Q2 report 2015
Ericsson's financial report was released at 7.30am CET, on July 17, 2015. On this page you will find: CEO Comments, Press Conference webcast and the Media & Analyst conference call information.
Comments from Hans Vestberg, President and CEO
Reported sales increased by 11%. Sales, adjusted for comparable units and currency, decreased by -6% YoY, mainly impacted by less capacity business in North America. Profitability improved sequentially, driven by a strong development in segment Networks.
The mobile broadband business in North America stabilized in the quarter, but remained at a lower level than a year ago. The YoY decline in North America was partly offset by an increased pace of 4G deployments in Mainland China. Sales growth was strong in the Middle East, India and South East Asia, while it continued to be weak in Japan. Professional Services sales increased YoY with continued strong global demand and growth in all ten regions.
The OSS & BSS business had a favorable development YoY, contributing to sales both in Professional Services and segment Support Solutions. Segment Networks sales increased by 18% sequentially, supported by the stabilized mobile broadband sales in North America.
Operating income, excluding restructuring charges, increased YoY by almost 50%, with improvements in all segments. After a weak first quarter, segment Networks profitability recovered, driven by increased sales and a positive currency hedge effect.
Reported IPR revenues were slightly down YoY despite a positive currency effect as a majority of the licenses contracts are in USD. The decline was primarily due to the ongoing dispute with a major customer.
Cost and efficiency program
The global cost and efficiency program is progressing according to plan. The target, to achieve savings of approximately SEK 9 b. during 2017 relative to 2014, remains. During the quarter, numerous activities were implemented globally including a reduction of 2,100 positions in Sweden, resulting in higher than normal restructuring charges. Savings related to the activities will start to impact results towards the end of this year.
After a weak first quarter, cash flow from operating activities was positive in the quarter. As cash flow is volatile between quarters it should be viewed on a full-year basis. Our full-year cash conversion target of more than 70% remains.
Targeted growth areas
Our growth strategy builds on a combination of excelling in our core business and establishing leadership in targeted growth areas. We see good progress in the targeted areas and sales continued its strong development from the first quarter. This was mainly driven by a solid sales development in OSS & BSS.
The consolidation in the industry continues, both among vendors and customers, creating opportunities and challenges. Therefore we have, during the first half of 2015, accelerated our transformation journey towards becoming a true ICT company. With our ongoing strategic initiatives we are well positioned to continue to create value for our customers in a transforming market.
Conference call for analysts, investors and media
The conference call for financial analysts, investors and media will begin at 14:00 CET (13:00 BST in the UK, 08:00 EDT in the US, and 21:00 local time in Japan).
Hans Vestberg, Jan Frykhammar and Magnus Mandersson, Head of Business Unit Global Services, will comment on the report and take questions.
Sweden: +46 8 505 202 94
International: +44 20 776 964 25
Confirmation number: 1872 8920#
Press conference and live webcast, 9AM CET
Ericsson will hold a press briefing, which will be shown in a live webcast, starting at 09:00 CET on July 17, 2015 at Ericsson Studio, Grönlandsgången 4, Kista, Sweden.
Ericsson President and CEO Hans Vestberg and CFO Jan Frykhammar will comment on the report and answer questions. The press briefing is open to journalists and analysts.
Note:Please note that webcast viewers will not be able to post questions.