22 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Apr 25, 2017
Slide 1: First Quarter 2017
first QUARTER 2017 Apr 25, 2017
Slide 2: Peter Nyquist, Vice President Investor Relations
Peter nyquist Vice President Investor Relations
Slide 3: Forward-looking statements
first QUARTER 2017 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: Börje Ekholm, President and CEO
Börje Ekholm President and CEO
Slide 5: Starting point
Starting point › Unsatisfactory company performance - highlights need for the new strategy › A challenging quarter– but mixed picture – Solid Networks result despite declining sales – Accelerated losses in IT & Cloud and Media – additional actions initiated › Focused strategy launched to revitalize
Slide 6: First quarter 2017
First quarter 2017 › Sales adjusted for FX -16% YoY – Sales adjusted for FX and IPR -12% YoY › Significant adjustments to Q1 2017 result of SEK 13.4 b. – Restructuring charges, asset write-downs as well as provisions and adjustments related to certain customer projects › Cash flow SEK -1.5 (-2.4) b.
Slide 7: Segment summary
segment summary Tables exclude provisions, write-downs and restructuring charges in 17Q1. 16Q1 and 16Q4 exclude restructuring. Networks IT & Cloud Media SEK b. 17Q1 16Q1 16Q4 SEK b. 17Q1 16Q1 16Q4 SEK b. 17Q1 16Q1 16Q4 Sales 36.2 39.9 47.8 Sales 9.6 9.8 14.9 Sales 2.0 2.4 2.5 GM 31% 33% 27% GM 28% 3
Slide 8: Carl Mellander, Chief Financial Officer
Carl mellander Chief Financial Officer
Slide 9: First quarter 2017
First quarter 2017 Adjusted for restructuring charges and items affecting comparability Provisions Q117 Restruct. Write- and cust. Q117 SEK b. reported charges downs proj. adj. adjusted Net sales 46.4 - - 1.4 47.8 Gross income 6.4 1.5 - 6.7 14.6 Gross margin 13.9% - - - 30.5% Operating expenses -18.
Slide 10: Q1 sales geographical overview
Q1 sales geographical overview Middle East South East › South East Asia, Oceania and India (1% YoY) and Africa Asia, Oceania – Operator consolidations in India and India – Continued MBB investments in South East Asia 12.5% 18.5% › North East Asia (0% YoY) – Mainland China decline offset by growth in
Slide 11: Gross margin Q1 YoY
GROSS MARGIN Q1 YoY Stable Reduced Changed margins in business mix and services and Under-absorption 33.9% increased in services service share 30.5% 17.0% Q116 excl IPR licensing Segment Segment Segment Q117 adjusted* Q117 excl restructuring revenues Networks IT & Cloud Media restructuring * Excludi
Slide 12: Gross margin Q1 QoQ
GROSS MARGIN Q1 QoQ Higher share of capacity Reduced services business. margins in Improved services large transformation 29.4% margins. contracts and in IT 30.5% Higher share of IPR managed services 17.0% Q416 excl Segment Segment Segment Q117 adjusted* Q117 excl restructuring Networks IT & Cloud M
Slide 13: Operating income Q1 YoY
OPERATING INCOME Q1 YoY SEK b. OM 8% 4.1 OM 2% 1.1 Q116 excl IPR revenues Volume Gross margin Expenses Other Q117 adjusted * Q117 excl restructuring restruct. -10.6 * Excluding restructuring charges, asset write-downs as well as provisions and adjustments related to certain customer projects IPR rev
Slide 14: Cost Savings
Cost Savings Opex, excl. restructuring and Q117 adjustments1) › Cost and efficiency program is not yielding SEK b. sufficient result 64.4 – Focus further on structural changes for increased cost 63.0 61.4 competitiveness 56.4 56.3 › Underlying expenses reduced by SEK 0.5 b. › Restructuring charges f
Slide 15: Change in gross cash Q1
Change in gross cash Q1 Operating cash flow Investing1 Financing FX on cash -1.5 b -1.8 b +10.9 b +0.2 bb 0.0 +0.2 -1.6 -1.0 +10.9 -0.8 -9.2 +9.3 65.6 57.9 Change in gross cash SEK +7.7 b Gross Cash Net Income Change Net Restructuring CAPEX Acquisitions, Other Dividend FX on cash Gross Cash 1612A re
Slide 16: Aligning reporting to new organization
Aligning reporting to new organization › Renamed segments from Q2 2017 – Networks unchanged – IT & Cloud unchanged – Media reported as Other › The current 10 Regions will become 5 Market areas › In Q1 2018, at the latest, the reporting structure will be fully aligned with the new organization – Rest
Slide 17: Planning assumptions
Planning assumptions From the Q1 report › Industry trends and business mix in mobile broadband from 2016 are expected to prevail in 2017 › RAN equipment market in USD estimated to decline by -2% to -6% in 2017 › The renewed MS contract in North America will impact sales negatively YoY in Q2 and Q3 2
Slide 18: Börje Ekholm, President and CEO
Börje Ekholm President and CEO
Slide 19: Focused business strategy
Focused business strategy › Fully leveraging the potential of 5G, IoT and cloud. › Increase pace of innovation and new business development › Restore profitability is key – start by focusing the portfolio › Simplify organizational structure with new Executive Team › Significant profit improvements a
Slide 20: © Telefonaktiebolaget LM Ericsson 2017 | FIRST QUARTER REPORT 2017 | APR 25, 2017
© Telefonaktiebolaget LM Ericsson 2017 | FIRST QUARTER REPORT 2017 | APR 25, 2017 | Page 20
Slide 21: Ericsson
ERICSSON
Slide 22: First Quarter 2017
First QUARTER 2017 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