19 slides from Telefonaktiebolaget Lm Ericsson Class A's earnings presentation, Apr 22, 2020
Slide 1: Ericsson First quarter 2020
Ericsson First quarter 2020 Apr 22, 2020 © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 1
Slide 2: Peter Nyquist, Vice President Investor Relations
Peter Nyquist Vice President Investor Relations © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 2
Slide 3: First quarter 2020
First 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 b
Slide 4: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 4
Slide 5: Key takeaways
Key takeaways — Covid-19 world impact – key driver health and safety employees, customers, stakeholders — Solid result driven by improvements across segments — Digital Services sales declined but strong underlying business — Solid cash flow and further strengthened cash position — The industry is sh
Slide 6: Covid-19 actions
Covid-19 actions — Early implemented actions – 85.000 of total workforce working from home — Travel restrictions in place since February — Withdrew from Mobile World Congress – cancelled all external events — Supply – secure dual mode production and taking precautionary activities to keep supply ope
Slide 7: Market area sales Q120, YoY
Market area sales Q120, YoY Net sales bridge — Europe & Latin America FX adjusted • Growth in Networks Europe offset by decline in Latin -8% America (large deployments in 2019) • Managed Services sales declined due to contract exits 5% — South East Asia, Oceania & India • Sales declined in Networks
Slide 8: Segment summary
Segment summary Excluding restructuring charges and items affecting comparability in 20191 Networks Digital Services SEK b. 20Q1 19Q1 YoY 19Q4 SEK b. 20Q1 19Q1 YoY 19Q4 Sales 35.1 33.5 5% 44.4 Sales 7.3 7.8 -6% 13.2 Organic 0% Organic -9% Gross margin 44.6% 43.2% 41.1% Gross margin 40.1% 37.6% 38.1%
Slide 9: Carl Mellander, Chief Financial Officer
Carl Mellander Chief Financial Officer © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 9
Slide 10: Q1 2020 in numbers
Q1 2020 in numbers Financial Performance Excluding restructuring charges SEK b. 20Q1 19Q1 YoY 19Q4 — Organic and FX adjusted sales declined YoY due to Net sales 49.8 48.9 2% 66.4 lower revenue in Digital Services Organic and FX adj. growth -2% — Gross margin Gross margin 40.4% 38.5% 37.1% • Improved
Slide 11: Gross margin
Gross margin Excluding restructuring charges — QoQ development 40.4% • Higher share of IPR revenues 38.5% • Improvements in all segments 37.8% 35.9% 36.7% 36.9% 36.3%1 36.7% 37.1% — Planning assumptions 37.9% 36.5%1 37.0%1 37.0%1 37.3% 37.5% 1 • Larger share of strategic contracts incl. China 5G is
Slide 12: R&D and SG&A expenses YoY
R&D and SG&A expenses YoY Excluding restructuring charges R&D SEK b. — R&D expenses YoY • Increase mainly in Networks • Lower effect from capitalized and amortized development R&D expenses in Digital Services 9.0 9.5 9.4 10.6 9.2 • Invest in 5G and AI across all segments Q119 Q219 Q319 Q419 Q120 SG&
Slide 13: Free cash flow
Free cash flow Financial Performance SEK b. 20Q1 19Q1 — Free cash flow before M&A SEK 2.3 (3.5) b. Net income adjusted for non-cash items 4.7 5.5 • Contributing to improved cash position Working capital changes -0.4 0.3 • Positive one time item in 19Q1 of SEK 0.7 b. Cash flow from operating activiti
Slide 14: Financial position
Financial position Financial Cash position Performance and debt maturity profile (SEK b.) Debt maturity profile (SEK b.) — Gross cash position of SEK 79.5 b. and net cash 80 of SEK 38.4 b. 70 Gross — SEK 8.7 b. of debt will mature in Q4 2020 60 Gross cash — Average maturity of long-term borrowings 2
Slide 15: Börje Ekholm, President and CEO
Börje Ekholm President and CEO © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 15
Slide 16: Closing remarks
Closing remarks — Business fundamentals remain strong — Our focused strategy is paying off. Leader in 5G with 29 live 5G networks and 86 agreements end of March — European governments should encourage 5G investments as a way to restart economies. — Ericsson continues to invest in market leading port
Slide 17: © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020
© Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020 | Page 17
Slide 18: © Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 2020
© Telefonaktiebolaget LM Ericsson 2020 | First quarter report 2020 | Apr 22, 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