19 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Jul 17, 2020
Slide 1: Ericsson Second quarter 2020
Ericsson Second quarter 2020 July 17, 2020 © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | Page 1
Slide 2: Peter Nyquist, Vice President Investor Relations
Peter Nyquist Vice President Investor Relations © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | Page 2
Slide 3: Second quarter 2020
Second 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 2020 | Second quarter report 2020 | July 17, 2020 | Page 4
Slide 5: Key takeaways
Key takeaways — Technology leadership in an accelerating 5G market • 99 commercial 5G agreements and 54 live networks — Sales SEK 55.6 b. and operating margin 8.2% excl restr. • Driven by Networks and Digital Services — Strengthened market position in Mainland China — Maintained Group targets for 20
Slide 6: Market area sales Q220, YoY
Market area sales Q220, YoY Net sales bridge — Europe & Latin America FX adjusted • Europe: Growth in Networks from market share gains • Latin America: Decline due to macro uncertainty 19% -6% — Middle East & Africa • Continued strong 5G deployments in the Middle East • Sales impacted by macro uncer
Slide 7: Segment summary
Segment summary Excluding restructuring charges Networks Digital Services SEK b. 20Q2 19Q2 YoY 20Q1 SEK b. 20Q2 19Q2 YoY 20Q1 Sales 39.8 37.8 5% 35.1 Sales 8.6 9.0 -5% 7.3 Organic 4% Organic -5% Gross margin 40.5% 41.4% 44.6% Gross margin 43.6% 37.1% 40.1% Op. income 5.6 5.7 -1% 5.9 Op. income -0.7
Slide 8: Carl Mellander, Chief Financial Officer
Carl Mellander Chief Financial Officer © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | Page 8
Slide 9: Q2 2020 in numbers
Q2 2020 in numbers Financial performance Excluding restructuring charges SEK b. 20Q2 19Q2 YoY 20Q1 — Organic and FX adjusted sales flat YoY • Networks growth 4% Net sales 55.6 54.8 1% 49.8 Organic and FX adj. growth 0% — Gross margin Gross margin 38.2% 36.7% 40.4% • Improved YoY – Digital Services (
Slide 10: Gross margin
Gross margin Excluding restructuring charges — Rolling 4Q gross margin 38.3% 40.4% — Q2 gross margin 38.2% (36.7%) 38.5% 37.8% 37.1% 38.2% • Driven by Digital Services (software sales) and 36.7% 36.9% 36.7% 35.9% 36.3%1 37.9% 38.3% Managed Services (efficiency gains) 37.0%137.0%137.3%1 37.5% • Highe
Slide 11: R&D and SG&A expenses YoY
R&D and SG&A expenses YoY Excluding restructuring charges R&D SEK b. — R&D expenses SEK 9.8 (9.5) b. • Networks – in line with strategy continued high level of R&D • Digital Services – savings in legacy portfolio reinvested in new portfolio • Managed Services – investments in automation, analytics a
Slide 12: Free cash flow
Free cash flow Financial Performance SEK b. 2020 2019 2020 2019 Q2 Q2 YTD YTD — Free cash flow before M&A SEK 3.2 (1.6) b. Net income adjusted for non-cash items 5.6 5.0 10.3 10.4 — Net operating asset and liabilities stable Changes in Net operating assets and liabilities -0.1 -1.3 -0.6 -1.0 despite
Slide 13: Financial position
Financial position Financial Cash position Performance and debt maturity profile (SEK b.) Debt maturity profile (SEK b.) — Gross cash of SEK 75.4 (69.0) b. 80 • SEK -4.1 b. QoQ, mainly due to dividend payment 70 — Solid net cash position at SEK 37.5 (33.8) b. Gross cash 60 • SEK -0.8 b. QoQ Gross 50
Slide 14: Planning assumptions highlights
Planning assumptions highlights Please see the Q2 report for complete planning assumptions Market related — RAN equipment market estimated to grow 4% FY 2020 (Dell’Oro) — Momentum in North America remains strong, market estimated to grow 4% in 2020 (Dell’Oro) Ericsson related — Normal sales seasonal
Slide 15: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | Page 15
Slide 16: Closing remarks
Closing remarks — Gaining market share through technology leadership — Business performance enabling strategic investments — Leader in 5G with 54 live 5G networks and 99 agreements as of July 17 — Competitive offering and resilient balance sheet — Group financial targets for 2020 and 2022 remain — R
Slide 17: © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020
© Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | Page 17
Slide 18: © Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020
© Telefonaktiebolaget LM Ericsson 2020 | Second quarter report 2020 | July 17, 2020 | 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