Telefonaktiebolaget LM Ericsson Class A · OMXSTO:ERIC_A
Telefonaktiebolaget LM Ericsson Class A — Ericsson — Q2 2014 Earnings Presentation
24 slides from Telefonaktiebolaget LM Ericsson Class A's earnings presentation, Jul 18, 2014
Slide 1: Second Quarter 2014
second QUARTER 2014 July 18, 2014
Slide 2: Helena Norrman, SVP Communications
HElena norrman Senior Vice President Communications
Slide 3: Forward-looking statements
second 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 July 1
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 › Increased operator focus on network performance as a differentiator – capacity enhancements, densification › Rapid technology transformation to 4G/LTE in China › Major operators evaluating how next generation virtualized networks impact business and operations › Mobile data
Slide 7: The social world cup
The social world cup World Cup total: 26.7 TB data traffic, 48.5 million photos, 4.5 million calls Final game: Germany vs. Argentina, Maracanã, Rio de Janeiro 1.5 TB data traffic, 2.6 million photos, 35 photos per person 91% of mobile internet access was for social media usage © Telefonaktiebolaget
Slide 8: Second quarter in numbers
Second quarter in numbers SEK b. 80 Net sales and sales development 70 60 5% › Organic FX adjusted sales -1% YoY 50 2% 40 1% – Sales recovered compared to previous quarter driven by 0% 0% 30 -2% -1% the Middle East, China and India -3% 20 -9% – Continued good capacity business in North America 10 –
Slide 9: Regional overview Q2 sales YoY
Regional overview Q2 sales YoY SEK 55.3.b. -29% 23% SEK 54.8 b. -11% 13% -4% -3% 29% -1% -3% 1% 0% SEK 52 b. Sales recovered in North America and North East Asia © Telefonaktiebolaget LM Ericsson 2014 | SECOND QUARTER REPORT 2014 | JULY 18, 2014 | Page 9
Slide 10: Regional overview Q2 sales QoQ
Regional overview Q2 sales qoq 24% SEK 54.8 b. 31% 15% 17% 15% 12% 5% 6% SEK 47.5.b. -3% 4% 3% SEK 44 b. Strong sequential sales development – growth in 9 out of 10 regions © Telefonaktiebolaget LM Ericsson 2014 | SECOND QUARTER REPORT 2014 | JULY 18, 2014 | Page 10
Slide 11: Jan Frykhammar, CFO
JAN FRYKHAMMAR CFO and Executive Vice President
Slide 12: Second quarter
Second quarter Gross margin 37.1% 36.5% › Net sales SEK 54.8 (55.3) b. 36.4% › Gross income and margin improved YoY 32.0% 31.1% 32.0% 32.4% 32.0% 30.4% – Good development in capacity business, increased IPR and lower restructuring › Operating expenses increased YoY to SEK 15.6 b. – Added modems and
Slide 13: Sales growth – FX impact
Sales growth – FX impact SEK b. Sales YoY change, Q2 2014 80 Reported Organic FX adjusted 70 7% 7% 5% Networks 3% 5% 60 4% 5% Global Services -7% -8% 50 3% Support Solutions 21% 5% 1% 2% 0% 40 -1% Group -1% -1% -2% 0% -3% -1% 30 -4% • Major FX exposure: USD, EUR and JPY -6% 20 -7% • Negative revalua
Slide 14: Operating income and margin development – Q2 YoY
Operating Income and margin development – Q2 YoY 0.90.2 14.215.5 SEK b. 32.4%36.4% Hedge revaluation -0.2-0.5 7.3% 7.3% Mainly -0.9 6.1% 55.354.8 4.0 Modems and 3.4 Mediaroom 4.5% 2.5 Costs related to divestment of ACS and exiting Cables Q2 2013 One-time Q2 2013 Sales Gross Restructuring Expens
Slide 15: Change in gross cash Q2
Change in gross cash Q2 SEK b. Operating Cash flow Investing1 Financing FX on cash +2.1 -2.8 -12.2 +1.5b Change in net cash SEK -11.1 b. (from SEK 43.6 to 32.5 b.) Execution of order-to-cash initiative continues and shows good progress 1Excluding Short term investments © Telefonaktiebolaget LM Erics
Slide 16: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 17: Networks
Networks SEK b. Net sales and sales development 40 › Business highlights 30 6% – Continued operator focus on network performance 3% 3% 1% – Continued momentum for SSR, 120 contracts since launch 20 -1% -1% › Organic FX adjusted sales +5% YoY 10 -17% -17% -13% – Sales recovered, driven by the Middle
Slide 18: Global services
Global services SEK b. Net sales and sales development 30 30% › Business highlights 20% – Red Bee Media acquisition finalized during the quarter 20 10% – 21 new Managed Services contracts in nine regions 10 – 12 new significant Consulting and Systems Integration 0% contracts 0 -10% › Organic FX adju
Slide 19: Support solutions
Support solutions Net sales and sales development SEK b. 6 47% 40% › Business highlights 5 29% 6% 21% 4 13% – Multi-year BSS contract signed with T-Mobile US 3 – Transition of business models continues 2 -19% -33% -29% 1 › Reported sales +21% YoY 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 – Growth from Mediaroom
Slide 20: Modems
modems › Business highlights – Smartphones and data devices featuring M7450 will be on the market by the end of this year – Global operator certification is progressing as planned › Net sales are expected 2H 2014 › Operating loss of SEK -0.5 b. in the quarter – Mainly R&D expenses › Operating expens
Slide 21: Summary
summary › Continued good capacity business as operators focus on network performance › Strong sequential sales growth › Improved profitability driven by Networks › Good profitability maintained in Professional Services › Transition of business models in Support Solutions continues › Continued invest
Slide 22: Q&A
Q&A © Telefonaktiebolaget LM Ericsson 2014 | SECOND QUARTER REPORT 2014 | JULY 18, 2014 | Page 22
Slide 23: Ericsson
ERICSSON
Slide 24: Forward-looking statements
second 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 July 1