Ericsson studies first quarter outcomes 2021

First quarter highlights

  • Gross sales adjusted for comparable items and foreign money grew by 10% YoY regardless of SEK -1.6 b. decrease IPR licensing revenues YoY and 4 of the 5 market areas confirmed double-digit development. Reported gross sales have been SEK 49.8 (49.8) b.
  • Gross margin excluding restructuring prices improved to 42.9% (40.4%) with margin enhancements in all segments regardless of decrease IPR licensing revenues. Reported gross margin improved to 42.8% (39.8%).
  • EBIT excluding restructuring prices improved to SEK 5.Three b. (10.7%) from SEK 4.6 b. (9.3%) YoY pushed by Networks, greater than offsetting the unfavourable affect from decrease IPR licensing revenues. Reported EBIT was SEK 5.3 (4.3) b.
  • Networks gross sales elevated by 15% YoY, adjusted for comparable items and foreign money, pushed by market share features. Networks EBIT margin excluding restructuring prices was 19.9% (16.8%). 
  • Reported web earnings was SEK 3.2 (2.3) b. 
  • Free money circulate earlier than M&A was SEK 1.6 (2.3) b. primarily impacted by decrease incoming IPR funds. Web money per March 31, 2021 was SEK 43.0 (38.4) b.

 















SEK b.

Q1

2021
Q1

2020
YoY

change
This fall

2020
QoQ

change
Web gross sales 49.8 49.8 0% 69.6 -28%
 Gross sales development adj. for comparable items and foreign money[1]  –  –  10% –  – 
Gross margin[1]  42.8% 39.8% –  40.6% – 
EBIT  5.3 4.3 22% 11.0 -52%
EBIT margin[1]  10.6% 8.7% –  15.8% – 
Web earnings  3.2 2.3 39% 7.2 -56%
EPS diluted, SEK  0.96 0.65 48% 2.26 -58%
Measures excl. restructuring prices and different objects affecting comparability[1]
Gross margin excluding restructuring prices  42.9% 40.4% –  40.6% – 
EBIT excluding restructuring prices  5.3 4.6 16% 11.0 -51%
EBIT margin excluding restructuring prices  10.7% 9.3% –  15.8% – 
Free money circulate earlier than M&A  1.6 2.3 -33% 12.8 -88%
Web money, finish of interval  43.0 38.4 12% 41.9 3%

[1] Non-IFRS monetary measures are reconciled on the finish of this report back to probably the most instantly reconcilable line objects within the monetary statements.

Feedback from Börje Ekholm, President and CEO of Ericsson (NASDAQ:ERIC)

Our technique, constructed on elevated investments in R&D for expertise and value management, continued to bear fruit within the first quarter of 2021. We noticed natural gross sales[1] development of 10%, primarily pushed by market share features in Networks. Adjusting for declining IPR revenues, natural gross sales[1] development was 14%. Gross margin[2] improved to 42.9% (40.4%) YoY and margin will increase in all segments greater than offset decrease IPR licensing revenues. Our EBIT margin[2] elevated to 10.7% regardless of important investments in our enterprise and headwind from foreign money. We’re effectively positioned to reap the benefits of the continued market momentum with a aggressive 5G product portfolio and value construction.

Networks gross sales[1] grew organically by 15%, regardless of a decline in IPR licensing revenues. This development is reflecting continued excessive exercise ranges in all market areas, besides within the Center East and Africa. We continued to develop market share within the quarter with robust order consumption. The gross margin[2] for Q1 improved to 46.0% (44.6%). With proactive and steady measures for provide chain resilience now we have to this point been capable of handle the worldwide semiconductors scarcity scenario with out affect on our buyer deliveries. Our elevated R&D investments have accelerated product growth, evidenced by our just lately launched light-weight, energy-efficient Huge MIMO radios for 5G mid-band in addition to the Cloud RAN portfolio. These are complementing our radio portfolio, giving clients extra deployment choices and are receiving good buyer traction. We count on the general market to develop favorably throughout 2021. We intend to proceed to take a position for market share features in addition to provide chain resilience throughout the remainder of the 12 months.

Digital Companies reveals good momentum in contract awards primarily in our cloud native 5G Core portfolio and continues to execute on the plan, seen within the gross margin[2] improve to 43.6% (40.1%). Rising topline for Digital Companies is a key driver, and it’s encouraging to see gross sales[1] rising 3% organically within the quarter, regardless of decrease IPR licensing revenues in addition to continued fall within the legacy portfolio. The EBIT loss within the quarter is a results of seasonally low gross sales, decrease IPR licensing revenues and ongoing ramp-up in R&D investments. We’ll proceed to spend money on R&D for the brand new cloud native 5G Core portfolio and we’ll see preliminary deployment prices impacting 2021. Nevertheless, we count on revenues from awarded 5G Core contracts to begin late 2021 or early 2022. 2021 shall be an funding 12 months and an analogous earnings stage in Q2 as in Q1 is predicted. We’re assured that we’re constructing a robust platform for Digital Companies and the goal to succeed in an EBIT margin[2] of 4%-7% in 2022 stays.

Managed Companies delivered a gross margin[2] of 21.0% (20.6%) within the quarter. EBIT margin[2] decreased to eight.1% (11.4%), together with a one share level one-time unfavourable affect associated to an exit from a non-core enterprise. Going ahead, we proceed to give attention to additional bettering the margin profile primarily based on elevated R&D investments in automation and AI.

We’re inspired to see Cradlepoint, reported in section Rising Enterprise and Different, growing in keeping with plan.

IPR licensing revenues amounted to SEK 0.8 (2.5) b. within the quarter. The decline is principally associated to expired contracts pending renewal and decrease volumes with one licensee. For the most important contract below renewal, each authorized and negotiation processes are persevering with.

Free money circulate earlier than M&A amounted to SEK 1.6 (2.3) b. within the quarter. Usually the vast majority of the annual IPR licensing charges are obtained in Q1. Excluding the IPR affect, the money circulate improved considerably YoY because of improved earnings and continued working capital self-discipline. We’re effectively positioned with a resilient stability sheet and a strong aggressive place primarily based on our 5G portfolio giving us the chance to additional develop the corporate each organically and thru acquisitions.

The continuing international pandemic has fast-forwarded the digitalization of societies, putting a big financial and social premium on high-quality community connectivity. A resilient international digital infrastructure is important. We see optimistic indicators of governments and enterprises more and more recognizing 5G as a most popular alternative for connectivity with accelerating deployment.

We proceed to bolster our robust dedication to ethics and compliance. We’re additional rising our investments to strengthen our capabilities, and on the identical time deploying new or revised processes and inside controls. An important cornerstone is establishing a sturdy moral tradition constructed on particular person accountability for accountable enterprise practices. The continuing unbiased monitorship is offering worthwhile contributions to reaching our ambition.

There’s robust momentum within the international 5G demand with lead markets shifting ahead at excessive tempo, creating alternatives for us to develop our core enterprise. To that finish we proceed to spend money on additional strengthening our portfolio and rising our international footprint. The Enterprise alternative, on the again of 5G and IoT, gives one other engaging development space. With the investments we’re making in our enterprise in 2021, we’re creating a robust platform for the long run with strengthened competitiveness within the core enterprise in addition to in Enterprise functions.

Our primary precedence is the protection, well being and well-being of our colleagues, clients and companions. Due to the resilience of our excellent workers working below difficult situations throughout the pandemic, now we have been capable of ship to clients and handle our operations with out disruption.

Keep wholesome and effectively.

Börje Ekholm

President and CEO

[1]Gross sales adjusted for comparable items and foreign money

[2]Excluding restructuring prices

NOTES TO EDITORS

You discover the whole report with tables within the hooked up PDF or by following this hyperlink https://www.ericsson.com/property/native/buyers/paperwork/financial-reports-and-filings/interim-reports-archive/2021/3month21-en.pdf or on www.ericsson.com/buyers

Video webcast for analysts, buyers and journalists

President and CEO Börje Ekholm and CFO Carl Mellander will touch upon 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 hitch the webcast, please go to www.ericsson.com/buyers

To ask a query, please name:

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PIN code: 35472293#

Please name in not less than 15 minutes earlier than the webcast begins.

The webcast shall be accessible on-demand after the occasion and could be considered at www.ericsson.com/buyers.

FOR FURTHER INFORMATION, PLEASE CONTACT

Contact particular person

Peter Nyquist, Head of Investor Relations

Cellphone: +46 705 75 29 06

E-mail:
[email protected]

Further contacts

Stella Medlicott, Senior Vice President, Advertising and Company Relations

Cellphone: +46 730 95 65 39

E-mail:
[email protected]

Buyers

Lena Häggblom, Director, Investor Relations

Cellphone: +46 72 593 27 78

E-mail: 
[email protected]

Stefan Jelvin, Director, Investor Relations

Cellphone: +46 709 86 02 27

E-mail:
[email protected]

Media

Peter Olofsson, Head of Company Communications

Cellphone: +46 702 67 34 45

E-mail: 
[email protected]

Company Communications

Cellphone: +46 10 719 69 92

E-mail: 
[email protected]

That is info that Telefonaktiebolaget LM Ericsson is obliged to make public pursuant to the EU Market Abuse Regulation. The data was submitted for publication, via the company of the contact particular person set out above, at 07:00 AM CEST on April 21, 2021.

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