TIDM61QS
RNS Number : 4649S
Telefonaktiebolaget Lm Ericsson
14 July 2022
Ericsson reports second quarter results 2022
Second quarter highlights
-- Group organic sales grew by 5% YoY driven primarily by
Networks in North America and Europe. Reported sales were SEK 62.5
(54.9) b.
-- Reported gross income increased to SEK 26.3 (23.9) b. driven
by higher sales. Gross margin was 42.1% (43.4%) impacted by lower
IPR revenues of SEK 0.9 b YoY and supply chain cost, partly offset
by timing of software sales in a large contract and underlying
improvements.
-- Reported EBIT amounted to SEK 7.3 (5.8) b. as a result of
higher sales and higher gross income. EBIT margin was 11.7%
(10.6%).
-- Reported EBITA amounted to SEK 7.5 (6.1) b. with an EBITA
margin of 12.0% (11.1%). EBITA margin rolling four quarters was
14%.
-- Networks reported EBIT margin was 19.2% (21.7%) impacted by
lower IPR revenues, increased component and logistics costs, and
proactive investments in supply chain resilience, partly offset by
timing of software sales in a large contract.
-- Reported net income was SEK 4.7 (3.9) b.
-- Free cash flow before M&A was SEK 4.4 (4.1) b. Net cash
on June 30, 2022, was SEK 70.3 b. compared with SEK 43.7 b. on June
30, 2021.
-- Planning for a Capital Markets Day December 15, 2022.
Q2 Q2 YoY Q1 QoQ Jan-Jun Jan-Jun YoY
SEK b. 2022 2021 change 2022 change 2022 2021 change
Net sales 62.5 54.9 14% 55.1 13% 117.5 104.7 12%
------- ------- --------- ------- --------- -------- -------- ---------
Sales growth adj. for comparable
units and currency[1] - - 5% - - - - 4%
------- ------- --------- ------- --------- -------- -------- ---------
Gross margin[1] 42.1% 43.4% - 42.3% - 42.2% 43.1% -
------- ------- --------- ------- --------- -------- -------- ---------
EBIT 7.3 5.8 26% 4.7 54% 12.1 11.1 9%
------- ------- --------- ------- --------- -------- -------- ---------
EBIT margin[1] 11.7% 10.6% - 8.6% - 10.3% 10.6% -
------- ------- --------- ------- --------- -------- -------- ---------
Net income 4.7 3.9 19% 2.9 60% 7.6 7.1 7%
------- ------- --------- ------- --------- -------- -------- ---------
EPS diluted, SEK 1.35 1.10 23% 0.88 53% 2.23 2.06 8%
------- ------- --------- ------- --------- -------- -------- ---------
Measures excl. restructuring charges[1]
Gross margin excluding restructuring
charges 42.2% 43.4% - 42.3% - 42.2% 43.2% -
------- ------- --------- ------- --------- -------- -------- ---------
EBIT excluding restructuring
charges 7.4 5.8 26% 4.8 54% 12.1 11.2 9%
------- ------- --------- ------- --------- -------- -------- ---------
EBIT margin excluding restructuring
charges 11.8% 10.6% - 8.7% - 10.3% 10.7% -
------- ------- --------- ------- --------- -------- -------- ---------
Free cash flow before M&A 4.4 4.1 9% -1.7 - 2.8 5.6 -51%
------- ------- --------- ------- --------- -------- -------- ---------
Net cash, end of period 70.3 43.7 61% 65.2 8% 70.3 43.7 61%
------- ------- --------- ------- --------- -------- -------- ---------
[1] Non-IFRS financial measures are reconciled at the end of
this report to the most directly reconcilable line items in the
financial statements.
Comments from Börje Ekholm, President and CEO of Ericsson
(NASDAQ:ERIC)
Strong business momentum continued during the second quarter.
Rollout of 5G networks and market share gains resulted in a 5%
organic sales[1] growth in the quarter. We have adjusted our group
structure to strengthen execution of our strategy to be a leading
mobile infrastructure provider and to establish a focused
enterprise business. Consumers, enterprises, and society will be
digitalized through 5G in a way we have not seen before. With our
strategy, we are in a position to capture these opportunities to
enable further growth.
Technology leadership is a foundation for our growth strategy.
Since 2017, our increased R&D investments have created
significant value. The geopolitical situation has also required
proactive investments to de-risk our supply chain and ensure that
we can deliver on our strategy to gain footprint. The global supply
chain situation remains challenging and inflationary pressures are
strong. Combined, this results in cost increases which we work hard
to mitigate as far as possible. As contracts expire, we aim to
adjust pricing. However, we believe the best way to compensate for
cost increases is the continued investment in technology to
increase the cadence of bringing new innovative solutions to the
market.
Fulfilling customer commitments under current challenging
conditions, comes at a cost which dilutes gross margin. The
increased costs have been largely absorbed through our investments
in innovation and continuous improvements. Increased sales resulted
in a gross income improvement in absolute terms of SEK 2.4 b.
compared with Q2 last year, despite lower IPR revenues of SEK 0.9
b. YoY.
While 5G is the fastest scaling mobile technology, global
penetration is still in an early phase. We foresee that the global
5G build-out will be larger and continue for longer than previous
mobile generations. The build-out will include evolving consumer
use cases, such as Fixed Wireless Access, mobile gaming and XR
applications, in addition to new areas, such as enterprise and
first responders.
Networks sales[1] grew organically by 6% in Q2 underpinned by
market share gains. Gross margin was 45.1% (47.9%), impacted by
lower IPR revenues, increased component and logistics costs, and
proactive investments in supply chain resilience, which enabled
continued delivery performance in the quarter. We continue to
invest in enhancing and expanding our offerings, and we increased
R&D in the quarter primarily for Cloud RAN and acceleration of
the next-generation Ericsson Silicon (ASICs).
Digital Services sales[1] grew organically by 2% YoY with strong
growth in cloud native 5G Core, and an EBIT of SEK -1.3 (-1.6) b.
The accelerated 5G Core projects with initial deployment costs
partly offset the margin improvement from increased software
sales.
Managed Services sales[1] were flat YoY with an EBIT margin of
11.2% (8.1%). With a 4Q rolling EBIT margin[2] of 9.5%, we achieved
our 2022 target two quarters ahead of plan.
The new group structure, to be reported from Q3, positions us
well to execute on our strategy. Segment Cloud Software and
Services is formed by merging Digital Services and Managed Services
to create stronger customer propositions as our customers are
moving towards 5G using cloud technologies and intelligent
automation. The Digital Services business will leverage our
technology leadership to accelerate customers' transformation to
cloud native networks. We are committed to turning around the
business in support of the Group reaching the long-term
targets.
Segment Enterprise includes Enterprise Wireless Solutions,
combining Cradlepoint with Dedicated Networks to capture the
growing needs for enterprise solutions. The Enterprise segment will
also include the Global Network Platform, which we believe will
create a paradigm shift in the industry as the full capabilities of
the network will be exposed to the global developer communities and
enterprises. This will inspire innovation with new opportunities
for the operators to monetize network investments. The intended
acquisition of Vonage is an important building block, and we are
working to secure approval and close the transaction before end of
July. The third element of the Enterprise segment is Technologies
& New Businesses, previously within segment Emerging Business
and Other.
IPR licensing revenues were affected by several expiring patent
license agreements pending renewal and by 5G license negotiations
in the quarter. We are confident in our strong 5G position and
leading patent portfolio, positioning us well to conclude pending
and future license renewals. With current contracts, revenues from
IPR are estimated to be SEK 1.0-1.5 b. in Q3.
To secure deliveries we have pro-actively increased our buffer
inventories. Additionally, unpredictable deliveries of components
and site material led to increased inventory levels across our
business. We were, however, able to partly offset the inventory
increases with other working capital improvements, thereby
delivering an improved free cash flow before M&A amounting to
SEK 4.4 (4.1) b. Based on current visibility, we expect a gradual
reduction in inventory towards the end of the year.
We continue to strengthen our governance, risk management, and
compliance across the group and are fully committed to operating
with integrity. We continue to engage with the Department of
Justice and the Securities and Exchange Commission in relation to
the 2019 Iraq investigation report and the DPA breach notices. The
outcome of these matters cannot be assessed at this point in time.
We are fully committed to cooperating with the US authorities.
Our strategy targets a higher growth trajectory as we aim to
grow our core mobile infrastructure business and capitalize on the
fast-growing enterprise market. With 5G, the world is experiencing
the largest innovation platform to date, where anything that can go
wireless, will go wireless. Ericsson is at the epicenter of this
powerful trend, and we will continue to invest in technology
leadership to ensure we capitalize on this position. EBITA
margin[2] rolling four quarters was 14% and we remain determined to
reach our long-term target of an EBITA margin[2] of 15-18% no later
than in 2-3 years.
Börje Ekholm
President and CEO
[1] Sales adjusted for comparable units and currency
[2] Excluding restructuring charges
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or
on www.ericsson.com/investors
Video webcast for analysts, investors and journalists
President and CEO Börje Ekholm and CFO Carl Mellander will
comment on the report and take questions at a video webcast at 9:00
AM CEST (8:00 AM BST London, 3:00 AM EDT New York).
To join the webcast, please go to www.ericsson.com/investors
To ask a question, please call:
Sweden: +46 (0)8 566 426 51 (Toll-free Sweden: 0200 883 685)
International/UK: +44 (0)333 300 0804 (Toll-free UK: 0800 358
9473)
US: +1 631 913 1422 (Toll-free US: +1 855 85 70686)
PIN code: 34742898#
Please call in at least 15 minutes before the webcast
starts.
The webcast will be available on-demand after the event and can
be viewed at www.ericsson.com/investors .
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Peter Nyquist, Head of Investor Relations
Phone: +46 705 75 29 06
E-mail: peter.nyquist@ericsson.com
Additional contacts
Stella Medlicott, Senior Vice President, Marketing and Corporate
Relations
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com
Investors
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Media
Kristoffer Edshage, Director Corporate Media
Phone: +46 722 20 44 46
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
This is information that Telefonaktiebolaget LM Ericsson is
obliged to make public pursuant to the EU Market Abuse Regulation
and the Swedish Securities Markets Act. The information was
submitted for publication, through the agency of the contact person
set out above, at 07:00 CEST on July 14, 2022.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR QZLBFLDLLBBD
(END) Dow Jones Newswires
July 14, 2022 02:31 ET (06:31 GMT)
Telefonak. 24 (LSE:61QS)
Historical Stock Chart
From Dec 2024 to Jan 2025
Telefonak. 24 (LSE:61QS)
Historical Stock Chart
From Jan 2024 to Jan 2025
