Ericsson
OMX : ERIC
NASDAQ : ERIC

July 18, 2012 01:42 ET

Ericsson second quarter 2012

STOCKHOLM, SWEDEN--(Marketwire - Jul 18, 2012) -


* Sales increased 1% YoY and showed a good performance QoQ, +9%.

* Networks sales decreased YoY due to the expected decline in CDMA equipment sales as well as weaker sales in China and Russia.

* Global Services and Support Solutions showed strong performance YoY and QoQ.

* The underlying business mix, with higher share of coverage projects than capacity projects, was unchanged in the quarter and is expected to prevail short-term. The negative gross margin impact from the network modernization projects in Europe will start to gradually decline end 2012.

* Cash flow from operations SEK -1.4 b. impacted by high working capital mainly due to late invoicing.

* Net income SEK 1.2 b., down from SEK 3.2 b. YoY, impacted by lower profitability in Network and increased loss in ST-Ericsson.

* EPS diluted SEK 0.34 (0.96). EPS Non-IFRS SEK 0.78 (1.60).

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                              Q2    Q2    YoY    Q1    QoQ Six m.    Six m.
 SEK b.                    2012   2011 Change  2012 Change   2012      2011
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 Net sales                  55.3  54.8     1%  51.0     9%  106.3     107.7
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 Of which Networks          27.8  33.4   -17%  27.3     2%   55.1      66.6
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 Of which Global Services   24.1  19.0    26%  20.6    17%   44.7      36.5
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 Of which Support            3.5   2.4    47%   3.0    15%    6.5       4.7
 Solutions
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 Gross margin              32.0% 37.8%      - 33.3%      -  32.6%     38.1%
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 EBITA margin excl JVs and  8.0% 11.4%      -  7.7%      -   7.9%     12.7%
 Sony Ericsson sale

 Operating income excl JVs   3.3   5.0   -35%   2.8    17%    6.1      11.3
 and Sony Ericsson sale

 Operating margin excl JVs  5.9%  9.2%      -  5.5%      -   5.7%     10.5%
 and Sony Ericsson sale
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 EBITA margin excl JVs      8.0% 11.4%      - 22.8%      -  15.2%     12.7%
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 Operating income excl JVs   3.3   5.0   -35%  10.5      -   13.8      11.3

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 Operating margin excl JVs  5.9%  9.2%      - 20.6%      -  13.0%     10.5%
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 Of which Networks            5%   14%      -    6%      -     5%       16%
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 Of which Global Services     6%    5%      -    6%      -     6%        6%
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 Of which Support            12%  -11%      -   -1%      -     6%      -13%
 Solutions
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 Operating income incl JVs   2.1   4.3   -51%   9.1      -   11.2      10.1
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 Income after financial      1.8   4.6      -   9.1      -   10.8      10.4
 items
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 Net income                  1.2   3.2   -63%   8.8      -   10.0       7.3
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 EPS diluted, SEK           0.34  0.96   -65%  2.76   -88%   3.10      2.23
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 EPS (Non-IFRS), SEK(1))    0.78  1.60   -51%  3.14   -75%   3.91      3.21
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 Cash flow from operations  -1.4   5.8      -   0.7      -   -0.6       2.9
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 Cash conversion            -43%  115%      -   17%      -    -9%       25%
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 Net cash, end of period       -     -      -  37.1      -   25.9      42.6
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 (1))  EPS, diluted, excl. amortizations, write-downs of acquired
       intangible assets and restructuring.
 Q112 includes a gain from the divestment of Sony Ericsson of SEK 7.7 b.
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Comments from Hans Vestberg, President and CEO

"In the quarter, demand for Global Services and Support Solutions was strong, while Networks sales decreased YoY mainly due to the expected decline in CDMA equipment sales as well as lower business activity in China, including weaker sales of GSM and lower 3G sales in Russia," says Hans Vestberg, President and CEO of Ericsson (NASDAQ: ERIC). "In Global Services all areas showed good growth in the quarter due to operators' focus on operational efficiency and high project activities. The strong development for Support Solutions was driven by billing systems and TV solutions. Global Services and Support Solutions together represented about half of the Group's revenues. The growing Global Services business has a dilutive impact on gross margin.

We continue to stay close to our customers to monitor the impacts of macroeconomic development and political uncertainty in certain regions on their investments. In customer conversations it is clear that the fundamental drivers for increased data traffic are unchanged. Today there are more than 700 million smartphone subscriptions and according to our estimates this number will increase to three billion in 2017. Based on these drivers, we see an increasing focus from our customers on network performance and quality of service. This will require continuous operator investments in hardware, software and services.

Our joint venture ST-Ericsson is still in a challenging situation due to a significant drop in sales of new products to one of the largest customers and continued decline in legacy products. The company continues to focus on securing the successful execution and delivery of its NovaThor ModAp platforms and Thor modems to customers while executing on company transformation aiming at lowering its break-even point.

In 2010 we made a conscious decision to gain market share and increase technology and services leadership, well aware of the short-term profitability pressure. Our focus is now on translating these gains into sustainable profitable growth," concludes Vestberg.

You find the complete report with tables in the attached PDF or by following this link: www.ericsson.com/res/investors/docs/q-reports/2012/6month12-en.pdf

NOTES TO EDITORS

To read the complete report with tables, please go to: www.ericsson.com/res/investors/docs/q-reports/2012/6month12-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), July 18, 2012. An analysts, investors and media conference call will begin at 14.00 (CET).

Live webcast of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors

Video material will be published during the day on www.ericsson.com/press

FOR FURTHER INFORMATION, PLEASE CONTACT

Helena Norrman, Senior Vice President, Communications
Phone: +46 10 719 3472
E-mail:  investor.relations@ericsson.com  or  media.relations@ericsson.com 

Investors

Åse Lindskog, Vice President,
Head of Investor and Analyst Relations
Phone: +46 10 719 9725 , +46 730 244 872
E-mail:  investor.relations@ericsson.com 

Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 2039 , +46 709 860 227
E-mail:  investor.relations@ericsson.com 

Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 3928 , +46 730 825 928
E-mail:  investor.relations@ericsson.com 

Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 5400, +46 761 005 400
E-mail:  investor.relations@ericsson.com 

Media

Ola Rembe, Vice President,
Head of Corporate Public & Media Relations
Phone: +46 10 719 97 27, +46 730 244 873
E-mail:  media.relations@ericsson.com 

Corporate Public & Media Relations
Phone: +46 10 719 69 92
E-mail:  media.relations@ericsson.com 

Telefonaktiebolaget LM Ericsson (publ)
Org. number: 556016-0680
Torshamnsgatan 23
SE-164 83 Stockholm
Phone: +46 10 719 00 00
 www.ericsson.com 

Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on July 18, 2012.

Second quarter report 2012: http://hugin.info/1061/R/1627496/520892.pdf

Press release second quarter report 2012: http://hugin.info/1061/R/1627496/520893.pdf

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Ericsson via Thomson Reuters ONE [HUG#1627496]

Contact Information

  • FOR FURTHER INFORMATION, PLEASE CONTACT

    Helena Norrman
    Senior Vice President, Communications
    Phone: +46 10 719 3472
    E-mail: Email Contact or Email Contact