Ericsson reports third quarter results 2015
(Thomson Reuters ONE) -
THIRD QUARTER HIGHLIGHTS
* Reported sales increased by 3% YoY. Sales, adjusted for comparable units and
currency, decreased by -9% due to lower sales in Networks. This was partly
offset by sales growth in Professional Services.
* The mobile broadband business in North America remained stable QoQ, but at a
lower level compared to the same period last year.
* Reported sales in Networks declined sequentially impacted by a slowdown of
the 4G deployments in Mainland China.
* Gross margin declined YoY to 33.9% (35.2%). Excluding restructuring charges,
gross margin decreased to 34.5% (35.5%) due to a higher share of Global
Services sales.
* The global cost and efficiency program is progressing according to plan,
contributing to lower cost level YoY.
* Operating margin, excluding restructuring charges, improved YoY to 10% (7%).
Network Rollout, within Global Services, reached a break-even result.
* Cash flow from operating activities was SEK 1.6 (-1.4) b.
+----------------------------+-----+-----+------+-----+------+--------+--------+
| | Q3| Q3| YoY| Q2| QoQ|9 months|9 months|
| SEK b. | 2015| 2014|change| 2015|change| 2015| 2014|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Net sales | 59.2| 57.6| 3%| 60.7| -2%| 173.4| 160.0|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Sales growth adj. for | | | | | | | |
|comparable units and | | | | | | | |
|currency | -| -| -9%| -| -2%| -7%| -2%|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Gross margin |33.9%|35.2%| -|33.2%| -| 34.1%| 36.0%|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Gross margin excluding | | | | | | | |
|restructuring charges |34.5%|35.5%| -|35.1%| -| 35.3%| 36.2%|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Operating income | 5.1| 3.9| 31%| 3.6| 43%| 10.8| 10.5|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Operating income excluding| | | | | | | |
|restructuring charges | 6.1| 4.2| 46%| 6.3| -4%| 15.1| 11.2|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Operating margin | 8.6%| 6.7%| -| 5.9%| -| 6.2%| 6.6%|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Operating margin excluding| | | | | | | |
|restructuring charges |10.2%| 7.2%| -|10.4%| -| 8.7%| 7.0%|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Net income | 3.1| 2.6| 19%| 2.1| 47%| 6.7| 7.0|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| EPS diluted, SEK | 0.94| 0.81| 16%| 0.64| 47%| 1.98| 2.25|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| EPS (Non-IFRS), SEK (1)) | 1.34| 1.11| 21%| 1.45| -8%| 3.56| 3.08|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Cash flow from operating | | | | | | | |
|activities | 1.6| -1.4| -| 3.1| -49%| -1.3| 10.1|
+----------------------------+-----+-----+------+-----+------+--------+--------+
| Net cash, end of period | -0.2| 29.4| -101%| 3.5| -107%| -0.2| 29.4|
+----------------------------+-----+-----+------+-----+------+--------+--------+
|1) EPS, diluted, excl. amortizations and write-downs of acquired intangible |
|assets, and restructuring. |
+------------------------------------------------------------------------------+
Comments from Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC)
Reported sales increased by 3% YoY. Sales, adjusted for comparable units and
currency, decreased by -9%, due to lower sales in Networks. This was partly
offset by continued solid sales growth in Professional Services. Profitability
improved YoY, with lower operating expenses as a significant contributor.
Business
Sales growth remained strong in India as well as in South East Asia and Oceania
compared to the same period last year, while sales declined in North East Asia
as well as in Northern Europe and Central Asia.
The mobile broadband business in North America remained stable QoQ, but at a
lower level compared to the same period last year.
In the quarter, there was a slowdown of the 4G deployments in Mainland China. We
also saw a somewhat slower pace of mobile broadband investments in markets such
as Russia, Brazil and parts of the Middle East which had a weak macro
development.
Professional Services sales increased by 15% YoY, with double-digit growth in
eight out of ten regions, driven by strong performance across the portfolio.
Profitability
Operating income, excluding restructuring charges, increased by 46% YoY with
improvements in all segments. The main contributors to the profit improvement
were lower operating expenses and a break-even result in Network Rollout. The
negative effect of revaluation and realization of currency hedge contracts was
lower than a year ago.
Global Services operating margin increased to 9% as an effect of the improved
Network Rollout profitability and a solid result in Professional Services.
Segment Networks profitability remained stable in the quarter, with an operating
margin of 10%, despite lower sales.
Cost and efficiency program
The global cost and efficiency program, with the target to achieve annual net
savings of SEK 9 b. during 2017, is progressing according to plan. Since the
announcement in November last year, a number of activities have been implemented
globally, contributing to lower cost levels.
Cash flow
After a weak first quarter our cash flow from operating activities has now been
positive for the last two quarters despite major payouts related to the ongoing
cost and efficiency program. Cash flow year to date has been negatively impacted
by increased working capital. This was driven by a business mix with a high
share of coverage projects in Mainland China and emerging markets.
Targeted growth areas
Our strategic growth initiatives build on a combination of excelling in our core
business and establishing leadership in targeted growth areas. We see continued
good progress in these areas which had a sales growth of more than 10% YoY.
In targeted growth area TV & Media we made two important customer announcements
in North America, confirming our strong position in the fast-growing TV & Media
market. In addition, Ericsson signed an agreement to acquire the Nasdaq-listed
company Envivio, a global leader in software-based video encoding.
There is an increased customer interest in future network architecture for 5G,
virtualization, efficient video delivery and internet of things (IoT). With our
ongoing strategic initiatives, we are well positioned to create value for our
customers and shareholders in a transforming market.
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or by following
this link www.ericsson.com/res/investors/docs/q-reports/2015/09month15-en.pdf or
on www.ericsson.com/investors
Ericsson invites media, investors and analysts to a briefing at the Ericsson
Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), October 23, 2015.
A conference call for analysts, investors and media will begin at 14.00 (CET).
Live webcast of the briefing and conference call details, as well as supporting
slides, will be available at www.ericsson.com/press and
www.ericsson.com/investors
FOR FURTHER INFORMATION, PLEASE CONTACT
Helena Norrman, Senior Vice President, Marketing and Communications
Phone: +46 10 719 34 72
E-mail: media.relations(at)ericsson.com
Investors
Peter Nyquist, Head of Investor Relations
Phone: +46 10 714 64 49
E-mail: peter.nyquist(at)ericsson.com
Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 39 28
E-mail: asa.konnbjer(at)ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 20 39
E-mail: stefan.jelvin(at)ericsson.com
Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 54 00
E-mail: rikard.tunedal(at)ericsson.com
Media
Ola Rembe, Vice President, Head of External Communications
Phone: +46 10 719 97 27
E-mail: media.relations(at)ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations(at)ericsson.com
Ericsson discloses the information provided herein pursuant to the Securities
Markets Act. The information was submitted for publication at 07.35 CET, on
October 23, 2015.
Ericsson third quarter report 2015:
http://hugin.info/1061/R/1961043/715015.pdf
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[HUG#1961043]
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Datum: 23.10.2015 - 07:35 Uhr
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