19 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Oct 19, 2021
Slide 1: Ericsson Third quarter 2021
Ericsson Third quarter 2021 Oct 19, 2021 © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 1
Slide 2: Welcome
Welcome Peter Nyquist Vice President Investor Relations © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 2
Slide 3: Third quarter 2021
Third quarter 2021 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: Business overview
Business overview Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 4
Slide 5: Key takeaways from Q3
Key takeaways from Q3 ●Continued to win footprint across our business, leveraging our competitive 5G portfolio ●5G contracts awarded by all three tier-1 US carriers – largest ever ●Excluding the sales reduction in Mainland China: +6% organic growth ●Gross margin 44.0%1 and EBIT margin 15.7%1 – impro
Slide 6: Market Area Development
Market Area Development Net sales bridge North East Asia: Sales SEK 5.7 (8.8) b. FX adjusted – Loss of market share in Mainland China -33% SE Asia, Oceania & India: Sales SEK 6.5 (7.8) b. 13% – Declined due to timing of orders and project milestones -16% Middle East & Africa: Sales SEK 5.0 (5.5) b.
Slide 7: Segment summary
Segment summary Sales and gross margin Excluding restructuring charges Group and segments 21Q3 20Q3 YoY Organic Gross margin excl. restructuring rolling 4Q: 42.6%, improved Ericsson Group 56.3 57.5 -2% -1% QoQ and YoY Gross margin 44.0% 43.2% Networks 40.6 41.7 -3% 0% Networks Gross margin 47.8% 46.
Slide 8: Financial overview
Financial overview Carl Mellander Chief Financial Officer © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 8
Slide 9: Q3 2021 in numbers
Q3 2021 in numbers Financial Performance Excluding restructuring charges SEK b. 21Q3 20Q3 YoY 21Q2 ● Organic and FX adjusted sales: -1% YoY Net sales 56.3 57.5 -2% 54.9 – Adjusted for China: +6% YoY Organic and FX adj. growth -1% – Some impact from supply challenges Gross margin 44.0% 43.2% 43.4% ●
Slide 10: Free cash flow and financial position
Free cash flow and financial position Financial Performance SEK b. Q321 Q320 ● Free cash flow before M&A of SEK 13.0 (3.9) b. – Reduction in working capital supported cash flow from EBIT excluding restructuring charges 8.8 9.0 operating activities Depreciation, amortization & impairment losses 2.4 2
Slide 11: Planning assumptions highlights
Planning assumptions highlights Please see the Q3 report for complete planning assumptions Market related (Source: Dell’Oro) ●Global RAN market is estimated to grow by 13% (10%) FY 2021. China is expected to grow by 13% (11%), North America by 15% (12%), Europe by 10% (9%). ●Global RAN market is est
Slide 12: Digital Services – towards long-term profitability
Digital Services – towards long-term profitability Illustrative EBIT margin bridge 10-12% Limited loss -6% 2020 R&D SG&A Gross margin Sales 2022 Opex Gross margin Sales Long-term Investing in R&D Gross margin Net sales • Transformation towards software-based and • 5G Core revenue late 2021 and beyon
Slide 13: 5G driven momentum across Digital Services' portfolio – highlights
5G driven momentum across Digital Services’ portfolio – highlights To date 451 5G standalone core (5GC) contracts Major deals 8 live! BSS Rogers Vodafone Elisa 70+ new in 2021 Telus BT Erillisverkot China Telecom TDC China Mobile Ericsson Orchestrator customers 6 undisclosed OSS 2020 Q3 2021 Q3 SK T
Slide 14: Gearing for growth - focused expansion into enterprise
Gearing for growth - focused expansion into enterprise Ericsson addressable market (BUSD) Extend leadership in mobile networks CAGR 21-25 ● Investments in technology leadership for cost and performance ~187 ~194 15-25 ● Strong product portfolio enabling growth as market flattens 6-9 ~25% ● Enterpris
Slide 15: Summary
Summary Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 15
Slide 16: Closing remarks
Closing remarks ●Well positioned to take advantage of market opportunities as 5G continues to be rolled out ●Disturbances in the supply chain – continue to pose a risk ●Continue the successful path of 5G wins in North America ●Enterprise provides an exciting and sustained growth path ●Committed to t
Slide 17: Q&A
Q&A © Telefonaktiebolaget LM Ericsson 2021 | Third quarter report 2021 | 2021-10-19 | Page 17
Slide 18: W
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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