Ericsson Projects Margin Increases to 2022, Further Out on Software Sales
November 10 2020 - 1:59AM
Dow Jones News
By Dominic Chopping
STOCKHOLM--Ericsson AB said late Monday it expects margins to
rise as it outlined new long-term targets ahead of its capital
markets day Tuesday.
The telecommunications equipment vendor said it is targeting a
group operating margin excluding restructuring charges of 15%-18%
beyond 2022, with free cash flow before mergers at 9%-12% of
sales.
Ericsson's group operating margin stood at 9.7% for 2019.
"Growth as well as gross margin improvements, driven by software
sales and operational leverage, will be the cornerstones in
reaching the long-term targets," it said in a statement.
The company maintained its 2022 operating margin target of
12%-14%, excluding restructuring charges, but raised the margin
target of its key networks unit to 16%-18%, from 15%-17%, helped by
increasing fifth-generation network contracts.
Its managed services margin target is also raised, to 9%-11%
from 8%-10%.
However, the 2022 margin forecast at its digital-services unit
was cut to 4%-7% from 10%-12%, due to higher research and
development spending and a decline in legacy sales.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
November 10, 2020 02:44 ET (07:44 GMT)
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