19 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Oct 21, 2020
Slide 1: Ericsson Third quarter 2020
Ericsson Third quarter 2020 Oct 21, 2020 © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 1
Slide 2: Peter Nyquist, Vice President Investor Relations
Peter Nyquist Vice President Investor Relations © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 2
Slide 3: Third quarter 2020
Third quarter 2020 This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to risks and uncertainties that could materially affect our business and results. Please read our earnings reports and our most recent annual report for a b
Slide 4: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 4
Slide 5: Highlights
Highlights — Ericsson technology leader with 112 commercial 5G agreements and 65 live networks — Organic sales up 7% - GM: 43.2%1 and OM 15.6%1 — China: 5G contracts on plan with positive margins — Market share gain in Networks and Core — Rolling 4Q Free cash flow before M&A: SEK 17.7 b.2 — Cradlepo
Slide 6: Q320: Market Area sales
Q320: Market Area sales Net sales bridge — Middle East & Africa FX adjusted • Africa: Macroeconomic uncertainty and delayed 49% investments • 5G deployments continuing in Middle East — Europe & Latin America • Europe: Market share gains 11% • Latin America: Macroeconomic uncertainty 6% -3% -1% — Nor
Slide 7: Segment summary
Segment summary Excluding restructuring charges and items affecting comparability Networks Digital Services SEK b. 20Q3 19Q3 YoY 20Q2 SEK b. 20Q3 19Q3 YoY 20Q2 Sales 41.7 39.3 6% 39.8 Sales 8.7 9.9 -12% 8.6 Organic 13% Organic -5% Gross margin 46.7% 41.6% 40.5% Gross margin 43.5% 38.3% 43.6% Op. inc
Slide 8: Carl Mellander, Chief Financial Officer
Carl Mellander Chief Financial Officer © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 8
Slide 9: Q3 2020 in numbers
Q3 2020 in numbers Financial performance — Organic and FX adjusted sales: 7% YoY Excluding restructuring charges • Networks: 13% YoY SEK b. 20Q3 19Q3 YoY 20Q2 — Gross margin 43.2% (37.8%) Net sales 57.5 57.1 1% 55.6 • Improved YoY – mainly Networks and Digital Services Organic and FX adj. growth 7%
Slide 10: Gross margin
Gross margin Excluding restructuring charges 43.2% — Rolling 4Q gross margin 39.6% 40.4% — Q3 gross margin 43.2% (37.8%) 38.5% 38.2% 36.7% 36.9% 36.7% 37.8% 37.1% 39.6% • Improvements in all segments 36.3%1 35.9% 37.9% 38.3% • Increased software sales contributed to the higher 37.0%1 37.3%137.5% 36.
Slide 11: R&D and SG&A expenses YoY
R&D and SG&A expenses YoY Excluding restructuring charges R&D SEK b. — R&D expenses SEK 9.9 (9.4) b. • Networks – increased in line with strategy • Digital Services – savings in legacy portfolio reinvested in growth portfolio • Managed Services – further investments in automation, analytics and AI 9
Slide 12: Free cash flow and financial position
Free cash flow and financial position Financial Performance SEK b. Q3 YTD — Free cash flow before M&A of SEK 3.9 (4.5) b. 2020 2019 2020 2019 • Improved by SEK 1.9 b. YoY when adjusting for a Net income adjusted for non-cash items 9.7 -4.3 20.0 6.1 capital injection into the Swedish Pension Trust an
Slide 13: Planning assumptions highlights
Planning assumptions highlights Please see the Q3 report for complete planning assumptions Market related — Global RAN equipment market estimated to grow 8% (previously 4% growth) FY 2020 with China up by 33% and global market excluding China flat. Global RAN equipment market 0% CAGR for 2019-2024 (
Slide 14: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 14
Slide 15: Closing remarks
Closing remarks — Technology leadership – driving market share — The leader in 5G – 65 live networks 112 agreements — Performance enabling strategic growth investments — Cradlepoint signals progress in Enterprise Business — Positive longer-term outlook — Strengthened confidence delivering FY 2020 fi
Slide 16: © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020
© Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 16
Slide 17: Capital Markets Day Online event, November 10
Capital Markets Day Online event, November 10 Update from Market Areas – A customer perspective October 29 and 30, 2020 Capital Markets Day – Creating value through technology leadership November 10, 2020 at 3:00 – 7:00 PM CET https://www.ericsson.com/en/investors/events-and-presentations/cmd2020 ©
Slide 18: © Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020
© Telefonaktiebolaget LM Ericsson 2020 | Third quarter report 2020 | Oct 21, 2020 | Page 18
Slide 19: Forward-looking statements
Forward-looking statements This presentation includes forward-looking statements, including statements reflecting management’s current views relating to the growth of the market, future market conditions, future events, financial condition, and expected operational and financial performance, includi