21 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Apr 23, 2015
Slide 1: First Quarter 2015
First Quarter 2015 April 23, 2015
Slide 2: Helena Norrman, SVP Marketing and Communications
Helena Norrman Senior Vice President, Marketing and Communications
Slide 3: First Quarter 2015 – forward-looking statements
First 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 April 2
Slide 4: Hans Vestberg, President and CEO
Hans Vestberg President and CEO
Slide 5: Key developments
key developments Market › Digital transformation influences strategic industry choices › Transition towards LTE in all regions › Consolidation – an industry theme › China 4G deployments continue at fast pace › Currency movements with strengthening USD Ericsson › Continued slow mobile broadband busin
Slide 6: Net sales and operating income
Ericsson Q1 2015 SEK b. Net sales and sales development 80 13% 9% 60 › Sales +13% YoY 2% 1% 40 0% 0% -1% – Organic FX adjusted sales -6% YoY -3% 20 – Professional Services sales strong -9% – Growth in India and North East Asia 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 – Continued slow mobile broadband business i
Slide 7: Regional sales Q1 YoY
Regional sales Q1 YoY 108% SEK 53.5 b. 23% 24% 15% 17% 19% 8% SEK 47.5.b. -3% 0% 4% 12% Growth in 8 of 10 regions – North America continued to be slow © Telefonaktiebolaget LM Ericsson 2015 | FIRST QUARTER REPORT 2015 | APRIL 23, 2015 | Page 7
Slide 8: Jan Frykhammar, CFO and Executive Vice President
Jan Frykhammar CFO and Executive Vice President
Slide 9: First quarter: gross margin and operating expenses
First quarter Gross margin › Gross margin 35.4% (36.5%) 37.1% 36.5% 36.4% 35.2% 36.6% 35.4% – Lower capacity business in North America 32.0% 32.4% 32.0% – Continued fast pace of 4G deployments in Mainland China › Gross margin decreased QoQ – High software sales and strong IPR revenues in Q4 2014 Q1
Slide 10: Operating Income YoY
Operating Income YoY SEK b. 5.5% Realized -1.1 Unrealized -0.3 Driven by 4.7 4.0% currencies 2.6 2.1 Q114 Volume Gross Hedges Expenses Restructuring Q115 margin Operating income was flat, excluding restructuring © Telefonaktiebolaget LM Ericsson 2015 | FIRST QUARTER REPORT 2015 | APRIL 23, 2015 | Pa
Slide 11: Gross margin YoY
Gross margin YoY North America and China development 36.5% 35.4% 35.3% 20% Q114 Restructuring Services share Business mix FX + other Q115 Gross margin established on a higher level © Telefonaktiebolaget LM Ericsson 2015 | FIRST QUARTER REPORT 2015 | APRIL 23, 2015 | Page 11
Slide 12: Sales growth – FX impact
Sales growth – FX impact SEK b. 80 20% 70 15% 13% Sales YoY change, Q1 2015 60 10% 9% 7% Reported Organic and FX adj. 50 7% 5% 4% 3% Networks 8% -9% 40 2% 3% 1% 0% 0% -1% 0% Global Services 17% -2% 30 -1% -2% -3% Support Solutions 11% -11% -5% 20 -7% -6% Group 13% -6% -9% 10 -10% 0 -15% Changed meth
Slide 13: Change in gross cash Q1
Change in gross cash Q1 Operating cash flow Investing1 Financing FX on cash SEK b. -5.9 b -2.5 b +0.9 b +1.5 b 80 70 +3.1 -8.6 -0.4 60 -2.4 -0.2 +0.9 0.0 +1.5 72.2 66.1 50 Change in gross cash SEK -6.1 b 40 Gross cash Net income Change net Restructuring CAPEX Acquisitions, Other Dividend FX on cash
Slide 14: Hans Vestberg, President and CEO
Hans Vestberg President and CEO
Slide 15: Networks
Networks SEK b. Net sales and sales development 40 13% 8% 30 3% 1% 3% › Sales increased 8% YoY -1% -1% -2% 20 – Organic FX adjusted sales decreased by -9% YoY – Strong sales in China, India, the Middle East as well as South 10 -13% East Asia and Oceania – Continued slow mobile broadband business in
Slide 16: Global Services
Global services SEK b. 30 Net sales and sales development 30% 20% 20 › Sales increased 17% YoY 10% – Global Services organic FX adjusted sales -2% YoY 10 0% – Professional Services growth 20% – good momentum – 30% growth in Managed Services – 27 contracts signed 0 -10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 › S
Slide 17: Support Solutions
Support solutions Net sales and sales development SEK b. 6 40% 5 30% 21% 4 13% 11% › Sales increased 11% 3 – Organic FX adjusted sales -11% YoY 2 -19% -21% -29% – Continued good development in OSS & BSS 1 -33% – Transition of business models continues 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 › Sales decreased Q
Slide 18: Summary
summary › Growth in 8 out of 10 regions, supported by significant currency movements › 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 › Weak profitability in Network
Slide 19: © Telefonaktiebolaget LM Ericsson 2015 | FIRST QUARTER REPORT 2015 | APRIL 23, 2015
© Telefonaktiebolaget LM Ericsson 2015 | FIRST QUARTER REPORT 2015 | APRIL 23, 2015 | Page 19
Slide 20: Ericsson
ERICSSON
Slide 21: First Quarter 2015 – forward-looking statements
First 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 April 2