19 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Jan 29, 2021
Slide 1: Ericsson Fourth quarter 2020
Ericsson Fourth quarter 2020 Jan 29, 2021 © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 1
Slide 2: Peter Nyquist, Vice President Investor Relations
Peter Nyquist Vice President Investor Relations © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 2
Slide 3: Fourth quarter 2020
Fourth 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
Slide 4: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 4
Slide 5: 2020 Highlights
2020 Highlights Market Exceeded 2020 Strong share growth margin targets Free Cash Flow — Extended 5G technology leadership: 127 agreements and 79 live networks — Acquisition of Cradlepoint a leader in WAN solutions — R&D investment: Market share gains in 5G core and RAN — Operating margin1 of 12.5%
Slide 6: Q420: Market Area sales
Q420: Market Area sales Net sales bridge — Middle East & Africa FX adjusted • Sales declined due to timing of investments in the Middle 38% East and Covid-19 impact in Africa — Europe & Latin America 21% • Europe: Market share gains in Networks and Digital Services • Latin America: Macroeconomic unc
Slide 7: Segment summary
Segment summary Excluding restructuring charges Networks Digital Services SEK b. 20Q4 19Q4 YoY 20Q3 SEK b. 20Q4 19Q4 YoY 20Q3 Sales 49.4 44.4 11% 41.7 Sales 12.7 13.2 -4% 8.7 Organic 20% Organic 3% Gross margin 43.5% 41.1% 46.7% Gross margin 41.0% 38.1% 43.5% Op. income 10.6 6.4 65% 9.4 Op. income 0
Slide 8: Carl Mellander, Chief Financial Officer
Carl Mellander Chief Financial Officer © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 8
Slide 9: FY 2020 in numbers
FY 2020 in numbers Excluding restructuring charges Financial performance — Organic and FX adjusted sales: 5% YoY • Networks 10% and Digital Services -3% YoY SEK b. 2019 2020 Target Target — Gross margin 40.6% (37.5%) 2020 2022 • Margin improvements in all segments Net sales 227.2 232.4 230-240 Gross
Slide 10: Q4 2020 in numbers
Q4 2020 in numbers Excluding restructuring charges Financial performance — Organic and FX adjusted sales: 13% YoY • Networks: 20% and Digital Services: 3% SEK b. 20Q4 19Q4 YoY 20Q3 — Gross margin 40.6% (37.1%) Net sales 69.6 66.4 5% 57.5 • All segments improved YoY – Networks (Operational Organic an
Slide 11: Gross margin
Gross margin Excluding restructuring charges 43.2% — FY 2020 gross margin 40.6% (37.5%) 40.4% 40.6% • Improvements in all segments – lower share of services 38.5% 37.8% 38.2% 40.6% • Networks – operational leverage more than offsetting 36.9% 35.9% 36.7% 36.3%1 36.7% 37.1% margin dilution from market
Slide 12: R&D and SG&A expenses YoY
R&D and SG&A expenses YoY Excluding restructuring charges R&D SEK b. Q419 Q120 Q220 Q320 Q420 — R&D expenses stable YoY at SEK -10.5 (-10.6) b. • Networks – slight reduction • Emerging Business & Other – increased due to Cradlepoint -10.6 -9.2 -9.8 -9.9 -10.5 • FX impact supported the reduction SG&A
Slide 13: Free cash flow and financial position
Free cash flow and financial position Financial Performance SEK b. Q4 FY — Free cash flow before M&A of SEK 12.8 (-1.9) b. 2020 2019 2020 2019 • Improved by SEK 4.5 b. YoY when adjusted for Net income adjusted for non-cash items 12.5 8.0 32.5 14.1 payments of SEK -10.1 b. related to SEC and DOJ, in
Slide 14: Planning assumptions – summary
Planning assumptions – summary Please see the Q4 report for complete planning assumptions Market — RAN equipment market 3% FY 2021. China: 4%, North America: 2%, Europe 3%. (Dell’Oro) — Net sales • Normal seasonality Q4→Q1 -24%. However, seasonal effect may be somewhat less pronounced due to 5G in s
Slide 15: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 15
Slide 16: Looking forward – 5G
Looking forward – 5G Successful turnaround and strong underlying performance Investment in long-term growth — IPR — Investments in the business — Strengthened market position Risk resilience — Pandemic response — Geopolitical flexibility Accelerating 5G — Front-runner countries driving demand — Ente
Slide 17: © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021
© Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | Page 17
Slide 18: © Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021
© Telefonaktiebolaget LM Ericsson 2021 | Fourth quarter report 2020 | Jan 29, 2021 | 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