Telefonaktiebolaget LM Ericsson Class A · OMXSTO:ERIC_A
Telefonaktiebolaget LM Ericsson Class A — Ericsson — Q1 2014 Earnings Presentation
22 slides from Telefonaktiebolaget LM Ericsson Class A's earnings presentation, Apr 23, 2014
Slide 1: First Quarter 2014
first QUARTER 2014 April 23, 2014
Slide 2: Helena Norrman, Senior Vice President Communications
HElena norrman Senior Vice President Communications
Slide 3: Forward-looking statements
first QUARTER 2014 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 and Jan Frykhammar
HANS VESTBERg President and CEO JAN FRYKHAMMAR CFO and Executive Vice President
Slide 5: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 6: Key developments
key developments Market › Improved network performance, a differentiator › Increased industry interest in SDN and NFV › Operators looking to optimize fixed and mobile IP networks for efficient video delivery Ericsson › China 4G contracts in execution › Partner to AT&T for Domain 2.0 › Awarded part o
Slide 7: First quarter in numbers
First quarter in numbers SEK b. Net sales and sales development 80 8% 60 3% › Organic FX adjusted sales -7% YoY 5% 2% – Lower coverage project activity in North America and 40 -4% 1% -2% 0% 0% Japan -2% -3% 20 -7% – Growth in China, Middle East and Latin America -9% 0 -12% › Organic FX adjusted sale
Slide 8: Regional overview
Regional overview Q1 sales YoY SEK 52.0 b. -23% -19% 22% SEK 47.5 b. -17% 12% -9% 8% -15% 6% 7% 1% SEK 45 b. North America: As anticipated, lower coverage project activity © Telefonaktiebolaget LM Ericsson 2014 | FIRST QUARTER REPORT 2014 | APR 23, 2014 | Page 8
Slide 9: Jan Frykhammar, CFO and Executive Vice President
JAN FRYKHAMMAR CFO and Executive Vice President
Slide 10: First quarter
First quarter Gross margin 37.1% › Sales declined in the quarter, as anticipated 36.5% 33.3% › Gross income and margin substantially improved 32.0% 31.1% 32.0% 32.4% 32.0% 30.4% – Larger share of capacity business with higher hardware margins and lower restructuring charges › Operating expenses SEK
Slide 11: Sales growth – FX impact
Sales growth – FX impact SEK b. Sales YoY change, Q1 2014 80 10% Reported Organic FX adjusted 7% 7% 8% 70 Networks -13% -10% 5% 6% 60 4% Global Services -5% -3% 5% 3% 4% 50 Support Solutions 13% 4% 1% 2% 2% 0% 0% Group -9% -7% 40 0% -2% -3% -2% 30 -4% -4% -4% 20 -6% -6% -7% -6% • Major FX exposure:
Slide 12: Operating income development Q1 YoY
Operating Income development Q1 YoY Q1 2013 Restructuring in Sweden SEK b. SEK -1.4 b. 32.0% 5.5% 52.0 4.0% 47.5 36.5% Improved operating margins in all segments © Telefonaktiebolaget LM Ericsson 2014 | FIRST QUARTER REPORT 2014 | APR 23, 2014 | Page 12
Slide 13: Change in gross cash Q1
Change in gross cash Q1 Operating Cash flow Investing1 Financing2 FX on cash +9.4 -2.0 -5.1 +0.4 SEK b. -0.5 -1.0 -0.9 +6.7 -5.1 0.0 +0.4 +3.2 Change in gross cash SEK +2.8 b 79.9 77.1 SEK 60 b. Gross cash Net income Change net Restructuring CAPEX Acquisitions, Other financing Dividend FX on cash Gr
Slide 14: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 15: Networks
Networks SEK b. Net sales and sales development 40 16% › Business highlights 8% 30 – LTE business steady YoY 6% 3% 0% 20 1% – Continued momentum for SSR -1% -1% -8% – Agreement with Ciena for IP-optical capabilities -17% 10 -18% -17% – Partner to AT&T for Domain 2.0 Initiative utilizing NFV and SDN
Slide 16: Global Services
Global services SEK b. Net sales and sales development 30 30% › Business highlights 20% 20 – Demand for professional services continued strong, several new contracts signed 10% – 16 new Managed Services contratcs signed 10 0% – 9 significant Consulting and Systems Integration contracts signed › Orga
Slide 17: Support Solutions
Support solutions SEK b. Net sales and sales development 6 47% 60% 5 33% › Business highlights 29% 40% 4 40% 13% 20% – Azuki Systems acquired, strong customer 3 6% interest in portfolio 0% 2 -19% -33% -29% -20% – Important OSS and BSS contracts signed – 1 0 -40% CenturyLink and TeliaSonera Q1 Q2 Q3
Slide 18: Modems
modems › Business highlights – M7450 released for commercial use in Q4 2013. Integration work ongoing with a tier one smartphone manufacturer › Net sales are expected 2H 2014 › Segment Modems generated an operating loss of SEK 0.7 b. in the quarter – Mainly R&D expenses › Operating expenses for Mode
Slide 19: Summary
summary › As anticipated lower sales in North America and Japan › Large share of mobile broadband capacity projects and additional software sales › With current visibility, key contracts awarded will gradually impact sales and business mix, mainly in 2H › Focus on profitability pays off – the work c
Slide 20: Q&A
Q&A © Telefonaktiebolaget LM Ericsson 2014 | FIRST QUARTER REPORT 2014 | APR 23, 2014 | Page 20
Slide 21: Ericsson
ERICSSON
Slide 22: Forward-looking statements
first QUARTER 2014 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