Ericsson reports second quarter results 2013

    2013-07-18 Categories: Corporate, Press Releases Download:
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    Second quarter highlights

    • Sales were flat YoY at SEK 55.3 b. For comparable units and adjusted for FX, sales increased 7% YoY and 6% QoQ.
    • Operating income incl. JV was SEK 2.5 (2.1) b. with an operating margin of 4.5% (3.8%).
    • The quarter was negatively impacted by one-time items of SEK -0.9 b. from losses due to divestments and exiting the telecom and power cable operations.
    • Net income was SEK 1.5 (1.2) b.
    • EPS diluted was SEK 0.45 (0.34). EPS Non-IFRS was SEK 0.88 (0.78).
    • Cash flow from operating activities was SEK 4.3 b.
    SEK b. Q2
    2013
    Q2
    2012  
    YoY
    Change
    Q1
    2013
    QoQ
    Change
    6 months
    2013
    6 months
    2012
    Net sales 55.3 55.3 0% 52.0 6% 107.4 106.3
         Of which Networks 28.1 27.8 1% 28.1 0% 56.3 55.1
         Of which Global Services 24.9 24.1 3% 21.5 16% 46.3 44.7
         Of which Support Solutions 2.3 3.5 -33% 2.4 -4% 4.8 6.5
    Gross margin 32.4% 32.0% - 32.0% - 32.2% 32.6%
    Operating income excl JV 2.5 3.3 -24% 2.1 17% 4.6 13.8
    Operating margin excl JV 4.5% 5.9% - 4.1% - 4.3% 13.0%
         Of which Networks 5% 5% - 6% - 5% 5%
         Of which Global Services 6% 6% - 3% - 5% 6%
         Of which Support Solutions -12% 12% - -1% - -7% 6%
    Operating income incl JV 2.5 2.1 19% 2.1 17% 4.6 11.2
    Operating margin incl JV 4.5% 3.8% - 4.0% - 4.3% 10.5%
    Net income 1.5 1.2 26% 1.2 26% 2.7 10.0
    EPS diluted, SEK 0.45 0.34 32% 0.37 22% 0.82 3.10
    EPS (Non-IFRS), SEK1) 0.88 0.78 13% 0.99 - 1.88 3.91
    Cash flow from operating activities 4.3 -1.4 - -3.0 - 1.3 -0.6
    Net cash, end of period 27.4 25.9 6% 32.2 -15% 27.4 25.9
    1)  EPS, diluted, excl. amortizations, write-downs of acquired intangible assets and restructuring

    COMMENTS FROM HANS VESTBERG, PRESIDENT AND CEO

    "Sales for comparable units, adjusted for FX, grew 7%. Reported sales were flat YoY, due to continued currency headwind," said Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).

    "There was continued high project activity in Europe as well as in North America where two large mobile broadband coverage projects have peaked in first half 2013. North East Asia had another challenging quarter following continued structural decline in GSM investments in China, FX in Japan and lower business activity in South Korea due to spectrum delays.

    The business mix, with a higher share of coverage projects than capacity projects, started to shift slightly towards more capacity during the quarter.

    We implemented our strategy to capture new market share in the network modernization projects in Europe starting in 2010, despite their initial lower margins. Now that these projects gradually come to an end, we can conclude that we have been successful in gaining market share and regained leadership in Europe. It is also encouraging to see that we are now starting to engage in new business, based on this footprint, regarding capacity and LTE projects in Europe.

    We continue to strengthen our leading position in 4G/LTE. The vendor selection processes for 4G/LTE in Russia and China continue and to date we have been awarded contracts by two large operators in Russia.

    During the quarter we also reached one billion subscribers in networks managed by Ericsson. This clearly shows the confidence our customers have in our ability to create value for them.

    Profitability improved YoY, adjusted for one-time effects related to exiting the telecom and power cable operations and the divestment of Applied Communication Sciences (ACS). The improvement was driven by higher gross margins and lower operating expenses. This was partly offset by currency headwind.

    With the announcement in April and July of the intended acquisitions of Microsoft's Mediaroom and Red Bee Media, we continue to strengthen our position in TV and media. As TV and media converge with telecom we can leverage our strength in media management and managed services. Video is already the single largest contributor to traffic in mobile networks and is expected to grow by 60% annually until 2018.

    While the macroeconomic situation in Europe remains challenging and the political uncertainty in parts of Region Middle East, such as Egypt, increases, the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market," concludes Vestberg.

    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/2013/06month13-en.pdf or go to: www.ericsson.com/investors

    Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), July 18, 2013. An analysts, investors and media conference call will begin at 15.00 (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/broadcast_room

    FOR FURTHER INFORMATION, PLEASE CONTACT

    Helena Norrman, Senior Vice President, Communications
    Phone: +46 10 719 34 72
    E-mail: media.relations@ericsson.com

    Investors

    Åsa Konnbjer, Director, Investor Relations
    Phone: +46 10 713 39 28
    E-mail: investor.relations@ericsson.com

    Stefan Jelvin, Director, Investor Relations
    Phone: +46 10 714 20 39
    E-mail: investor.relations@ericsson.com

    Rikard Tunedal, Director, Investor Relations
    Phone: +46 10 714 54 00
    E-mail: investor.relations@ericsson.com

    Media

    Ola Rembe, Vice President, Head of External Communications
    Phone: +46 10 719 97 27
    E-mail: media.relations@ericsson.com

    Corporate Communications
    Phone: +46 10 719 69 92
    E-mail: media.relations@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, 2013.