21 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Oct 21, 2016
Slide 1: Third Quarter 2016
THIRD QUARTER 2016 Oct 21, 2016
Slide 2: Helena Norrman, Chief Marketing and Communications Officer
HElena norrman Senior Vice President Chief Marketing and Communications Officer
Slide 3: Third Quarter 2016 forward-looking statements
THird QUARTER 2016 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 Oct 21,
Slide 4: Jan Frykhammar, President and CEO
Jan Frykhammar President and CEO
Slide 5: Third quarter 2016
Third quarter 2016 › Negative industry trends accelerated – weaker demand for SEK b. 16Q3 15Q3 16Q2 mobile broadband in some markets ‒ FX adjusted sales declined -14% YoY and -7% YoY in Q2 Sales 51.1 59.2 54.1 ‒ Networks FX adjusted sales declined -20% YoY and -11% Gross margin, % 28.3 33.9 32.3 YoY
Slide 6: Regional sales Q3 YoY
Regional sales Q3 YoY SEK 59.2 b. -25% -22% -8% -28% -21% -17% -25% -19% -8% -4% 6% SEK 51.1 b. Negative trend for mobile broadband demand accelerated further © Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016 | Page 6
Slide 7: Net sales Q3 YoY
Net sales Q3 YoY Regions Middle East, Latin America, SEK b. Sub Saharan Africa + Russia Delayed spectrum auctions Mainly Services 59.2 51.1 Q315 Regions impacted EU countries India North North East Asia Other Q316 by macro-economics America Major decline in countries impacted by weak macro © Telefon
Slide 8: Regional sales Q3 QoQ
Regional sales Q3 qoq SEK 54.1 b. -20% -16% -13% -13% -4% -2% -4% 7% SEK 51.1 b. -2% 2% 1% Lower capacity sales in Europe © Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016 | Page 8
Slide 9: Segment summary
segment summary Networks Global Services Support Solutions SEK b. 16Q3 15Q3 16Q2 SEK b. 16Q3 15Q3 16Q2 SEK b. 16Q3 15Q3 16Q2 Sales 23.3 28.8 26.8 Sales 24.8 27.1 24.5 Sales 2.9 3.3 2.9 Op Inc -0.3 2.8 1.6 Op Inc 1.0 2.4 1.5 Op Inc -0.4 0.0 -0.4 › Sales down -19% › Sales down -8% › Sales down -11% ›
Slide 10: On customers' agenda
On customers’ agenda › Increased focus on 5G and IoT › Digital transformation › Core network transformation © Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016 | Page 10
Slide 11: Carl Mellander, Chief Financial Officer
Carl mellander Chief Financial Officer
Slide 12: Operating Income Q3 YoY
Operating Income Q3 YoY SEK b. OM 8.6% Cost and Gross margin efficiency excl restr YoY program 34.5% 29.4% Sales decline -14% 5.1 Increased restructuring OM 0.7% 0.3 Q315 Expenses Volume Gross Restructuring Q316 margin Cost reductions did not offset lower sales and gross margin © Telefonaktiebolag
Slide 13: Gross Margin Q3 QoQ, ex restructuring
Gross Margin Q3 QoQ, ex restructuring Services share from 45% to 49% Mainly lower capacity sales in Europe 33.2% Driven by lower share of capacity sales in regions impacted by macro-economics 29.4% Q216 Q316 Current business mix anticipated to prevail short term © Telefonaktiebolaget LM Ericsson 201
Slide 14: Cost Savings
Cost Savings Operating expenses, excl restructuring › Cost and efficiency program tracking towards opex SEK b. target of SEK 53 b. 64.4 – Headcount reduction initiated in; Sweden, the US, Finland, 63.0 61.4 Spain and the UK 59.8 57.7 56.7 › Operating expenses (excl restr) decreased YoY to 53.0 SEK 1
Slide 15: Change in gross cash Q3
Change in gross cash Q3 16Q3A Operating Cash Flow Investing1 Financing FX on cash -2.3 b -2.7 b -1.5 b +1.3 bb SEK b. 55 50 +1.5 45 -3.3 -0.5 -1.3 -1.4 -1.3 40 -0.2 +1.3 48.8 43.6 35 Change in gross cash SEK -5.2 b 30 Gross Cash Net income Change net Restructuring CAPEX Acquisitions, Other financing
Slide 16: Jan Frykhammar, President and CEO
Jan Frykhammar President and CEO
Slide 17: Planning assumptions
Planning assumptions extracted from the q3 report SHORT TERM MID TERM › The current industry trends indicate a somewhat › Annual opex run rate to be reduced to SEK 53 b. weaker than normal seasonal sales growth (ex restructuring) in 2H 2017, compared with SEK between Q3 and Q4 63 b. in 2014 › A rene
Slide 18: © Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016
© Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016 | Page 18
Slide 19: Ericsson investor update
Ericsson investor update November 10, New York © Telefonaktiebolaget LM Ericsson 2016 | THIRD QUARTER REPORT 2016 | OCT 21, 2016 | Page 19
Slide 20: Ericsson
ERICSSON
Slide 21: Third Quarter 2016 forward-looking statements
third QUARTER 2016 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 Oct 21,