22 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Jul 17, 2015
Slide 1: Second Quarter 2015
SECOND QUARTER 2015 July 17, 2015
Slide 2: Helena Norrman, SVP Communications
HELENA NORRMAN Senior Vice President Communications
Slide 3: Second Quarter 2015 forward-looking statements
SECOND 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 July 1
Slide 4: Hans Vestberg, President and CEO
HANS VESTBERG President and CEO
Slide 5: Key developments
key developments Market › Strong focus on 5G and digitalization of industries › Consolidation continues – customers and vendors › Continued currency movements › Ericsson Mobility Report released in June – 55% growth in data traffic Q114 to Q115 – Smartphone subscriptions to double by 2020 – 3.7 bill
Slide 6: Net sales and sales development
Ericsson q2 2015 SEK b. Net sales and sales development 80 13% 11% 9% › Reported sales up 11% YoY 60 1% › Organic FX adjusted sales down 6% YoY 40 0% -3% 0% -1% – North America and Japan at lower levels 20 -9% – Growth in Mainland China, Middle East, India 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 and South East
Slide 7: Regional sales Q2 YoY
Regional sales Q2 YoY 44% SEK 60.7 b. 85% 34% 41% SEK 54.8 b. 12% -4% 8% -6% -6% 7% 1% Growth driven by currency – adjusted sales down 6% © Telefonaktiebolaget LM Ericsson 2015 | SECOND QUARTER REPORT 2015 | JULY 17, 2015 | Page 7
Slide 8: Regional sales Q2 QoQ
Regional sales Q2 qoq 19% SEK 60.7 b. 44% 15% 18% 15% SEK 53.5 b. -14% 23% -10% 11% -6% 8% Growth in North America – partly offset by India and Japan © Telefonaktiebolaget LM Ericsson 2015 | SECOND QUARTER REPORT 2015 | JULY 17, 2015 | Page 8
Slide 9: Jan Frykhammar, CFO and Executive Vice President
JAN FRYKHAMMAR CFO and Executive Vice President
Slide 10: Second quarter
second quarter Gross margin › Restructuring SEK 2.7 (0.2) b. 36.5% 36.4% 35.2% 36.6% 35.4% – Mainly related to activities in Sweden 32.4% 32.0% 32.9% 33.2% › Gross margin, excluding restructuring, 35.1% (36.6%) – Lower capacity business and continued coverage deployments – Lower IPR revenues and hig
Slide 11: Operating Income YoY
Operating Income YoY SEK b. Q2 2014 Q2 2015 Lower IPR 10.4% revenues Mainly North America Sales increase Due to FX. Efficiencies 7.7% & 7.3% +11% YoY China FX adjusted Capital gain development expenses 5.9% down YoY 6.3 4.0 4.2 3.6 Q214 Reported Excl restr. Hedge impact Volume IPR Business Mix Expen
Slide 12: Operating Income QoQ
Operating Income QoQ SEK b. Q1 2015 Q2 2015 10.4% Lower IPR revenues Increased HW share sales +4% QoQ Capital gain Sales 5.9% 5.1% increase +13% QoQ 6.3 4.0% 3.6 2.7 2.1 Q115 Reported Excl restr. Hedge impact Volume IPR Business Mix Expenses Other Excl restr. Q215 Reported Improved operating income
Slide 13: Sales growth – FX impact
Sales growth – FX impact SEK b. Sales YoY change, Q2 2015 80 Reported Organic and FX adj. 13% 60 11% Networks 8% -9% 9% 7% Global Services 14% -2% 4% 40 3% 3% 0% 0% 1% Support Solutions 9% -13% -1% -2% -3% Group 11% -6% 20 -7% -6% -6% -9% 0 Changed method for translating FX exposure into Q2 Q3 Q4 Q1
Slide 14: Change in gross cash Q2
Change in gross cash Q2 SEK b. Operating cash flow Investing1 Financing FX on cash +3.1 b -2.9 b -10.6 b -1.9 b 80 70 +0.1 -0.5 +3.4 -2.4 -0.5 +0.4 60 66.1 -11.0 50 -1.9 Change in gross cash SEK -12.3 b 53.8 40 Gross cash Net income Change Net Restructuring CAPEX Acquisitions, Other financing Divide
Slide 15: Hans Vestberg, President and CEO
HANS VESTBERG President and CEO
Slide 16: Networks
Networks SEK b. Net sales and sales development 40 13% 8% 8% 30 3% 1% › Reported sales up 8% YoY -1% -1% -2% 20 › Organic FX adjusted sales down 9% YoY 10 – Lower business activity in North America and Japan -13% – Strong sales in Mainland China, the Middle East and India 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q
Slide 17: Global Services
Global services SEK b. Net sales and sales development 30 30% 20% 20 › Reported sales up 14% YoY 10% 10 › Organic FX adjusted sales down 2% YoY 0% – Network rollout continued to decline 0 -10% Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 › Professional Services good momentum 2013 2014 2015 – 26% growth in Managed Ser
Slide 18: Support Solutions
Support solutions SEK b. Net sales and sales development 6 40% 5 30% 21% 4 13% 11% 9% › Reported sales up 9% YoY 3 2 -21% › Organic FX adjusted sales down 13% YoY 1 -33% -29% – Continued good development in OSS & BSS 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 – TV & Media declined 2013 2014 2015 › Organic FX adju
Slide 19: Closing remarks
Closing remarks › North America business stabilized, but at lower level than last year › Continued 4G coverage deployments in Mainland China › Strong demand for Professional Services – Sales growth across all regions › Lower IPR revenues › Full year 2015 restructuring is expected to be SEK 4-5 b. ›
Slide 20: © Telefonaktiebolaget LM Ericsson 2015 | SECOND QUARTER REPORT 2015 | JULY 17, 2015
© Telefonaktiebolaget LM Ericsson 2015 | SECOND QUARTER REPORT 2015 | JULY 17, 2015 | Page 20
Slide 21: Ericsson
ERICSSON
Slide 22: Second Quarter 2015 forward-looking statements
SECOND 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 July 1