23 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Oct 23, 2015
Slide 1: Third Quarter 2015
THIRD QUARTER 2015 October 23, 2015
Slide 2: Helena Norrman, Senior Vice President Communications
HElena norrman Senior Vice President Communications
Slide 3: Forward-looking statements
THIRD QUARTER 2015 This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for October
Slide 4: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 5: Key developments
key developments Market › Strong focus on 5G and Internet of Things (IoT) › Video continues to be the main driver of network traffic › Continued currency movements and weaker macro in parts of the world impact customer investments Ericsson › Slowdown of 4G deployments in Mainland China › North Ameri
Slide 6: Net sales and operating income
Ericsson q3 2015 SEK b. Net sales and sales development 80 13% 11% 9% › Reported sales up 3% YoY 60 3% 0% 1% 40 -1% › Organic FX adjusted sales down 9% YoY -3% 20 – North America, Japan, Russia and Brazil at lower -9% levels 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 – Growth in India and South East Asia 2013 201
Slide 7: Regional sales Q3 YoY
Regional sales Q3 YoY 81% SEK 59.2 b. SEK 57.6 b. -10% 25% -20% -5% 2% -5% 10% 5% -2% 4% Growth driven by currency – adjusted sales down 9% © Telefonaktiebolaget LM Ericsson 2015 | THIRD QUARTER REPORT 2015 | OCTOBER 23, 2015 | Page 7
Slide 8: Regional sales Q3 QoQ
Regional sales Q3 qoq SEK 60.7 b. -12% -9% -12% 19% SEK 59.2 b. -7% 11% -2% -3% 4% -1% 1% Mainland China and the Middle East slowed down © Telefonaktiebolaget LM Ericsson 2015 | THIRD QUARTER REPORT 2015 | OCTOBER 23, 2015 | Page 8
Slide 9: Jan Frykhammar, CFO and Executive Vice President
JAN FRYKHAMMAR CFO and Executive Vice President
Slide 10: Third quarter gross margin and operating expenses
THIRD quarter Gross margin 37.1% 36.5% 36.4% 36.6% 35.2% 35.4% 33.2% 33.9% › Gross margin 33.9% (35.2%) 32.0% – Higher share of Services, approx. 3% – Higher restructuring charges › Gross margin increased QoQ Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 – Lower restructuring charges 2013 2014 2015 – Partly offset by
Slide 11: Operating Income YoY
Operating Income YoY SEK b. Q3 2014 Q3 2015 10.2% 0.8 0.4 0.1 8.6% 0.6 7.2% Op margin Exit Modems 6.7% 0.1 excl business restr. 1% Q315 op margin Global Services excl 6.1 op. margin restr. 12% excl restr. 10% 5.1 3.9 4.2 Q314 Reported Excl restr. Networks Professional Network Rollout Support Solutio
Slide 12: Sales growth – FX impact
Sales growth – FX impact SEK b. Sales YoY change, Q3 2015 80 Reported Organic and FX adj. 13% Networks -4% -15% 60 11% 9% Global Services 11% -2% 4% 3% Support Solutions 8% -8% 40 3% 1% 3% 0% -1% Group 3% -9% -3% -2% 20 -7% -6% -6% -9% -9% 0 Changed method for translating FX exposure into Q3 Q4 Q1 Q
Slide 13: Currency movements
Currency movements USD vs SEK USD vs basket of six currencies 9.0 130.0 128 8.5 120.0 8.3 8.0 110.0 7.5 100.0 7.0 90.0 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct 2014 2015 2014 2015 Brazilian Real Indian Rupee Russian Ruble Indonesian Rupi
Slide 14: Change in gross cash Q3
Change in gross cash Q3 Operating Cash Flow Investing1 Financing FX on cash SEK b. +1.6 b -3.3 b -0.3 b -0.2 bb 65 60 55 -4.1 -1.1 +6.8 -1.8 -1.5 -0.0 50 -0.3 -0.2 53.8 Change in gross cash SEK -2.2 b 51.5 45 40 Gross Cash Net Income Change Net Restructuring CAPEX Acquisitions, Other financing Divid
Slide 15: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 16: Networks
Networks SEK b. Net sales and sales development 40 13% 8% 8% 30 3% › Reported sales down 4% YoY -1% -1% -2% 20 -4% › Organic FX adjusted sales down 15% YoY 10 -13% – Decline in all regions except India and South East Asia 0 › Organic FX adjusted sales down 6% QoQ Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 – North A
Slide 17: Global Services
Global services SEK b. Net sales and sales development 30 30% 20% 20 › Reported sales up 11% YoY 10% – Organic FX adjusted down 2%, as Network Rollout declined 10 0% › Professional Services momentum, sales up 15% YoY 0 -10% – Double-digit growth in eight out of ten regions Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 18: Support Solutions
Support solutions SEK b. Net sales and sales development 6 40% 30% 5 21% 4 13% 11% 9% 8% › Reported sales up 8% YoY 3 2 -21% › Organic FX adjusted sales down 8% YoY 1 -29% – Continued good development in OSS & BSS 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 – TV & Media declined 2013 2014 2015 › Organic FX adjuste
Slide 19: Closing remarks
CLOSING REMARKS › Slowdown of 4G deployments in Mainland China › Mobile broadband business in North America remained stable, but at lower level than last year › Emerging market impacted by weak macro development › Global Services – Strong demand for Professional Services – Double-digit growth in 8 o
Slide 20: © Telefonaktiebolaget LM Ericsson 2015 | THIRD QUARTER REPORT 2015 | OCTOBER 23, 2015
© Telefonaktiebolaget LM Ericsson 2015 | THIRD QUARTER REPORT 2015 | OCTOBER 23, 2015 | Page 20
Slide 21: Ericsson
ERICSSON
Slide 22: Ericsson Capital Markets Day November 10, Kista - Stockholm
Ericsson Capital markets day November 10, Kista - Stockholm Latest update on our business and strategy http://www.ericsson.com/ericsson/investors/events/2015/capital-markets-day-2015.shtml
Slide 23: Forward-looking statements
THIRD QUARTER 2015 This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for October