 -65% |
| EPS diluted, SEK 0.40 0.65 -38% 1.29 -69% |
| EPS (Non-IFRS), SEK1) 0.77 0.90 -14% 1.71 -55% |
| Cash flow from operating activities -5.9 9.4 - 8.6 - |
| Net cash, end of period 15.6 43.6 -64% 27.6 -44% |
----------------------------------------------------------------------------------------------------------
1) EPS, diluted, excl. amortizations and write-downs of acquired intangible
assets, and restructuring.

Comments from Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC)

Sales increased by 13% in the quarter. Significant currency movements impacted
sales positively and Professional Services had a strong quarter.
Profitability improved in segment Global Services while it declined in
segment Networks due to changed business mix.

Business

In the quarter, sales growth was strong in India and North East Asia.

Professional Services sales increased YoY with a continued good global demand
for our services offering. We signed 27 managed services contracts in the
quarter, including a major multi-country contract in Europe.

As anticipated, segment Networks mobile broadband business in North America
continued to be slow in the quarter as operators remained focused on cash
flow optimization in order to finance major acquisitions and spectrum
auctions. The decline in North America was partly offset by a continued fast
pace of 4G deployments in Mainland China. As a consequence, the business mix
shifted to a higher share of coverage projects in the quarter.

Consumer demand and mobile data traffic growth continued to be strong in North
America, creating further need for quality and capacity investments. However,
with current visibility, we anticipate the fast pace of 4G deployments in
Mainland China to continue and the North American mobile broadband business
to remain slow in the short term.

Profitability

Operating income declined YoY, primarily driven by lower profitability in
segment Networks due to the above mentioned change in business mix and
increased operating expenses. This was partly offset by significantly
improved operating income in segment Global Services, mainly driven by
Network Rollout. There were no losses related to the modems business in the
quarter.

The underlying margin, excluding restructuring charges and hedge losses,
improved YoY. The net currency effect contributed positively to the operating
income, considering transaction and translation exposure as well as the
negative currency hedge effect.

IPR revenues

As a consequence of the ongoing dispute with a major customer, the IPR
licensing revenues declined in constant currencies. Reported IPR revenues
were stable in the quarter as a majority of these contracts are in USD.

Cost and efficiency program

As part of improving the profitability, we continue to proactively identify
efficiency opportunities. The cost and efficiency program is progressing
according to plan. The ambition is to achieve savings of approximately SEK 9
b., with full effect during 2017. The program primarily relates to five key
areas: portfolio streamlining and ways of working in R&D; structural
enhancements in IS/IT; accelerated service delivery transformation; supply
chain efficiencies; and structural efficiency gains in G&A.

In the quarter we announced, as part of the program, that 2,200 positions in
Sweden, are subject to notice. In addition we will reduce the number of
consultants in Sweden by 850.

Cash flow

We ended the quarter with a negative cash flow from operating activities of
SEK -5.9 b. mainly due to a change in business mix with less capacity
business in North America and a higher share of coverage business in Mainland
China. This impacted working capital negatively.

Targeted areas

In line with our strategy, we are investing in our targeted areas; IP
networks, Cloud, OSS&BSS, TV&Media and Industry&Society. Sales in targeted
areas continued to show good growth. At the Mobile World Congress (MWC) in
Barcelona, in February, we saw an increased interest from non-operator
customers, especially within the area of Industry&Society. Most of our key
launches at MWC were related to the targeted areas, including the new Router
6000 Series, the Hyperscale Cloud Solution, Expert Analytics 15.0, a new
Media Delivery Network solution and Digital Telco Transformation.

In addition to the launches in the targeted areas we announced the new
Ericsson Radio System. The system has an innovative modular architecture,
delivering three times the capacity density with 50% improvement in energy
efficiency. With the launches at the MWC, we have further strengthened our
leadership and ability to deliver on our growth ambitions.

NOTES TO EDITORS

You find the complete report with tables in the attached PDF or by following
this
linkwww.ericsson.com/res/investors/docs/q-reports/2015/03month15-en.pdfor
onwww.ericsson.com/investors

Ericsson invites media, investors and analysts to a briefing at the Ericsson
Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), April 23, 2015.
A conference call for analysts, investors and media will begin at 14.00 (CET).

Live webcast of the briefing and conference call details, as well as
supporting slides, will be available
atwww.ericsson.com/pressandwww.ericsson.com/investors

Video material will be published during the day onwww.ericsson.com/press

FOR FURTHER INFORMATION, PLEASE CONTACT

Helena Norrman, Senior Vice President, Marketing and Communications
Phone: +46 10 719 34 72
E-mail:media.relations@ericsson.com

Investors

Peter Nyquist, Head of Investor Relations
Phone: +46 10 714 64 49
E-mail:peter.nyquist@ericsson.com

Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 39 28
E-mail:asa.konnbjer@ericsson.com

Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 20 39
E-mail:stefan.jelvin@ericsson.com

Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 54 00
E-mail:rikard.tunedal@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
April 23, 2015.

Ericsson first quarter report 2015
http://hugin.info/1061/R/1913802/683649.pdf

---------------------------------------

This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Ericsson via Globenewswire

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