Telefonaktiebolaget LM Ericsson Class A · OMXSTO:ERIC_A
Telefonaktiebolaget LM Ericsson Class A — Ericsson — Q3 2014 Earnings Presentation
24 slides from Telefonaktiebolaget LM Ericsson Class A's earnings presentation, Oct 24, 2014
Slide 1: Third Quarter 2014
Third QUARTER 2014 October 24, 2014
Slide 2: Helena Norrman, Senior Vice President Communications
HElena norrman Senior Vice President Communications
Slide 3: Forward-looking statements
Third 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 October
Slide 4: Hans Vestberg, President and CEO
HANS VESTBERg President and CEO
Slide 5: Key developments
key developments Market › Continued high operator focus on network performance as a differentiator – capacity enhancements, densification › Rapid technology transformation to 4G/LTE in China › Operator network transformation drives demand for systems integration › North America slowed down as operat
Slide 6: Third quarter in numbers
Third quarter in numbers SEK b. Net sales and sales development 9% 80 › Sales increased 9% YoY 60 5% – Organic FX adjusted sales 3% 40 2% – Growth was mainly driven by the Middle East, China, India -2% 0% 0% -1% -3% -9% and Russia 20 – Started to deliver on previously communicated key contracts 0 –
Slide 7: Regional overview Q3 sales YoY
Regional overview Q3 sales YoY 38% SEK 57.6 b. 55% 16% 56% SEK 53.0.b. -8% 11% -3% 6% -9% 7% 5% Majority of regions are growing © Telefonaktiebolaget LM Ericsson 2014 | THIRD QUARTER REPORT 2014 | OCTOBER 24, 2014 | Page 8
Slide 8: Regional overview Q3 sales QoQ
Regional overview Q3 sales qoq 34% SEK 57.6 b. 10% 30% SEK 54.8.b. -8% 9% 16% 22% -5% 4% 1% 1% Our global footprint gives us the scale and strength to manage regional variations © Telefonaktiebolaget LM Ericsson 2014 | THIRD QUARTER REPORT 2014 | OCTOBER 24, 2014 | Page 9
Slide 9: Jan Frykhammar, CFO and Executive Vice President
JAN FRYKHAMMAR CFO and Executive Vice President
Slide 10: Third quarter
Third quarter Gross margin › Net sales SEK 57.6 (53.0) b. 37,1% 36,5% 36,4% 35,2% – Growth in all segments both YoY and QoQ 32,0% 32,4% 32,0% 31,1% – Strengthened USD impacted sales positively 30,4% › Gross income and margin improved YoY – Improved business mix, increased IPR revenues, lower Global
Slide 11: Sales growth – FX impact
Sales growth – FX impact SEK b. 80 9% 7% 70 7% 5% 60 4% Sales YoY change, Q3 2014 5% 3% 50 3% Reported Organic FX adjusted 2% 0% 40 -1% Networks 13% 7% -2% 0% 30 -1% Global Services 2% -2% -4% -3% Support Solutions 30% 10% 20 -7% Group 9% 3% 10 -9% 0 • Major FX exposure: USD, EUR and JPY Q3 Q4 Q1 Q2
Slide 12: Operating income and margin development – Q3 YoY
Operating Income and margin development – Q3 YoY SEK b. Unrealized . hedge impact -0.7-0.3 SEK -1.0 b. -0.7 Unrealized 8% hedge impact 8% SEK 0.8 b. 32.0%35.2% Acquisition & 4.9 7% strategic 4.2 6% investments 3.9 3.4 53.0 57.6 Q313 Reported Q313 Adjusted Sales Gross Restructuring Segment Other e
Slide 13: FX exposure on income
Fx Exposure oN income 2013 FX Transaction exposure (SEK b.) Revaluation of unrealized hedge contracts, effect on 22 Operating income (SEK b.) 0,8 0.0 -0,3 -0,5 -1.0 4 6 2013 Q3 Q4 2014 Q1 Q2 Q3 -7 USD EUR JPY CNY › Contracts valued at USD closing rate September 30, › Largest income exposure in USD a
Slide 14: Change in gross cash Q3
Change in gross cash Q3 Operating Cash Flow Investing1 Financing FX on cash -1.4 b -2.0 b -1.3 b +2.3 bb SEK b. 75 70 +5.0 -6.1 65 -0.2 -1.4 -0.6 -0.0 +2.3 60 -1.3 68.4 66.1 55 Change in gross cash SEK -2.3 b 50 Gross cash Net income Change net Restructuring CAPEX Acquisitions, Other Dividend FX on
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% 35 › Business highlights 30 – Operator focus on performance as a differentiator 25 6% 3% 1% 3% – Small cell portfolio now complete – RBS 6402 20 -1% -1% – Continued momentum for SSR, 134 contracts since launch 15 10 -17% – Apcera investment to s
Slide 17: Global Services
Global services SEK b. Net sales and sales development 30 30% › Business highlights 20% 20 – 17 new managed services contracts in nine regions 10% – 13 new significant consulting and systems integration 10 contracts 0% – 500+ channels served in Broadcast and Media services 0 -10% › Sales increased 2
Slide 18: Support Solutions
Support solutions SEK b. Net sales and sales development 6 40% › Business highlights 5 29% 21% 30% 4 13% – Acquisition of Fabrix Systems (TV & Media) and MetraTech 6% 3 (BSS) 2 -19% -33% – MediaFirst TV platform launched in the quarter -29% 1 – Transition of business models continues 0 Q3 Q4 Q1 Q2 Q
Slide 19: Modems
modems › All development of new modems discontinued – Current customer commitments on M7450 maintained › Changed market dynamics – Reduced addressable market for thin modems – Strong competition – Need for significant increase in R&D › Shifting parts of Modems’ resources into Radio R&D › Financial i
Slide 20: Summary
summary › Improved growth and profitability across all segments › North America business activity slowed down as operators currently focus on cash flow optimization › Continue to execute on strategic agenda - Three acquisitions - Modem development discontinued › Our global footprint, with customers
Slide 21: Q&A
Q&A © Telefonaktiebolaget LM Ericsson 2014 | THIRD QUARTER REPORT 2014 | OCTOBER 24, 2014 | Page 22
Slide 22: Ericsson Capital Markets Day
Ericsson Capital markets day november 13, Arlanda - stockholm Focus on strategy for growth and profitability › Targeted areas › Operating expenses › Resource and capital allocation http://www.ericsson.com/ericsson/investors/events/2014/capital-markets-day-2014.shtml
Slide 23: Ericsson
ERICSSON
Slide 24: Forward-looking statements
Third 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 October