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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
April 24, 2013
LM ERICSSON TELEPHONE COMPANY
(Translation of registrant’s name into English)
Torshamnsgatan 23, Kista
SE-164 83, Stockholm, Sweden
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ¨ No x
Announcement of LM Ericsson Telephone Company, datedApril 24, 2013 regarding “Ericsson reports first quarter results 2013”
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TELEFONAKTIEBOLAGET LM ERICSSON (publ) | ||
By: | /s/ NINA MACPHERSON | |
Nina Macpherson | ||
Senior Vice President and | ||
General Counsel | ||
By: | /s/ HELENA NORRMAN | |
Helena Norrman | ||
Senior Vice President | ||
Corporate Communications |
Date:April 24, 2013
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ERICSSON
FIRST QUARTER
REPORT 2013
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Ericsson first quarter report 2013
APRIL 24, 2013
FIRST QUARTER HIGHLIGHTS
• | Sales in the quarter were SEK 52.0 b. For comparable units and adjusted for FX and hedging, sales increased 7% YoY and declined -19% QoQ. |
• | Operating income incl. JV was SEK 2.1 b. with an operating margin of 4.0%. Excluding the restructuring charges related to the reduction of operations in Sweden of SEK 1.4 b. the margin amounted to 6.7%. Last year’s margin of 17.8% was positively impacted by a gain of SEK 7.7 b. from the divestment of Sony Ericsson. |
• | Net income was SEK 1.2 (8.8) b. |
• | EPS diluted was SEK 0.37 (2.76). EPS Non-IFRS was SEK 0.99 (3.14). |
CONTENTS | ||||
3 | Financial highlights | |||
5 | Segment results | |||
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• | Cash flow from operating activities was SEK -3.0 b. primarily driven by higher working capital. |
• | Net cash decreased by SEK -6.3 b. QoQ to SEK 32.2 b. mainly due to negative operating cash flow and reclassification of Swedish special payroll taxes of SEK 1.8 b. from Other current liabilities to Pension liabilities. |
SEK b. | Q1 2013 | Q1 20122) | YoY Change | Q4 2012 | QoQ Change | |||||||||||||||
Net sales | 52.0 | 51.0 | 2 | % | 66.9 | -22 | % | |||||||||||||
Of which Networks | 28.1 | 27.3 | 3 | % | 35.3 | -20 | % | |||||||||||||
Of which Global Services | 21.5 | 20.6 | 4 | % | 28.0 | -24 | % | |||||||||||||
Of which Support Solutions | 2.4 | 3.0 | -19 | % | 3.6 | -33 | % | |||||||||||||
Gross margin | 32.0 | % | 33.3 | % | — | 31.1 | % | — | ||||||||||||
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Operating income excl JV | 2.1 | 10.5 | -80 | % | 4.8 | -55 | % | |||||||||||||
Operating margin excl JV | 4.1 | % | 20.6 | % | — | 7.1 | % | — | ||||||||||||
Of which Networks | 6 | % | 6 | % | — | 8 | % | — | ||||||||||||
Of which Global Services | 3 | % | 6 | % | — | 6 | % | — | ||||||||||||
Of which Support Solutions | -1 | % | -1 | % | — | 8 | % | — | ||||||||||||
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Operating income incl JV | 2.1 | 9.1 | -77 | % | -3.8 | — | ||||||||||||||
Operating margin incl JV | 4.0 | % | 17.8 | % | — | -5.7 | % | — | ||||||||||||
Net income | 1.2 | 8.8 | -86 | % | -6.3 | — | ||||||||||||||
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EPS diluted, SEK | 0.37 | 2.76 | -87 | % | -1.99 | — | ||||||||||||||
EPS (Non-IFRS), SEK1) | 0.99 | 3.14 | -68 | % | -1.40 | — | ||||||||||||||
Cash flow from operating activities | -3.0 | 0.7 | — | 15.7 | — | |||||||||||||||
Net cash, end of period | 32.2 | 37.1 | -13 | % | 38.5 | -16 | % |
1) | EPS, diluted, excl. amortizations, write-downs of acquired intangible assets, and restructuring |
2) | Q1 2012 includes a gain from the divestment of Sony Ericsson of SEK 7.7 b. |
Ericsson First Quarter Report 2013 | 1 |
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Comments from Hans vestberg, president and ceo
“Sales showed positive development in the quarter with a growth of 2% YoY, despite currency headwind. Sales for comparable units, adjusted for FX and hedging, grew 7%,” said Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).
“The sales increase was primarily driven by Networks and rollout services, following high project activities primarily in Europe and North America. North America remained the strongest region and showed a growth of 23% despite the decline in CDMA. North East Asia had a challenging quarter with lower sales in South Korea, which remains one of the most advanced LTE markets but without parallel 3G deployments as in Q112, continued structural decline in GSM investments in China and FX effects in Japan.
Looking at the areas of portfolio momentum, we see continued good development in Managed Services with 21 new contracts signed during the quarter. Within the Mobile Broadband area, the vendor selection processes for 4G/LTE in Russia and China have been initiated. We also see continued momentum for our SSR routing platform with 12 new contracts in the quarter. Within OSS and BSS demand continued to be strong.
At the Mobile World Congress (MWC) in Barcelona the trends in focus verify our belief that the Networked Society is coming to life. The growth in data traffic and video in the networks drives demand for mobile broadband and OSS and BSS. Other key topics at the MWC were software defined networks, cloud and machine-to-machine communications that will all be part of shaping the industry for the coming years.
Profitability improved YoY, adjusted for the restructuring charges related to the reduction of operations in Sweden concluded in Q1 and last year’s gain from the divestment of Sony Ericsson. The improvement is mainly due to higher sales in Networks and a continued reduction in operating expenses, offset by negative operating income in Network Rollout and negative FX effects.
The underlying business mix, with a higher share of coverage projects than capacity projects, continued as anticipated during the quarter. With present visibility of customer demand, and current global economic development, we continue to believe that the underlying business mix will start to gradually shift towards more capacity projects during the second half of 2013.
We continue to execute on our strategy. During the quarter we announced the way forward for our JV ST-Ericsson and in April 2013 we announced our intention to acquire Microsoft’s Mediaroom to strengthen our media position.
While macroeconomic and political uncertainty continues in certain regions, 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.
Ericsson First Quarter Report 2013 | 2 |
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Financial highlights – first quarter
INCOME STATEMENT
Sales for comparable units, adjusted for FX and hedging, increased 7% YoY and declined -19% sequentially. During the quarter, the SEK was further strengthened, negatively impacting sales especially in JPY and USD.
Networks sales increased 3% YoY, primarily driven by North America and South East Asia. Networks sales decreased -20% QoQ, partly due to lower sales in North East Asia, offset by continued high business activity in North America.
Global Services grew 4% YoY, driven by Network Rollout and decreased -24% QoQ, partly due to lower business activity in North East Asia and delays in LTE deployments in Latin America.
Support Solutions sales declined -19% YoY and -33% QoQ, mainly due to the divestment of Multimedia Brokering (IPX) in Q312 and negative FX effects.
Restructuring charges for the Group amounted to SEK 1.8 (0.6) b., of which SEK 1.4 b. related to the significant reduction of operations in Sweden. We also continued to execute on our service delivery strategy to move service delivery local resources to global centers, although at a slower pace this quarter.
Gross margin decreased YoY to 32.0% (33.3%), and increased from 31.1% Q412. The YoY decrease was due to lower Network Rollout margin and higher restructuring charges. This was partly offset by gradually declining effects from the network modernization projects in Europe, which also explain the sequential margin improvement.
With present visibility of customer demand, and current global economic development, we continue to believe that the underlying business mix will start to gradually shift towards more capacity projects during the second half of 2013. The negative impact from the network modernization projects in Europe will continue to gradually decline during 2013.
Total operating expenses increased YoY by SEK 0.3 b. to SEK 14.5 (14.2) b. due to increased restructuring charges in the quarter. Excluding acquisitions, divestments and restructuring charges, operating expenses were down -6% YoY. R&D expenses amounted to SEK 7.9 (8.0) b. and included restructuring charges of SEK 0.6 (0.0) b. Selling and general administrative expenses (SG&A) increased YoY to SEK 6.6 (6.2) b. due to restructuring charges of SEK 0.6 (0.1) b.
Ericsson First Quarter Report 2013 | 3 |
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Other operating income and expenses amounted to SEK 0.0 (7.7) b. Last year’s divestment of Sony Ericsson resulted in a gain of SEK 7.7 b. In the quarter we changed the hedge accounting for new hedges made 2013 and onwards (see Accounting Policies). The hedge effect on other operating income was SEK -0.1 b.
Ericsson’s share in ST-Ericsson’s income before tax was SEK 0.0 (-1.4) b.
Operating income, including JV, decreased to SEK 2.1 (9.1) b. mainly due to restructuring charges relating to the reduction of operations in Sweden and high 2012 comparison due to the gain related to the divestment of Sony Ericsson. Operating income was also negatively impacted by FX effects both YoY and QoQ. Operating margin including JV was 4.0% (17.8%).
Financial net amounted to SEK -0.4 (0.0) b. and decreased QoQ from SEK -0.1 b. mainly due to lower interest income and currency revaluation effects including impact from devaluation in Venezuela. Tax costs were SEK -0.5 (-0.3) b.
Net income decreased to SEK 1.2 (8.8) b. following the decline in operating income.
EPS diluted was SEK 0.37 (2.76). EPS Non-IFRS excluding the gain from divestment of Sony Ericsson in Q112 was SEK 0.99 (0.77).
BALANCE SHEET AND OTHER PERFORMANCE INDICATORS – FIRST QUARTER
Trade receivables increased QoQ to SEK 65.1 (63.7) b. and inventory increased QoQ to SEK 29.8 (28.8) b., due to high business and project activities. Accounts payable decreased as a consequence of the high volumes in Q412.
Cash, cash equivalents and short-term investments amounted to SEK 72.1 (76.7) b. The net cash position decreased QoQ by SEK -6.3 b. to SEK 32.2 (38.5) b., primarily due to the negative operating cash flow and reclassification of Swedish special payroll taxes of SEK 1.8 b. from Other current liabilities to Pension liabilities in line with the implementation of IAS19R on January 1, 2013.
During the quarter, approximately SEK 0.8 b. of provisions were utilized, of which SEK 0.3 b. were related to restructuring. Additions of SEK 1.9 b. were made, of which SEK 1.6 b. related to restructuring. Reversals of SEK 0.2 b. were made.
The negative cash flow from operating activities was driven by increased working capital of SEK 4.6 b. Cash outlays for restructuring amounted to SEK 0.3 (0.4) b. Cash outlays of SEK 2.4 b. remain to be made from the restructuring provision.
The total number of employees decreased QoQ to 109,648 (110,255) due to continued efficiency improvements. The reduction of operations in Sweden had limited impact on headcount in Q1.
Ericsson First Quarter Report 2013 | 4 |
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NETWORKS
SEK b. | Q1 2013 | Q1 2012 | YoY Change | Q4 2012 | QoQ Change | |||||||||||||||
Network sales | 28.1 | 27.3 | 3 | % | 35.3 | -20 | % | |||||||||||||
Operating income | 1.6 | 1.6 | -5 | % | 2.8 | -44 | % | |||||||||||||
Operating margin | 6 | % | 6 | % | — | 8 | % | — |
Sales for comparable units, adjusted for FX and hedging, increased 7% YoY supported by high mobile broadband deployment levels in the US and Indonesia. The structural decline in CDMA continued with -42% in the quarter to SEK 1.3 b. Sales declined QoQ due to the continued structural decline of GSM sales in China as well as declining sales in Japan, mainly due to FX effects. The business activity in North America remained high in the quarter.
The operator focus on monetizing their increasing data traffic is driving demand for mobile broadband including our 4th Generation IP solutions. There is good momentum for the SSR routing platform with 51 contracts signed since launch in December 2011, of which 12 new contracts were signed in Q1 2013.
The worldwide LTE radio access deployments continue to drive demand also for HSPA, packet core networks and VoLTE. In early February, Ericsson signed its 100th Evolved Packet Core (EPC) contract. We see a trend of higher adoption rate for software features as operators aim for differentiated services, higher network performance and increase their focus on cost effectiveness.
Operating margin was flat YoY, negatively impacted by restructuring charges related to reductions of operations in Sweden. Total restructuring charges in the quarter were SEK 1.3 (0.1) b. The operating margin decline QoQ was due to lower sales volumes. This was partly offset by reduced underlying operating expenses and the gradually decreasing negative effect from the network modernization projects in Europe.
Ericsson First Quarter Report 2013 | 5 |
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GLOBAL SERVICES
SEK b. | Q1 2013 | Q1 2012 | YoY Change | Q4 2012 | QoQ Change | |||||||||||||||
Global Services sales | 21.5 | 20.6 | 4 | % | 28.0 | -24 | % | |||||||||||||
Of which Professional Services | 14.6 | 14.9 | -2 | % | 18.9 | -23 | % | |||||||||||||
Of which Managed Services | 5.9 | 5.7 | 3 | % | 6.8 | -13 | % | |||||||||||||
Of which Network Rollout | 6.8 | 5.7 | 19 | % | 9.2 | -26 | % | |||||||||||||
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Operating income | 0.7 | 1.3 | -43 | % | 1.8 | -59 | % | |||||||||||||
Of which Professional Services | 1.8 | 1.9 | -4 | % | 2.8 | -34 | % | |||||||||||||
Of which Network Rollout | -1.1 | -0.6 | -73 | % | -1.0 | -10 | % | |||||||||||||
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Operating margin | 3 | % | 6 | % | — | 6 | % | — | ||||||||||||
Of which Professional Services | 13 | % | 13 | % | — | 15 | % | — | ||||||||||||
Of which Network Rollout | -16 | % | -11 | % | — | -11 | % | — |
Sales growth for comparable units, adjusted for FX and hedging, was 9% YoY, driven by Network Rollout with continued high activity in European modernization contracts and other coverage projects. Sales declined QoQ partly due to lower business activity in North East Asia and delays in LTE deployments in Latin America.
Professional Services sales were slightly down, impacted by currency headwind as well as lower Network Design & Optimization and Consulting & System Integration activities in the quarter.
The good momentum in Professional Services continues with 21 new Managed Services contracts signed in the quarter and eight new significant Consulting and Systems Integration contracts signed.
The IS/IT related Managed Services and Consulting and Systems Integration business is picking up speed driven by the ongoing business transformation in the industry.
Operating margin for Global Services decreased YoY as a result of increased losses in Network Rollout, partly due to continued high activity in the network modernization projects in Europe and delayed LTE rollouts in Latin America leading to additional project costs. Professional Services shows stable margin development.
Restructuring charges of SEK 0.4 (0.5) b. in the quarter had a negative impact on operating income.
Other information | Q1 2013 | Full year 2012 | ||||||
No. of signed Managed Services contracts | 21 | 52 | ||||||
Of which expansions/extensions | 8 | 19 | ||||||
No. of signed significant consulting & systems integration contracts1) | 8 | 24 | ||||||
Number of subscribers in networks managed by Ericsson, end of period2) | ~ 950 m. | ~ 950 m. | ||||||
Of which in network operations contracts | 550 m. | 550 m. | ||||||
Number of Ericsson services professionals, end of period | 61,000 | 60,000 |
1) In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects.
2) The figure includes network operations contracts and field operation contracts.
Ericsson First Quarter Report 2013 | 6 |
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SUPPORT SOLUTIONS
SEK b. | Q1 2013 | Q1 2012 | YoY Change | Q4 2012 | QoQ Change | |||||||||||||||
Support Solutions sales | 2.4 | 3.0 | -19 | % | 3.6 | -33 | % | |||||||||||||
Operating income | 0.0 | 0.0 | -4 | % | 0.3 | — | ||||||||||||||
Operating margin | -1 | % | -1 | % | — | 8 | % | — |
Sales growth for comparable units, adjusted for FX and hedging, was -3% YoY. Multimedia brokering (IPX) was divested in Q312, which impacted sales negatively YoY. IPX sales amounted to SEK 0.4 b in Q112. Demand for OSS and BSS continued to be strong, driven by operators’ focus on improving efficiency and adapting to mobile broadband business requirements. Media management sales declined YoY following a strong Q112 and a technology shift of our video compression portfolio.
We continue to implement our Support Solutions strategy communicated during Q112 with a more focused and concentrated portfolio. During the past year we have executed significant portfolio changes. On April 8, 2013, we announced our intention to
acquire Microsoft’s TV solution business Mediaroom, further strengthening our position in the growing media management market.
Operating margin was negatively impacted by restructuring charges and lower sales volumes. Efficiency improvements and portfolio streamlining contributed positively. Restructuring charges in the quarter were SEK 0.1 (0.0) b. which means that the underlying operating margin was positive.
The number of subscriptions served by Ericsson’s charging and billing solutions was 2.0 billion at end of period.
Ericsson First Quarter Report 2013 | 7 |
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ST-ERICSSON
USD m. | Q1 2013 | Q1 2012 | YoY Change | Q4 2012 | QoQ Change | |||||||||||||||
Net sales | 256 | 290 | -12 | % | 358 | -28 | % | |||||||||||||
Adjusted operating income1) | -158 | -297 | 47 | % | -133 | -19 | % |
1) | Operating income adjusted for amortization of acquired intangibles and restructuring charges. |
As announced on March 18, 2013, ST-Ericsson will be split between the parents. Ericsson will take on the design, development and sales of the LTE multimode thin modem business products, including 2G, 3G and 4G multimode. ST Microelectronics will take on the existing ST-Ericsson products, other than the LTE multimode thin modems and related business, as well as certain assembly and test facilities. The remaining parts of ST-Ericsson will be closed down. Both parents are assuming equal funding of the wind-down related activities. The formal transfer of the relevant parts of ST-Ericsson to the parent companies is expected to be completed during the third quarter of 2013, subject to regulatory approvals.
ST-Ericsson’s sales in the first quarter of 2013 decreased 28% sequentially to USD 256 million reflecting, as anticipated, seasonal factors, no revenues from licensing and softer market conditions. ST-Ericsson’s operating loss in the first quarter of 2013 was USD -158 million.
Ericsson’s share in ST-Ericsson’s income before tax was SEK 0.0 (-1.4) b. As of December 31, 2012 there are no remaining investments related to ST-Ericsson on Ericsson’s balance sheet and therefore no result from ST-Ericsson is included in Ericsson’s result.
In Q412, Ericsson made a provision of SEK 3.3 b. which provides for Ericsson’s share of obligations for the wind-down of ST-Ericsson. Ericsson incurred cash of SEK 0.5 b. in the quarter, which resulted in a net liability of SEK 2.8 b.
We are progressing as planned toward a Q313 transaction close to separate the thin modem business from ST-Ericsson and integrate into Ericsson. Our focus is on continued execution during the transition period and to continue engagement with customer development teams.
Once the multimode thin modem business has been fully integrated into Ericsson in Q413 the operation will continue to be reported as a segment. Our current best estimate is that it will generate operating losses of approximately SEK -0.5 b. in Q413 primarily related to R&D expenses.
Ericsson First Quarter Report 2013 | 8 |
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REGIONAL SALES
First quarter 2013 | Growth | |||||||||||||||||||||||
SEK b. | Networks | Global Services | Support Solutions | Total | YoY | QoQ | ||||||||||||||||||
North America | 9.2 | 6.1 | 0.5 | 15.8 | 23 | % | -7 | % | ||||||||||||||||
Latin America | 2.0 | 2.0 | 0.4 | 4.4 | -9 | % | -33 | % | ||||||||||||||||
Northern Europe and Central Asia | 1.3 | 1.0 | 0.1 | 2.3 | 0 | % | -24 | % | ||||||||||||||||
Western and Central Europe | 1.9 | 2.3 | 0.1 | 4.3 | 1 | % | -20 | % | ||||||||||||||||
Mediterranean | 2.4 | 2.7 | 0.1 | 5.3 | 14 | % | -25 | % | ||||||||||||||||
Middle East | 1.4 | 1.5 | 0.3 | 3.2 | 0 | % | -38 | % | ||||||||||||||||
Sub-Saharan Africa | 1.1 | 0.8 | 0.2 | 2.1 | -3 | % | -40 | % | ||||||||||||||||
India | 0.9 | 0.6 | 0.1 | 1.6 | 13 | % | 0 | % | ||||||||||||||||
North East Asia | 3.4 | 2.6 | 0.1 | 6.1 | -34 | % | -41 | % | ||||||||||||||||
South East Asia and Oceania | 2.6 | 1.4 | 0.1 | 4.1 | 22 | % | -9 | % | ||||||||||||||||
Other1) | 2.0 | 0.4 | 0.5 | 2.9 | 2 | % | -3 | % | ||||||||||||||||
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Total | 28.1 | 21.5 | 2.4 | 52.0 | 2 | % | -22 | % | ||||||||||||||||
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1) | Region “Other” includes licensing revenues, sales of cables, broadcast services, power modules and other businesses. |
In the regional dimension, all of the Telcordia sales are reported in the Support Solutions segment except for North America where it is split 50/50 between Global Services and Support Solutions. The acquired Technicolor Broadcast Service Division is reported in region “Other”. Multimedia brokering (IPX) was previously reported in each region in segment Support Solutions. For the first three quarters 2012 it was part of region “Other”. IPX was divested end Q312.
North America
Sales grew YoY with continued high activity levels with peaking volumes in one of the large mobile broadband coverage projects. CDMA equipment sales continued to decline.
Latin America
YoY sales were negatively impacted primarily by delays in LTE rollouts caused by issues related to LTE licenses, partly offset by YoY growth in OSS and BSS.
Northern Europe and Central Asia
Sales in the region were basically flat YoY with continued low investment levels in Russia. Operators in Russia are in the middle of the LTE vendor selection process, likely leading to initial deployments towards the latter part of 2013 or early 2014.
Western and Central Europe
Execution of the network modernization projects continued. Several new Managed Services contracts were signed in the quarter.
Mediterranean
Modernization projects and high project activity in France and Northwest Africa drove YoY growth. Macroeconomic development remained weak in parts of the region.
Middle East
Initial LTE deployments are ongoing, but from low levels. There is good demand for both OSS and BSS and professional services as operators seek differentiation and operational efficiencies. Political unrest prevails and is still impacting sales.
Sub-Saharan Africa
While 3G sales are increasing; the majority of sales is still related to 2G. The momentum for Managed Services continued with a multi-country contract signed in the quarter. Mobile broadband charging sales were strong in the quarter.
India
Operator spending remains cautious, principally because of sustained regulatory uncertainty. The momentum for Managed Services continued with a major contract signed in the quarter.
Ericsson First Quarter Report 2013 | 9 |
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North East Asia
Business activity declined YoY mainly due to lower sales in South Korea, continued structural decline in GSM investments in China and FX effects in Japan. South Korea remains one of the most advanced LTE markets, but the YoY comparison is impacted by the parallel 3G deployments in Q112. Sales were also impacted by delayed LTE spectrum auctions in South Korea.
South East Asia and Oceania
The business volume continued on a high level with simultaneous mobile broadband deployments in Indonesia, Australia and Thailand.
Other
IPX was divested at the end of Q312 impacting Support Solutions sales YoY comparison. Licensing revenues continued to show stable development YoY. Sales of broadcast services, cables, power modules and other businesses are also included in “Other”.
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Income after financial items was SEK 1.2 (5.1) b. The Parent Company’s financial position had the following major changes during the quarter; decreased cash, cash equivalents and short-term investments of SEK -4.7 b. and decreased current and non-current receivables from subsidiaries of SEK 6.7 b. At the end of the quarter, cash, cash equivalents and short-term investments amounted to SEK 52.7 (57.4) b.
By the end of the quarter ST-Ericsson had utilized USD 77 million (SEK 0.5 b.) of a short-term credit facility. In Q4 2012, Ericsson made a provision of SEK 3.3 b. which provides for Ericsson’s share of obligations for the wind-down of ST-Ericsson. Ericsson incurred cash of SEK 0.5 b. in the quarter, which resulted in a net liability of SEK 2.8 b.
In accordance with the conditions of the long-term variable remuneration program (LTV) for Ericsson employees, 2,588 932 shares from treasury stock were sold or distributed to employees during the first quarter. The holding of treasury stock at March 31, 2013, was 82,209,163 Class B shares.
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Samsung litigation
On November 27, 2012, Ericsson filed two patent infringement lawsuits in the US District Court for the Eastern District of Texas against Samsung. Ericsson seeks damages and an injunction. Ericsson also asked the Court to adjudge that Samsung breached its commitment to license any standard-essential patents it owns on fair, reasonable, and non-discriminatory terms and to declare Samsung’s allegedly standard essential patents to be unenforceable. On November 30, 2012, Ericsson filed a complaint with the US International Trade Commission (ITC) seeking an exclusion order blocking Samsung from importing certain products into the US. On December 21, 2012, Samsung filed a complaint with the ITC seeking an exclusion order blocking Ericsson from import of certain products into the US
On March 18, 2013, Samsung filed its answers and counterclaims in the Ericsson suits (above) in Texas, USA.
Airvana litigation
In February 2012, Airvana Networks Solutions Inc (Airvana) filed a complaint against Ericsson in the Supreme Court of the State of New York, USA, alleging that Ericsson has violated key contract terms and misappropriated Airvana trade secrets and proprietary information. Airvana is seeking damages of USD 330 million and to enjoin Ericsson from developing, deploying or commercializing Ericsson products allegedly based on Airvana’s proprietary technology.
On March 19, 2013 the Court issued a preliminary injunction barring Ericsson or any party in privity with Ericsson from using, operating, testing or deploying certain Airvana-based EV-DO hardware unless it is executing software that is licensed from Airvana.
The Court also confirmed that it will conduct a separate, related hearing starting in April on a second preliminary injunction motion filed by Airvana seeking to prevent deployment of the Digital Baseband Advanced (“DBA”) hardware with any EV-DO software other than Airvana’s.
Reduction of number of employees in Sweden
On March 27, 2013 the company announced the reductions of operations in Sweden. In total 1,399 positions were impacted with 919 employees notified. All sites in Sweden were affected except Falun, Hudiksvall, Kalmar and Katrineholm. Restructuring charges associated with these actions were SEK 1.4 b. impacting Group results in Q1, 2013.
Acquisition of Devoteam Telecom & Media operations
On January 21, 2013, Ericsson announced its intention to acquire Devoteam Telecom & Media operations in France. The completion of the acquisition is subject to consultation and customary closing conditions and is expected to take place by the beginning of Q2, 2013.
On new positions
As of April 1, 2013, Jan Signell is appointed Head of Region North East Asia and a member of Ericsson’s Global Leadership Team, reporting to Chairman of Asia-Pacific, Mats H Olsson. Jan Signell is currently Head of Customer Unit Japan within Region North East Asia, and will remain in this role until a successor is appointed.
As of June 3, 2013, Chris Houghton is appointed Head of Region India and a member of Ericsson’s Global Leadership Team, reporting to Chairman of Asia-Pacific, Mats H Olsson. Chris Houghton is currently Head of Customer Unit UK & Ireland.
POST-CLOSING EVENTS
Ericsson to acquire Microsoft Mediaroom
On April 8, 2013, Ericsson announced that the company has reached an agreement with Microsoft to acquire its TV solution Mediaroom business. This will make Ericsson the leading provider of IPTV and multi-screen solutions with a market share of over 25%. The agreement is subject to customary regulatory approvals and other conditions.
Ericsson First Quarter Report 2013 | 12 |
Table of Contents
Assessment of risk environment
Ericsson’s operational and financial risk factors and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes are described in our Annual Report 2012. Compared to the risks described in the Annual Report 2012, no material, new or changed risk factors or uncertainties have been identified in the quarter.
Risk factors and uncertainties in focus short-term for the Parent Company and the Ericsson Group include:
• | Potential negative effects on operators’ willingness to invest in network development due to uncertainty in the financial markets and a weak economic business environment, or reduced consumer telecom spending, or increased pressure on us to provide financing; |
• | Uncertainty regarding the financial stability of suppliers, for example due to lack of financing; |
• | Effects on gross margins and/or working capital of the product mix in the Networks segment between sales of upgrades and expansions (mainly software) and new build-outs of coverage (mainly hardware); |
• | Effects on gross margins of the product mix in the Global Services segment including proportion of new network build-outs and share of new managed services deals with initial transition costs; |
• | A continued volatile sales pattern in the Support Solutions segment or variability in our overall sales seasonality could make it more difficult to forecast future sales; |
• | Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence; |
• | Implementation of the strategic option for our joint venture ST-Ericsson and related capital need; |
• | Changes in foreign exchange rates, in particular USD, JPY and EUR; |
• | Political unrest or instability in certain markets; |
• | Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms; |
• | Natural disasters and other events, affecting business, production, supply and transportation. |
Ericsson stringently monitors the compliance with all relevant trade regulations and trade embargos applicable to dealings with customers operating in countries where there are trade restrictions or trade restrictions are discussed. Moreover, Ericsson operates globally in accordance with Group policies and directives for business ethics and conduct.
Stockholm, April 24, 2013
Telefonaktiebolaget LM Ericsson (publ)
Hans Vestberg, President and CEO
Org. Nr. 556016-0680
This report has not been reviewed by Telefonaktiebolaget LM Ericsson’s auditors.
Date for next report: July 18, 2013
Ericsson First Quarter Report 2013 | 13 |
Table of Contents
Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), April 24, 2013. 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 34 72
E-mail: investor.relations@ericsson.com or
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
Investors
Stefan Jelvin, Director,
Investor Relations
Phone: +46 10 714 20 39, +46 70 986 02 27
E-mail: investor.relations@ericsson.com
Åsa Konnbjer, Director,
Investor Relations
Phone: +46 10 713 39 28, +46 73 082 59 28
E-mail: investor.relations@ericsson.com
Rikard Tunedal, Director,
Investor Relations
Phone: +46 10 714 54 00, +46 761 005 400
E-mail: investor.relations@ericsson.com
Media
Ola Rembe, Vice President,
Head of External Communications
Phone: +46 10 719 97 27, +46 73 024 48 73
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Ericsson First Quarter Report 2013 | 14 |
Table of Contents
All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.
In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.
Ericsson First Quarter Report 2013 | 15 |
Table of Contents
Financial statements and additional information
Ericsson First Quarter Report 2013 | 16 |
Table of Contents
Jan - Mar | Jan - Dec | |||||||||||||||
SEK million | 2012 | 2013 | Change | 2012 | ||||||||||||
Net sales | 50,974 | 52,032 | 2 | % | 227,779 | |||||||||||
Cost of sales | -33,985 | -35,394 | 4 | % | -155,699 | |||||||||||
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Gross income | 16,989 | 16,638 | -2 | % | 72,080 | |||||||||||
Gross margin (%) | 33.3 | % | 32.0 | % | 31.6 | % | ||||||||||
Research and development expenses | -8,016 | -7,877 | -2 | % | -32,833 | |||||||||||
Selling and administrative expenses | -6,232 | -6,643 | 7 | % | -26,023 | |||||||||||
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Operating expenses | -14,248 | -14,520 | 2 | % | -58,856 | |||||||||||
Other operating income and expenses | 7,749 | 1) | 20 | 8,965 | 1) | |||||||||||
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Operating income before shares in earnings of JV and associated companies | 10,490 | 2,138 | -80 | % | 22,189 | |||||||||||
Operating margin before shares in earnings of JV and associated companies (%) | 20.6 | % | 4.1 | % | 9.7 | % | ||||||||||
Shares in earnings of JV and associated companies | -1,403 | -32 | -98 | % | -11,731 | 2) | ||||||||||
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| |||||||||
Operating income | 9,087 | 2,106 | -77 | % | 10,458 | |||||||||||
Financial income | 262 | 180 | 1,708 | |||||||||||||
Financial expenses | -273 | -565 | -1,984 | |||||||||||||
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Income after financial items | 9,076 | 1,721 | -81 | % | 10,182 | |||||||||||
Taxes | -272 | -517 | -4,244 | |||||||||||||
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| |||||||||
Net income | 8,804 | 1,204 | -86 | % | 5,938 | |||||||||||
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| |||||||||
Net income attributable to: | ||||||||||||||||
- Stockholders of the Parent Company | 8,950 | 1,205 | 5,775 | |||||||||||||
- Non-controlling interests | -146 | -1 | 163 | |||||||||||||
Other information | ||||||||||||||||
Average number of shares, basic (million) | 3,212 | 3,222 | 3,216 | |||||||||||||
Earnings per share, basic (SEK)3) | 2.79 | 0.37 | 1.80 | |||||||||||||
Earnings per share, diluted (SEK)3) | 2.76 | 0.37 | 1.78 | |||||||||||||
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STATEMENT OF COMPREHENSIVE INCOME
Jan - Mar | Jan - Dec | |||||||||||
SEK million | 2012 | 2013 | 2012 | |||||||||
Net income | 8,804 | 1,204 | 5,938 | |||||||||
Other comprehensive income | ||||||||||||
Items that will not be reclassified to profit or loss | ||||||||||||
Remeasurements of defined benefits pension plans incl. asset ceiling | 436 | 819 | -451 | |||||||||
Revaluation of other investments in shares and participations | ||||||||||||
Fair value remeasurement | — | — | 6 | |||||||||
Tax on items that will not be reclassified to profit or loss | -139 | -388 | -59 | |||||||||
Items that may be reclassified to profit or loss | ||||||||||||
Cash flow hedges | ||||||||||||
Gains/losses arising during the period | 785 | 174 | 1,668 | |||||||||
Reclassification adjustments for gains/losses included in profit or loss | -213 | -466 | -568 | |||||||||
Adjustments for amounts transferred to initial carrying amount of hedged items | 92 | — | 92 | |||||||||
Changes in cumulative translation adjustments | -2,004 | -718 | -3,947 | |||||||||
Share of other comprehensive income on JV and associated companies | -52 | -16 | -486 | |||||||||
Tax on items that may be reclassified to profit or loss | -253 | 62 | -363 | |||||||||
Total other comprehensive income | -1,348 | -533 | -4,108 | |||||||||
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Total comprehensive income | 7,456 | 671 | 1,830 | |||||||||
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Total comprehensive income attributable to: | ||||||||||||
Stockholders of the Parent Company | 7,650 | 693 | 1,716 | |||||||||
Non-controlling interests | -194 | -22 | 114 | |||||||||
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1) | Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012 |
2) | Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012 |
3) | Based on Net income attributable to stockholders of the Parent Company |
Ericsson First Quarter Report 2013 | 17 |
Table of Contents
Dec 31 | Mar 31 | |||||||
SEK million | 2012 | 2013 | ||||||
ASSETS | ||||||||
Non-current assets | ||||||||
Intangible assets | ||||||||
Capitalized development expenses | 3,840 | 3,819 | ||||||
Goodwill | 30,404 | 30,297 | ||||||
Intellectual property rights, brands and other intangible assets | 15,202 | 14,205 | ||||||
Property, plant and equipment | 11,493 | 11,461 | ||||||
Financial assets | ||||||||
Equity in JV and associated companies | 2,842 | 2,799 | ||||||
Other investments in shares and participations | 386 | 389 | ||||||
Customer finance, non-current | 1,290 | 1,146 | ||||||
Other financial assets, non-current | 3,964 | 4,180 | ||||||
Deferred tax assets | 12,321 | 12,132 | ||||||
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| |||||
81,742 | 80,428 | |||||||
Current assets | ||||||||
Inventories | 28,802 | 29,811 | ||||||
Trade receivables | 63,660 | 65,101 | ||||||
Customer finance, current | 4,019 | 3,869 | ||||||
Other current receivables | 20,065 | 19,206 | ||||||
Short-term investments1) | 32,026 | 34,641 | ||||||
Cash and cash equivalents | 44,682 | 37,444 | ||||||
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| |||||
193,254 | 190,072 | |||||||
Total assets | 274,996 | 270,500 | ||||||
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| |||||
EQUITY AND LIABILITIES | ||||||||
Equity | ||||||||
Stockholders’ equity | 136,883 | 137,668 | ||||||
Non-controlling interest in equity of subsidiaries | 1,600 | 1,501 | ||||||
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138,483 | 139,169 | |||||||
Non-current liabilities | ||||||||
Post-employment benefits2) | 9,503 | 11,132 | ||||||
Provisions, non-current | 211 | 247 | ||||||
Deferred tax liabilities | 3,120 | 3,281 | ||||||
Borrowings, non-current | 23,898 | 23,638 | ||||||
Other non-current liabilities | 2,377 | 2,407 | ||||||
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| |||||
39,109 | 40,705 | |||||||
Current liabilities | ||||||||
Provisions, current | 8,427 | 9,252 | ||||||
Borrowings, current | 4,769 | 5,084 | ||||||
Trade payables | 23,100 | 19,898 | ||||||
Other current liabilities2) | 61,108 | 56,392 | ||||||
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| |||||
97,404 | 90,626 | |||||||
Total equity and liabilities | 274,996 | 270,500 | ||||||
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| |||||
Of which interest-bearing liabilities and post-employment benefits | 38,170 | 39,854 | ||||||
Of which net cash | 38,538 | 32,231 | ||||||
Assets pledged as collateral | 520 | 2,534 | ||||||
Contingent liabilities | 613 | 601 | ||||||
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1) | Including loan to ST-Ericsson of SEK 540 million as of March 31, 2013 (SEK 0 million as of December 31, 2012) |
2) | The provision for the Swedish special payroll taxes, amounting to SEK 1.8 (1.8) billion, which was previously included in Other current liabilities, has been re-classified as pension liability in line with the implementation of IAS19R on January 1, 2013 |
Ericsson First Quarter Report 2013 | 18 |
Table of Contents
CONSOLIDATED STATEMENT OF CASH FLOWS
Jan - Mar | Jan - Dec | |||||||||||
SEK million | 2012 | 2013 | 2012 | |||||||||
Operating activities | ||||||||||||
Net income | 8,804 | 1,204 | 5,938 | |||||||||
Adjustments to reconcile net income to cash | ||||||||||||
Taxes | -1,118 | -1,849 | -1,140 | |||||||||
Earnings/dividends in JV and associated companies | 1,290 | 33 | 11,769 | |||||||||
Depreciation, amortization and impairment losses | 2,315 | 2,411 | 9,889 | |||||||||
Other | -7,022 | -201 | -7,441 | |||||||||
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4,269 | 1,598 | 19,015 | ||||||||||
Changes in operating net assets | ||||||||||||
Inventories | -59 | -1,426 | 2,752 | |||||||||
Customer finance, current and non-current | 282 | 260 | -1,259 | |||||||||
Trade receivables | 3,722 | -1,934 | -1,103 | |||||||||
Trade payables | -2,713 | -2,948 | -1,311 | |||||||||
Provisions and post-employment benefits | -1,771 | 1,155 | -1,920 | |||||||||
Other operating assets and liabilities, net | -2,999 | 325 | 5,857 | |||||||||
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-3,538 | -4,568 | 3,016 | ||||||||||
Cash flow from operating activities | 731 | -2,970 | 22,031 | |||||||||
Investing activities | ||||||||||||
Investments in property, plant and equipment | -1,648 | -1,196 | -5,429 | |||||||||
Sales of property, plant and equipment | 309 | 91 | 568 | |||||||||
Acquisitions/divestments of subsidiaries and other operations, net | -1,730 | 1) | -136 | -2,077 | 1) | |||||||
Product development | -251 | -282 | -1,641 | |||||||||
Other investing activities | 195 | 298 | 1,540 | |||||||||
Short-term investments | -3,999 | -2,860 | 2,151 | |||||||||
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Cash flow from investing activities | -7,124 | -4,085 | -4,888 | |||||||||
Cash flow before financing activities | -6,393 | -7,055 | 17,143 | |||||||||
Financing activities | ||||||||||||
Dividends paid | — | -61 | -8,632 | |||||||||
Other financing activities | -1,318 | 92 | -753 | |||||||||
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Cash flow from financing activities | -1,318 | 31 | -9,385 | |||||||||
Effect of exchange rate changes on cash | -327 | -214 | -1,752 | |||||||||
Net change in cash | -8,038 | -7,238 | 6,006 | |||||||||
Cash and cash equivalents, beginning of period | 38,676 | 44,682 | 38,676 | |||||||||
Cash and cash equivalents, end of period | 30,638 | 37,444 | 44,682 | |||||||||
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1) | Includes payment of external loan of SEK -6.2 billion attributable to the acquisition of Telcordia in Q1 2012 |
Ericsson First Quarter Report 2013 | 19 |
Table of Contents
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Jan - Mar | Jan - Mar | Jan - Dec | ||||||||||
SEK million | 2012 | 2013 | 2012 | |||||||||
Opening balance | 145,270 | 138,483 | 145,270 | |||||||||
Total comprehensive income | 7,456 | 671 | 1,830 | |||||||||
Sale/repurchase of own shares | 17 | 21 | -93 | |||||||||
Stock issue | — | — | 159 | |||||||||
Stock purchase plan | 108 | 82 | 405 | |||||||||
Dividends paid | — | -61 | -8,632 | |||||||||
Transactions with non-controlling interests | -384 | -26 | -456 | |||||||||
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Closing balance | 152,467 | 139,170 | 138,483 | |||||||||
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Ericsson First Quarter Report 2013 | 20 |
Table of Contents
CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Net sales | 50,974 | 55,319 | 54,550 | 66,936 | 52,032 | |||||||||||||||
Cost of sales | -33,985 | -37,611 | -37,970 | -46,133 | -35,394 | |||||||||||||||
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Gross income | 16,989 | 17,708 | 16,580 | 20,803 | 16,638 | |||||||||||||||
Gross margin (%) | 33.3 | % | 32.0 | % | 30.4 | % | 31.1 | % | 32.0 | % | ||||||||||
Research and development expenses | -8,016 | -8,097 | -7,473 | -9,247 | -7,877 | |||||||||||||||
Selling and administrative expenses | -6,232 | -6,855 | -5,797 | -7,139 | -6,643 | |||||||||||||||
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Operating expenses | -14,248 | -14,952 | -13,270 | -16,386 | -14,520 | |||||||||||||||
Other operating income and expenses | 7,749 | 1) | 530 | 341 | 345 | 20 | ||||||||||||||
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Operating income before shares in earnings of JV and associated companies | 10,490 | 3,286 | 3,651 | 4,762 | 2,138 | |||||||||||||||
Operating margin before shares in earnings of JV and associated companies (%) | 20.6 | % | 5.9 | % | 6.7 | % | 7.1 | % | 4.1 | % | ||||||||||
Shares in earnings of JV and associated companies | -1,403 | -1,208 | -555 | -8,565 | 2) | -32 | ||||||||||||||
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Operating income | 9,087 | 2,078 | 3,096 | -3,803 | 2,106 | |||||||||||||||
Financial income | 262 | 618 | 390 | 438 | 180 | |||||||||||||||
Financial expenses | -273 | -924 | -275 | -512 | -565 | |||||||||||||||
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Income after financial items | 9,076 | 1,772 | 3,211 | -3,877 | 1,721 | |||||||||||||||
Taxes | -272 | -567 | -1,027 | -2,378 | -517 | |||||||||||||||
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Net income | 8,804 | 1,205 | 2,184 | -6,255 | 1,204 | |||||||||||||||
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Net income attributable to: | ||||||||||||||||||||
- Stockholders of the Parent Company | 8,950 | 1,110 | 2,177 | -6,462 | 1,205 | |||||||||||||||
- Non-controlling interests | -146 | 95 | 7 | 207 | -1 | |||||||||||||||
Other information | ||||||||||||||||||||
Average number of shares, basic (million) | 3,212 | 3,215 | 3,217 | 3,219 | 3,222 | |||||||||||||||
Earnings per share, basic (SEK)3) | 2.79 | 0.35 | 0.68 | -2.01 | 0.37 | |||||||||||||||
Earnings per share, diluted (SEK) 3) | 2.76 | 0.34 | 0.67 | -1.99 | 0.37 | |||||||||||||||
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1) | Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012 |
2) | Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012 |
3) | Based on Net income attributable to stockholders of the Parent Company |
Ericsson First Quarter Report 2013 | 21 |
Table of Contents
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Operating activities | ||||||||||||||||||||
Net income | 8,804 | 1,205 | 2,184 | -6,255 | 1,204 | |||||||||||||||
Adjustments to reconcile net income to cash | ||||||||||||||||||||
Taxes | -1,118 | -1,185 | -886 | 2,049 | -1,849 | |||||||||||||||
Earnings/dividends in JV and associated companies | 1,290 | 1,193 | 579 | 8,707 | 33 | |||||||||||||||
Depreciation, amortization and impairment losses | 2,315 | 2,401 | 2,394 | 2,779 | 2,411 | |||||||||||||||
Other | -7,022 | -466 | 413 | -366 | -201 | |||||||||||||||
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4,269 | 3,148 | 4,684 | 6,914 | 1,598 | ||||||||||||||||
Changes in operating net assets | ||||||||||||||||||||
Inventories | -59 | 43 | -650 | 3,418 | -1,426 | |||||||||||||||
Customer finance, current and non-current | 282 | — | -164 | -1,377 | 260 | |||||||||||||||
Trade receivables | 3,722 | -5,427 | 2,882 | -2,280 | -1,934 | |||||||||||||||
Trade payables | -2,713 | 1,717 | -1,455 | 1,140 | -2,948 | |||||||||||||||
Provisions and post-employment benefits | -1,771 | -353 | -175 | 379 | 1,155 | |||||||||||||||
Other operating assets and liabilities, net | -2,999 | -492 | 1,851 | 7,497 | 325 | |||||||||||||||
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-3,538 | -4,512 | 2,289 | 8,777 | -4,568 | ||||||||||||||||
Cash flow from operating activities | 731 | -1,364 | 6,973 | 15,691 | -2,970 | |||||||||||||||
Investing activities | ||||||||||||||||||||
Investments in property, plant and equipment | -1,648 | -994 | -1,461 | -1,326 | -1,196 | |||||||||||||||
Sales of property, plant and equipment | 309 | -10 | 17 | 252 | 91 | |||||||||||||||
Acquisitions/divestments of subsidiaries and other operations, net | -1,730 | 1) | -110 | -357 | 120 | -136 | ||||||||||||||
Product development | -251 | -525 | -435 | -430 | -282 | |||||||||||||||
Other investing activities | 195 | -520 | 1,652 | 213 | 298 | |||||||||||||||
Short-term investments | -3,999 | 8,133 | -938 | -1,045 | -2,860 | |||||||||||||||
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Cash flow from investing activities | -7,124 | 5,974 | -1,522 | -2,216 | -4,085 | |||||||||||||||
Cash flow before financing activities | -6,393 | 4,610 | 5,451 | 13,475 | -7,055 | |||||||||||||||
Financing activities | ||||||||||||||||||||
Dividends paid | — | -8,252 | -381 | 1 | -61 | |||||||||||||||
Other financing activities | -1,318 | 1,112 | 1,062 | -1,609 | 92 | |||||||||||||||
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|
| |||||||||||
Cash flow from financing activities | -1,318 | -7,140 | 681 | -1,608 | 31 | |||||||||||||||
Effect of exchange rate changes on cash | -327 | 599 | -1,994 | -30 | -214 | |||||||||||||||
Net change in cash | -8,038 | -1,931 | 4,138 | 11,837 | -7,238 | |||||||||||||||
Cash and cash equivalents, beginning of period | 38,676 | 30,638 | 28,707 | 32,845 | 44,682 | |||||||||||||||
Cash and cash equivalents, end of period | 30,638 | 28,707 | 32,845 | 44,682 | 37,444 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
1) | Includes payment of external loan of SEK -6.2 billion attributable to the acquisition of Telcordia in Q1 2012 |
Ericsson First Quarter Report 2013 | 22 |
Table of Contents
PARENT COMPANY INCOME STATEMENT
Jan - Mar | Jan - Dec | |||||||||||
SEK million | 2012 | 2013 | 2012 | |||||||||
Net sales | — | — | — | |||||||||
Cost of sales | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Gross income | — | �� | — | |||||||||
Operating expenses | -147 | -256 | -931 | |||||||||
Other operating income and expenses | 561 | 640 | 2,534 | |||||||||
|
|
|
|
|
| |||||||
Operating income | 414 | 384 | 1,603 | |||||||||
Financial net | 4,720 | 792 | -6,461 | |||||||||
|
|
|
|
|
| |||||||
Income after financial items | 5,134 | 1,176 | -4,858 | |||||||||
Transfers to (-) / from untaxed reserves | — | — | -1,646 | |||||||||
Taxes | -109 | -119 | -289 | |||||||||
|
|
|
|
|
| |||||||
Net income | 5,025 | 1,057 | -6,793 | |||||||||
|
|
|
|
|
|
STATEMENT OF COMPREHENSIVE INCOME
Jan - Mar | Jan - Dec | |||||||||||
SEK million | 2012 | 2013 | 2012 | |||||||||
Net income | 5,025 | 1,057 | -6,793 | |||||||||
Cash flow hedges | ||||||||||||
Gains/losses arising during the period | -64 | — | -64 | |||||||||
Adjustments for amounts transferred to initial carrying amount of hegded items | -139 | — | -139 | |||||||||
Tax on items reported directly in or transferred from equity | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Other comprehensive income | -203 | — | -203 | |||||||||
|
|
|
|
|
| |||||||
Total comprehensive income | 4,822 | 1,057 | -6,996 | |||||||||
|
|
|
|
|
|
SEK million | Dec 31 2012 | Mar 31 2013 | ||||||
ASSETS | ||||||||
Fixed assets | ||||||||
Intangible assets | 849 | 795 | ||||||
Tangible assets | 535 | 522 | ||||||
Financial assets | 99,530 | 93,328 | ||||||
|
|
|
| |||||
100,914 | 94,645 | |||||||
Current assets | ||||||||
Inventories | 55 | 17 | ||||||
Receivables1) | 21,694 | 20,157 | ||||||
Short-term investments | 31,491 | 33,454 | ||||||
Cash and cash equivalents | 25,946 | 19,244 | ||||||
|
|
|
| |||||
79,186 | 72,872 | |||||||
Total assets | 180,100 | 167,517 | ||||||
|
|
|
| |||||
STOCKHOLDERS' EQUITY, PROVISIONS AND LIABILITIES | ||||||||
Equity | ||||||||
Restricted equity | 48,018 | 48,018 | ||||||
Non-restricted equity | 25,624 | 26,707 | ||||||
|
|
|
| |||||
73,642 | 74,725 | |||||||
Untaxed reserves | 288 | 288 | ||||||
Provisions | 4,095 | 4,089 | ||||||
Non-current liabilities | 48,763 | 45,811 | ||||||
Current liabilities | 53,312 | 42,604 | ||||||
Total stockholders' equity, provisions and liabilities | 180,100 | 167,517 | ||||||
|
|
|
| |||||
Assets pledged as collateral | 520 | 534 | ||||||
Contingent liabilities | 16,719 | 16,514 | ||||||
|
|
|
|
1) | Including loan to ST-Ericsson of SEK 540 million as of March 31, 2013 (SEK 0 million as of December 31, 2012) |
Ericsson First Quarter Report 2013 | 23 |
Table of Contents
The Group
This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2012, and should be read in conjunction with that annual report.
Change of hedge accounting
Due to cost efficiency reasons Ericsson has changed the hedge accounting.
Ericsson hedges highly probable forecast transactions related to sales and purchases with the purpose to limit the impact related to currency fluctuations on these forecasted transactions. This will not be changed.
Ericsson has, however, decided to discontinuehedge accountingfor this type of hedges. Until 2012 Ericsson applied cash flow hedge accounting for highly probable forecast transactions. Revaluation of these hedges (incepted prior to January 1, 2013) are prior to release reported under “Other comprehensive income“ (OCI) and is at release recycled to sales, cost of sales and R&D expenses respectively.
As from 2013, revaluation of new hedges (inception as from January 1, 2013) are reported under “Other operating income and expenses” in the Income statement.
As from January 1, 2013, the Company has applied the following new or amended IFRSs and IFRICs:
Amendment to IAS 1, “Financial statement presentation” regarding Other comprehensive income. The main change resulting from this amendment is a requirement for entities to group items presented in “other comprehensive income“ (OCI) on the basis of whether they are potentially recycle to profit or loss subsequently (reclassification adjustments). The amendment does not address which items are presented in OCI.
Amendment to IAS 19, “Employee benefits”eliminates the corridor approach and calculates finance costs on a net funding basis. The Company implemented the immediate and full recognition of actuarial gains/losses in other “Other comprehensive income“ (OCI) in 2006, meaning that the corridor method has not been applied by the Company as from that date and therefore the transition to the revised IAS 19 has not had an effect on the present obligation. The main issue to address is the implementation of the net interest cost/gain, which integrates the interest cost and expected return on assets to be based on a common discount rate. An analysis of fiscal year 2012 in relation to this amendment indicated an impact on pension costs for 2012 with an increase of approximately SEK 0.4 (–0.1) billion. The Company also needs to address the taxes to be incorporated into the defined benefit obligation. This amendment relates to the Swedish special payroll taxes to be reclassified from “Other current liabilities“ to “Post-employment benefits“ with an estimated amount of SEK 1.8 (1.8) billion as per December 31, 2012 *. The amendment also includes additional disclosure requirements on yearly financial and demographic assumptions, sensitivity analysis, duration and multi-employer plans.
Amendment to IFRS 7, “Financial instruments: Disclosures’ on asset and liability offsetting”. This amendment requires disclosure of gross amounts related to financial instruments for which offset has been made.
* | See also footnote under the balance sheet. |
Ericsson First Quarter Report 2013 | 24 |
Table of Contents
Accounting policies (continued)
IFRS 10, “Consolidated financial statements”. The objective of IFRS 10 is to establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more other entities to present consolidated financial statements. It defines the principle of control, and establishes control as the basis for consolidation. It sets out how to apply the principle of control to identify whether an investor controls an investee and therefore must consolidate the investee. An entity controls an investee if the entity has power over the investee, has the ability to use the power and is exposed to variable returns. It also sets out the accounting requirements for the preparation of consolidated financial statements.
IFRS 11, “Joint arrangements”is a more realistic reflection of joint arrangements by focusing on the rights and obligations of the arrangement rather than its legal form. There are two types of joint arrangement: joint operations and joint ventures. Proportional consolidation of joint ventures is no longer allowed. The Company did not apply the proportionate consolidation method prior to 2013.
IFRS 12, “Disclosures of interests in other entities” includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, structured entities and other off balance sheet vehicles.
IFRS 13, “Fair value measurement” does not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. This standard has also added disclosure requirements in IAS 34, Interim Financial Reporting regarding the disclosure for financial instruments.
IAS 27 (revised 2011), “Separate financial statements” includes the provisions on separate financial statements that are left after the control provisions of IAS 27 have been included in the new IFRS 10.
IAS 28 (revised 2011), “Associates and joint ventures” includes the requirements for joint ventures, as well as associates, to be equity accounted following the issue of IFRS 11.
None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no difference between IFRS effective as per March 31, 2013 and IFRS as endorsed by the EU.
Disclosures required by the IASB on an interim basis as from 2013
Fair valuation of financial instruments
The fair value of the Company’s financial instruments, recognized at fair value, is determined based on quoted market prices or rates. Financial instruments, measured according to the category “Fair value through profit or loss” showed a net fair value measurement positive effect of SEK 1.1 billion. The amount is recognized in the balance sheet as per March 31, 2013.
Book value for “Notes and bond loans” amount to SEK 16.2 billion and fair value to SEK 16.7 billion. Fair values of “Current part of non-current borrowings”, “Other borrowings non-current” as well as “Other financial instruments“ are not estimated to materially differ from book values.
For further information about valuation principles, please see Note C1, “Significant accounting policies” in the Annual Report of 2012.
Ericsson First Quarter Report 2013 | 25 |
Table of Contents
NET SALES BY SEGMENT BY QUARTER
Segments Sony Ericsson and ST-Ericsson are reported in accordance with the equity method, thus their sales are not included.
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | 27,314 | 27,766 | 26,939 | 35,266 | 28,133 | |||||||||||||||
Global Services | 20,631 | 24,074 | 24,296 | 28,042 | 21,452 | |||||||||||||||
Of which Professional Services | 14,884 | 16,947 | 16,388 | 18,873 | 14,626 | |||||||||||||||
Of which Managed Services | 5,708 | 6,468 | 6,306 | 6,752 | 5,888 | |||||||||||||||
Of which Network Rollout | 5,747 | 7,127 | 7,908 | 9,169 | 6,826 | |||||||||||||||
Support Solutions | 3,029 | 3,479 | 3,315 | 3,628 | 2,447 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 50,974 | 55,319 | 54,550 | 66,936 | 52,032 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2012 | 2013 | |||||||||||||||||||
Sequential change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | -18 | % | 2 | % | -3 | % | 31 | % | -20 | % | ||||||||||
Global Services | -24 | % | 17 | % | 1 | % | 15 | % | -24 | % | ||||||||||
Of which Professional Services | -18 | % | 14 | % | -3 | % | 15 | % | -23 | % | ||||||||||
Of which Managed Services | -6 | % | 13 | % | -3 | % | 7 | % | -13 | % | ||||||||||
Of which Network Rollout | -35 | % | 24 | % | 11 | % | 16 | % | -26 | % | ||||||||||
Support Solutions | -11 | % | 15 | % | -5 | % | 9 | % | -33 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -20 | % | 9 | % | -1 | % | 23 | % | -22 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2012 | 2013 | |||||||||||||||||||
Year over year change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | -18 | % | -17 | % | -17 | % | 6 | % | 3 | % | ||||||||||
Global Services | 18 | % | 26 | % | 19 | % | 4 | % | 4 | % | ||||||||||
Of which Professional Services | 18 | % | 26 | % | 11 | % | 4 | % | -2 | % | ||||||||||
Of which Managed Services | 16 | % | 37 | % | 19 | % | 12 | % | 3 | % | ||||||||||
Of which Network Rollout | 18 | % | 28 | % | 38 | % | 3 | % | 19 | % | ||||||||||
Support Solutions | 33 | % | 47 | % | 29 | % | 6 | % | -19 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -4 | % | 1 | % | -2 | % | 5 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | 27,314 | 55,080 | 82,019 | 117,285 | 28,133 | |||||||||||||||
Global Services | 20,631 | 44,705 | 69,001 | 97,043 | 21,452 | |||||||||||||||
Of which Professional Services | 14,884 | 31,830 | 48,219 | 67,092 | 14,626 | |||||||||||||||
Of which Managed Services | 5,708 | 12,176 | 18,482 | 25,234 | 5,888 | |||||||||||||||
Of which Network Rollout | 5,747 | 12,875 | 20,782 | 29,951 | 6,826 | |||||||||||||||
Support Solutions | 3,029 | 6,508 | 9,823 | 13,451 | 2,447 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 50,974 | 106,293 | 160,843 | 227,779 | 52,032 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Year to date, | 2012 | 2013 | ||||||||||||||||||
year over year change, percent | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | -18 | % | -17 | % | -17 | % | -11 | % | 3 | % | ||||||||||
Global Services | 18 | % | 23 | % | 21 | % | 16 | % | 4 | % | ||||||||||
Of which Professional Services | 18 | % | 22 | % | 18 | % | 14 | % | -2 | % | ||||||||||
Of which Managed Services | 16 | % | 26 | % | 24 | % | 20 | % | 3 | % | ||||||||||
Of which Network Rollout | 18 | % | 23 | % | 29 | % | 20 | % | 19 | % | ||||||||||
Support Solutions | 33 | % | 40 | % | 36 | % | 26 | % | -19 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -4 | % | -1 | % | -1 | % | 0 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
SALES GROWTH FOR COMPARABLE UNITS, ADJUSTED FOR CURRENCY EFFECTS AND HEDGING
2012 | 2013 | |||||||||||||||||||
Sequential change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | -19 | % | -1 | % | 0 | % | 33 | % | -17 | % | ||||||||||
Global Services | -25 | % | 15 | % | 3 | % | 16 | % | -20 | % | ||||||||||
Support Solutions | -25 | % | 13 | % | -3 | % | 21 | % | -30 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -22 | % | 6 | % | 1 | % | 24 | % | -19 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Isolated quarter, | 2012 | 2013 | ||||||||||||||||||
Year over year change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | -18 | % | -20 | % | -17 | % | 9 | % | 7 | % | ||||||||||
Global Services | 14 | % | 18 | % | 16 | % | 4 | % | 9 | % | ||||||||||
Support Solutions | 12 | % | 16 | % | 4 | % | 4 | % | -3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -6 | % | -6 | % | -4 | % | 5 | % | 7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Year to date, | 2012 | 2013 | ||||||||||||||||||
year over year change, percent | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | -18 | % | -19 | % | -18 | % | -12 | % | 7 | % | ||||||||||
Global Services | 14 | % | 16 | % | 16 | % | 12 | % | 9 | % | ||||||||||
Support Solutions | 12 | % | 14 | % | 10 | % | 9 | % | -3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -6 | % | -6 | % | -5 | % | -2 | % | 7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Ericsson First Quarter Report 2013 | 26 |
Table of Contents
OPERATING INCOME BY SEGMENT BY QUARTER
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | 1,649 | 1,255 | 1,341 | 2,812 | 1,565 | |||||||||||||||
Global Services | 1,267 | 1,362 | 1,835 | 1,762 | 726 | |||||||||||||||
Of which Professional Services | 1,908 | 2,142 | 2,293 | 2,768 | 1,837 | |||||||||||||||
Of which Network Rollout | -641 | -780 | -458 | -1,006 | -1,111 | |||||||||||||||
Support Solutions | -28 | 420 | 480 | 278 | -29 | |||||||||||||||
Unallocated 1) | -97 | -43 | 6 | -133 | -156 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Segments excluding Sony Ericsson and ST-Ericsson | 2,791 | 2,994 | 3,662 | 4,719 | 2,106 | |||||||||||||||
Sony Ericsson | 7,691 | 2) | 347 | -1 | -11 | — | ||||||||||||||
ST-Ericsson | -1,395 | -1,263 | -565 | -8,511 | 3) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Sony Ericsson and ST-Ericsson | 6,296 | -916 | -566 | -8,522 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 9,087 | 2,078 | 3,096 | -3,803 | 2,106 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | 1,649 | 2,904 | 4,245 | 7,057 | 1,565 | |||||||||||||||
Global Services | 1,267 | 2,629 | 4,464 | 6,226 | 726 | |||||||||||||||
Of which Professional Services | 1,908 | 4,050 | 6,343 | 9,111 | 1,837 | |||||||||||||||
Of which Network Rollout | -641 | -1,421 | -1,879 | -2,885 | -1,111 | |||||||||||||||
Support Solutions | -28 | 392 | 872 | 1,150 | -29 | |||||||||||||||
Unallocated 1) | -97 | -140 | -134 | -267 | -156 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Segments excluding Sony Ericsson and ST-Ericsson | 2,791 | 5,785 | 9,447 | 14,166 | 2,106 | |||||||||||||||
Sony Ericsson | 7,691 | 2) | 8,038 | 8,037 | 8,026 | — | ||||||||||||||
ST-Ericsson | -1,395 | -2,658 | -3,223 | -11,734 | 3) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Sony Ericsson and ST-Ericsson | 6,296 | 5,380 | 4,814 | -3,708 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 9,087 | 11,165 | 14,261 | 10,458 | 2,106 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
OPERATING MARGIN BY SEGMENT BY QUARTER
As percentage of net sales, isolated quarters | 2012 | 2013 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | ||||||||||||||||
Networks | 6 | % | 5 | % | 5 | % | 8 | % | 6 | % | ||||||||||
Global Services | 6 | % | 6 | % | 8 | % | 6 | % | 3 | % | ||||||||||
Of which Professional Services | 13 | % | 13 | % | 14 | % | 15 | % | 13 | % | ||||||||||
Of which Network Rollout | -11 | % | -11 | % | -6 | % | -11 | % | -16 | % | ||||||||||
Support Solutions | -1 | % | 12 | % | 14 | % | 8 | % | -1 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal excluding Sony Ericsson and ST-Ericsson | 5 | % | 5 | % | 7 | % | 7 | % | 4 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
As percentage of net sales, Year to date | 2012 | 2013 | ||||||||||||||||||
Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | ||||||||||||||||
Networks | 6 | % | 5 | % | 5 | % | 6 | % | 6 | % | ||||||||||
Global Services | 6 | % | 6 | % | 6 | % | 6 | % | 3 | % | ||||||||||
Of which Professional Services | 13 | % | 13 | % | 13 | % | 14 | % | 13 | % | ||||||||||
Of which Network Rollout | -11 | % | -11 | % | -9 | % | -10 | % | -16 | % | ||||||||||
Support Solutions | -1 | % | 6 | % | 9 | % | 9 | % | -1 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal excluding Sony Ericsson and ST-Ericsson | 5 | % | 5 | % | 6 | % | 6 | % | 4 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
1) | “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses |
2) | Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012 |
3) | Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012 |
Ericsson First Quarter Report 2013 | 27 |
Table of Contents
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | 2,343 | 1,994 | 2,075 | 3,595 | 2,302 | |||||||||||||||
Global Services | 1,464 | 1,594 | 2,050 | 1,974 | 942 | |||||||||||||||
Of which Professional Services | 2,086 | 2,320 | 2,438 | 2,925 | 2,009 | |||||||||||||||
Of which Network Rollout | -622 | -726 | -389 | -951 | -1,067 | |||||||||||||||
Support Solutions | 236 | 608 | 624 | 427 | 118 | |||||||||||||||
Unallocated 1) | -96 | -42 | 6 | -131 | -155 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Segments excluding Sony Ericsson and ST-Ericsson | 3,947 | 4,154 | 4,755 | 5,865 | 3,207 | |||||||||||||||
Sony Ericsson | 7,691 | 2) | 347 | -1 | -11 | — | ||||||||||||||
ST-Ericsson | -1,395 | -1,263 | -565 | -8,511 | 3) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Sony Ericsson and ST-Ericsson | 6,296 | -916 | -566 | -8,522 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 10,243 | 3,238 | 4,189 | -2,657 | 3,207 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | 2,343 | 4,337 | 6,411 | 10,007 | 2,302 | |||||||||||||||
Global Services | 1,464 | 3,058 | 5,108 | 7,082 | 942 | |||||||||||||||
Of which Professional Services | 2,086 | 4,406 | 6,845 | 9,769 | 2,009 | |||||||||||||||
Of which Network Rollout | -622 | -1,348 | -1,736 | -2,687 | -1,067 | |||||||||||||||
Support Solutions | 236 | 844 | 1,468 | 1,895 | 118 | |||||||||||||||
Unallocated 1) | -96 | -138 | -132 | -263 | -155 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Segments excluding Sony Ericsson and ST-Ericsson | 3,947 | 8,101 | 12,856 | 18,721 | 3,207 | |||||||||||||||
Sony Ericsson | 7,691 | 2) | 8,038 | 8,037 | 8,026 | — | ||||||||||||||
ST-Ericsson | -1,395 | -2,658 | -3,223 | -11,734 | 3) | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal Sony Ericsson and ST-Ericsson | 6,296 | 5,380 | 4,814 | -3,708 | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 10,243 | 13,481 | 17,670 | 15,013 | 3,207 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
EBITA MARGIN BY SEGMENT BY QUARTER
2012 | 2013 | |||||||||||||||||||
As percentage of net sales, isolated quarters | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | 9 | % | 7 | % | 8 | % | 10 | % | 8 | % | ||||||||||
Global Services | 7 | % | 7 | % | 8 | % | 7 | % | 4 | % | ||||||||||
Of which Professional Services | 14 | % | 14 | % | 15 | % | 15 | % | 14 | % | ||||||||||
Of which Network Rollout | -11 | % | -10 | % | -5 | % | -10 | % | -16 | % | ||||||||||
Support Solutions | 8 | % | 17 | % | 19 | % | 12 | % | 5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal excluding Sony Ericsson and ST-Ericsson | 8 | % | 8 | % | 9 | % | 9 | % | 6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
2012 | 2013 | |||||||||||||||||||
As percentage of net sales, year to date | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | 9 | % | 8 | % | 8 | % | 9 | % | 8 | % | ||||||||||
Global Services | 7 | % | 7 | % | 7 | % | 7 | % | 4 | % | ||||||||||
Of which Professional Services | 14 | % | 14 | % | 14 | % | 15 | % | 14 | % | ||||||||||
Of which Network Rollout | -11 | % | -10 | % | -8 | % | -9 | % | -16 | % | ||||||||||
Support Solutions | 8 | % | 13 | % | 15 | % | 14 | % | 5 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Subtotal excluding Sony Ericsson and ST-Ericsson | 8 | % | 8 | % | 8 | % | 8 | % | 6 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
1) | “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses |
2) | Includes gain on sale of Sony Ericsson SEK 7.7 billion in Q1 2012 |
3) | Negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 billion in Q4 2012 |
Ericsson First Quarter Report 2013 | 28 |
Table of Contents
NET SALES BY REGION BY QUARTER
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
North America | 12,775 | 12,987 | 14,037 | 16,950 | 15,773 | |||||||||||||||
Latin America | 4,822 | 5,243 | 5,424 | 6,517 | 4,374 | |||||||||||||||
Northern Europe & Central Asia1) 2) | 2,292 | 3,358 | 2,697 | 2,998 | 2,283 | |||||||||||||||
Western & Central Europe2) | 4,306 | 4,094 | 3,630 | 5,448 | 4,349 | |||||||||||||||
Mediterranean2) | 4,620 | 6,214 | 5,401 | 7,064 | 5,271 | |||||||||||||||
Middle East | 3,157 | 3,701 | 3,637 | 5,061 | 3,160 | |||||||||||||||
Sub Saharan Africa | 2,200 | 2,791 | 2,800 | 3,558 | 2,131 | |||||||||||||||
India | 1,421 | 1,700 | 1,737 | 1,602 | 1,606 | |||||||||||||||
North East Asia | 9,154 | 8,423 | 8,373 | 10,246 | 6,054 | |||||||||||||||
South East Asia & Oceania | 3,374 | 3,674 | 3,505 | 4,515 | 4,129 | |||||||||||||||
Other1) 2) | 2,853 | 3,134 | 3,309 | 2,977 | 2,902 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 50,974 | 55,319 | 54,550 | 66,936 | 52,032 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | 834 | 1,282 | 1,649 | 1,268 | 1,020 | |||||||||||||||
2) Of which EU | 9,502 | 11,201 | 10,604 | 12,923 | 9,782 | |||||||||||||||
2012 | 2013 | |||||||||||||||||||
Sequential change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
North America | 14 | % | 2 | % | 8 | % | 21 | % | -7 | % | ||||||||||
Latin America | -31 | % | 9 | % | 3 | % | 20 | % | -33 | % | ||||||||||
Northern Europe & Central Asia1) 2) | -39 | % | 47 | % | -20 | % | 11 | % | -24 | % | ||||||||||
Western & Central Europe2) | -18 | % | -5 | % | -11 | % | 50 | % | -20 | % | ||||||||||
Mediterranean2) | -44 | % | 35 | % | -13 | % | 31 | % | -25 | % | ||||||||||
Middle East | -39 | % | 17 | % | -2 | % | 39 | % | -38 | % | ||||||||||
Sub Saharan Africa | -32 | % | 27 | % | 0 | % | 27 | % | -40 | % | ||||||||||
India | -7 | % | 20 | % | 2 | % | -8 | % | 0 | % | ||||||||||
North East Asia | -16 | % | -8 | % | -1 | % | 22 | % | -41 | % | ||||||||||
South East Asia & Oceania | -16 | % | 9 | % | -5 | % | 29 | % | -9 | % | ||||||||||
Other1) 2) | -14 | % | 10 | % | 6 | % | -10 | % | -3 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -20 | % | 9 | % | -1 | % | 23 | % | -22 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | -8 | % | 54 | % | 29 | % | -23 | % | -20 | % | ||||||||||
2) Of which EU | -29 | % | 18 | % | -5 | % | 22 | % | -24 | % | ||||||||||
2012 | 2013 | |||||||||||||||||||
Year-over-year change, percent | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
North America | -3 | % | 5 | % | 16 | % | 51 | % | 23 | % | ||||||||||
Latin America | 20 | % | 6 | % | -10 | % | -7 | % | -9 | % | ||||||||||
Northern Europe & Central Asia1) 2) | -32 | % | -26 | % | -24 | % | -21 | % | 0 | % | ||||||||||
Western & Central Europe2) | -10 | % | -6 | % | -21 | % | 3 | % | 1 | % | ||||||||||
Mediterranean2) | -4 | % | 12 | % | 3 | % | -14 | % | 14 | % | ||||||||||
Middle East | 3 | % | 4 | % | 0 | % | -3 | % | 0 | % | ||||||||||
Sub Saharan Africa | -1 | % | 26 | % | 11 | % | 11 | % | -3 | % | ||||||||||
India | -55 | % | -39 | % | -24 | % | 5 | % | 13 | % | ||||||||||
North East Asia | 6 | % | -7 | % | -13 | % | -6 | % | -34 | % | ||||||||||
South East Asia & Oceania | 9 | % | 21 | % | -6 | % | 13 | % | 22 | % | ||||||||||
Other1) 2) | 9 | % | 27 | % | 49 | % | -10 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -4 | % | 1 | % | -2 | % | 5 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | -10 | % | 16 | % | 75 | % | 40 | % | 22 | % | ||||||||||
2) Of which EU | -5 | % | 9 | % | 4 | % | -4 | % | 3 | % |
Ericsson First Quarter Report 2013 | 29 |
Table of Contents
NET SALES BY REGION BY QUARTER (continued)
2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
North America | 12,775 | 25,762 | 39,799 | 56,749 | 15,773 | |||||||||||||||
Latin America | 4,822 | 10,065 | 15,489 | 22,006 | 4,374 | |||||||||||||||
Northern Europe & Central Asia1) 2) | 2,292 | 5,650 | 8,347 | 11,345 | 2,283 | |||||||||||||||
Western & Central Europe2) | 4,306 | 8,400 | 12,030 | 17,478 | 4,349 | |||||||||||||||
Mediterranean2) | 4,620 | 10,834 | 16,235 | 23,299 | 5,271 | |||||||||||||||
Middle East | 3,157 | 6,858 | 10,495 | 15,556 | 3,160 | |||||||||||||||
Sub Saharan Africa | 2,200 | 4,991 | 7,791 | 11,349 | 2,131 | |||||||||||||||
India | 1,421 | 3,121 | 4,858 | 6,460 | 1,606 | |||||||||||||||
North East Asia | 9,154 | 17,577 | 25,950 | 36,196 | 6,054 | |||||||||||||||
South East Asia & Oceania | 3,374 | 7,048 | 10,553 | 15,068 | 4,129 | |||||||||||||||
Other1) 2) | 2,853 | 5,987 | 9,296 | 12,273 | 2,902 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 50,974 | 106,293 | 160,843 | 227,779 | 52,032 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | 834 | 2,116 | 3,765 | 5,033 | 1,020 | |||||||||||||||
2) Of which EU | 9,502 | 20,703 | 31,307 | 44,230 | 9,782 |
Year to date, | 2012 | 2013 | ||||||||||||||||||
year-over-year change, percent | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
North America | -3 | % | 1 | % | 6 | % | 16 | % | 23 | % | ||||||||||
Latin America | 20 | % | 13 | % | 4 | % | 0 | % | -9 | % | ||||||||||
Northern Europe & Central Asia1) 2) | -32 | % | -29 | % | -27 | % | -25 | % | 0 | % | ||||||||||
Western & Central Europe2) | -10 | % | -8 | % | -13 | % | -8 | % | 1 | % | ||||||||||
Mediterranean2) | -4 | % | 5 | % | 4 | % | -2 | % | 14 | % | ||||||||||
Middle East | 3 | % | 4 | % | 2 | % | 1 | % | 0 | % | ||||||||||
Sub Saharan Africa | -1 | % | 13 | % | 12 | % | 12 | % | -3 | % | ||||||||||
India | -55 | % | -48 | % | -41 | % | -34 | % | 13 | % | ||||||||||
North East Asia | 6 | % | 0 | % | -5 | % | -5 | % | -34 | % | ||||||||||
South East Asia & Oceania | 9 | % | 15 | % | 7 | % | 9 | % | 22 | % | ||||||||||
Other1) 2) | 9 | % | 18 | % | 27 | % | 15 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -4 | % | -1 | % | -1 | % | 0 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | -10 | % | 4 | % | 27 | % | 30 | % | 22 | % | ||||||||||
2) Of which EU | -5 | % | 2 | % | 3 | % | 1 | % | 3 | % |
Q1 | Jan - Mar | |||||||||||||||
Country | 2012 | 2013 | 2012 | 2013 | ||||||||||||
UNITED STATES | 24 | % | 30 | % | 24 | % | 30 | % | ||||||||
JAPAN | 9 | % | 7 | % | 9 | % | 7 | % | ||||||||
CHINA | 5 | % | 4 | % | 5 | % | 4 | % | ||||||||
INDONESIA | 2 | % | 3 | % | 2 | % | 3 | % | ||||||||
ITALY | 3 | % | 3 | % | 3 | % | 3 | % |
Ericsson First Quarter Report 2013 | 30 |
Table of Contents
NET SALES BY REGION BY SEGMENT
Revenue from Telcordia is reported 50/50 between segments Global Services and Support Solutions. In the regional dimension, all of Telcordia sales is reported in Support Solutions, except for North America where it is split 50/50. IPX was divested Q3 2012. For the first nine months of 2012, IPX was included in Support Solutions and region Other.
Q1 2013, SEK million | Jan - Mar 2013, SEK million | |||||||||||||||||||||||||||||||
Net- works | Global Services | Support Solutions | Total | Net- works | Global Services | Support Solutions | Total | |||||||||||||||||||||||||
North America | 9,178 | 6,109 | 486 | 15,773 | 9,178 | 6,109 | 486 | 15,773 | ||||||||||||||||||||||||
Latin America | 2,003 | 2,017 | 354 | 4,374 | 2,003 | 2,017 | 354 | 4,374 | ||||||||||||||||||||||||
Northern Europe & Central Asia | 1,265 | 954 | 64 | 2,283 | 1,265 | 954 | 64 | 2,283 | ||||||||||||||||||||||||
Western & Central Europe | 1,891 | 2,341 | 117 | 4,349 | 1,891 | 2,341 | 117 | 4,349 | ||||||||||||||||||||||||
Mediterranean | 2,442 | 2,688 | 141 | 5,271 | 2,442 | 2,688 | 141 | 5,271 | ||||||||||||||||||||||||
Middle East | 1,417 | 1,472 | 271 | 3,160 | 1,417 | 1,472 | 271 | 3,160 | ||||||||||||||||||||||||
Sub Saharan Africa | 1,100 | 822 | 209 | 2,131 | 1,100 | 822 | 209 | 2,131 | ||||||||||||||||||||||||
India | 858 | 627 | 121 | 1,606 | 858 | 627 | 121 | 1,606 | ||||||||||||||||||||||||
North East Asia | 3,377 | 2,590 | 87 | 6,054 | 3,377 | 2,590 | 87 | 6,054 | ||||||||||||||||||||||||
South East Asia & Oceania | 2,600 | 1,421 | 108 | 4,129 | 2,600 | 1,421 | 108 | 4,129 | ||||||||||||||||||||||||
Other | 2,002 | 411 | 489 | 2,902 | 2,002 | 411 | 489 | 2,902 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 28,133 | 21,452 | 2,447 | 52,032 | 28,133 | 21,452 | 2,447 | 52,032 | ||||||||||||||||||||||||
Share of Total | 54 | % | 41 | % | 5 | % | 100 | % | 54 | % | 41 | % | 5 | % | 100 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2013 | ||||||||||||||||
Sequential change, percent | Net- works | Global Services | Support Solutions | Total | ||||||||||||
North America | -2 | % | -10 | % | -40 | % | -7 | % | ||||||||
Latin America | -30 | % | -38 | % | -11 | % | -33 | % | ||||||||
Northern Europe & Central Asia | -19 | % | -22 | % | -69 | % | -24 | % | ||||||||
Western & Central Europe | -19 | % | -20 | % | -34 | % | -20 | % | ||||||||
Mediterranean | -11 | % | -34 | % | -45 | % | -25 | % | ||||||||
Middle East | -43 | % | -29 | % | -49 | % | -38 | % | ||||||||
Sub Saharan Africa | -46 | % | -33 | % | -26 | % | -40 | % | ||||||||
India | -4 | % | 8 | % | -5 | % | 0 | % | ||||||||
North East Asia | -48 | % | -29 | % | -31 | % | -41 | % | ||||||||
South East Asia & Oceania | 2 | % | -24 | % | 15 | % | -9 | % | ||||||||
Other | 2 | % | 5 | % | -22 | % | -3 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | -20 | % | -24 | % | -33 | % | -22 | % | ||||||||
|
|
|
|
|
|
|
|
Q1 2013 | ||||||||||||||||
Year over year change, percent | Net- works | Global Services | Support Solutions | Total | ||||||||||||
North America | 23 | % | 30 | % | -17 | % | 23 | % | ||||||||
Latin America | -3 | % | -20 | % | 51 | % | -9 | % | ||||||||
Northern Europe & Central Asia | 6 | % | -6 | % | -20 | % | 0 | % | ||||||||
Western & Central Europe | 23 | % | -9 | % | -40 | % | 1 | % | ||||||||
Mediterranean | 21 | % | 11 | % | -17 | % | 14 | % | ||||||||
Middle East | 8 | % | -11 | % | 44 | % | 0 | % | ||||||||
Sub Saharan Africa | -12 | % | 4 | % | 39 | % | -3 | % | ||||||||
India | 30 | % | 1 | % | -12 | % | 13 | % | ||||||||
North East Asia | -46 | % | -6 | % | -29 | % | -34 | % | ||||||||
South East Asia & Oceania | 43 | % | 0 | % | -21 | % | 22 | % | ||||||||
Other | 19 | % | 180 | % | -52 | % | 2 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 3 | % | 4 | % | -19 | % | 2 | % | ||||||||
|
|
|
|
|
|
|
|
Jan - Mar 2013 | ||||||||||||||||
Year over year change, percent | Net- works | Global Services | Support Solutions | Total | ||||||||||||
North America | 23 | % | 30 | % | -17 | % | 23 | % | ||||||||
Latin America | -3 | % | -20 | % | 51 | % | -9 | % | ||||||||
Northern Europe & Central Asia | 6 | % | -6 | % | -20 | % | 0 | % | ||||||||
Western & Central Europe | 23 | % | -9 | % | -40 | % | 1 | % | ||||||||
Mediterranean | 21 | % | 11 | % | -17 | % | 14 | % | ||||||||
Middle East | 8 | % | -11 | % | 44 | % | 0 | % | ||||||||
Sub Saharan Africa | -12 | % | 4 | % | 39 | % | -3 | % | ||||||||
India | 30 | % | 1 | % | -12 | % | 13 | % | ||||||||
North East Asia | -46 | % | -6 | % | -29 | % | -34 | % | ||||||||
South East Asia & Oceania | 43 | % | 0 | % | -21 | % | 22 | % | ||||||||
Other | 19 | % | 180 | % | -52 | % | 2 | % | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 3 | % | 4 | % | -19 | % | 2 | % | ||||||||
|
|
|
|
|
|
|
|
Ericsson First Quarter Report 2013 | 31 |
Table of Contents
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Opening balance | 6,265 | 5,930 | 5,318 | 5,243 | 8,638 | |||||||||||||||
Additions | 1,003 | 616 | 810 | 4,582 | 1,915 | |||||||||||||||
Utilization/Cash out | -980 | -850 | -664 | -981 | -758 | |||||||||||||||
Of which restructuring | -401 | -342 | -160 | -267 | -324 | |||||||||||||||
Reversal of excess amounts | -370 | -453 | -95 | -155 | -209 | |||||||||||||||
Reclassification, translation difference and other | 12 | 75 | -126 | -51 | -87 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Closing balance | 5,930 | 5,318 | 5,243 | 8,638 | 9,499 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Opening balance | 6,265 | 6,265 | 6,265 | 6,265 | 8,638 | |||||||||||||||
Additions | 1,003 | 1,619 | 2,429 | 7,011 | 1,915 | |||||||||||||||
Utilization/Cash out | -980 | -1,830 | -2,494 | -3,475 | -758 | |||||||||||||||
Of which restructuring | -401 | -743 | -903 | -1,170 | -324 | |||||||||||||||
Reversal of excess amounts | -370 | -823 | -918 | -1,073 | -209 | |||||||||||||||
Reclassification, translation difference and other | 12 | 87 | -39 | -90 | -87 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Closing balance | 5,930 | 5,318 | 5,243 | 8,638 | 9,499 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
INFORMATION ON INVESTMENTS IN ASSETS SUBJECT TO DEPRECIATION, AMORTIZATION, IMPAIRMENT AND WRITE-DOWNS
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Additions | ||||||||||||||||||||
Property, plant and equipment | 1,648 | 994 | 1,461 | 1,326 | 1,196 | |||||||||||||||
Capitalized development expenses | 251 | 525 | 435 | 430 | 282 | |||||||||||||||
IPR, brands and other intangible assets | 5,570 | 992 | 341 | 409 | 196 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 7,469 | 2,511 | 2,237 | 2,165 | 1,674 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Depreciation, amortization and impairment losses | ||||||||||||||||||||
Property, plant and equipment | 914 | 982 | 1,035 | 1,081 | 1,008 | |||||||||||||||
Capitalized development expenses | 245 | 259 | 265 | 555 | 303 | |||||||||||||||
IPR, brands and other intangible assets, etc. | 1,156 | 1,160 | 1,094 | 1,143 | 1,100 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 2,315 | 2,401 | 2,394 | 2,779 | 2,411 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TABLE, NON-IFRS MEASUREMENTS
CASH CONVERSION
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Net income | 8,804 | 1,205 | 2,184 | -6,255 | 1,204 | |||||||||||||||
Net income reconciled to cash | 4,269 | 3,148 | 4,684 | 6,914 | 1,598 | |||||||||||||||
Cash flow from operating activities | 731 | -1,364 | 6,973 | 15,691 | -2,970 | |||||||||||||||
Cash conversion | 17.1 | % | -43.3 | % | 148.9 | % | 226.9 | % | -185.9 | % |
NET CASH, END OF PERIOD
Dec 31 | Mar 31 | |||||||
SEK million | 2012 | 2013 | ||||||
Cash and cash equivalents | 44,682 | 37,444 | ||||||
+ Short term investments | 32,026 | 34,641 | ||||||
- Borrowings, non-current | 23,898 | 23,638 | ||||||
- Borrowings, current | 4,769 | 5,084 | ||||||
- Post employment benefits | 9,503 | 11,132 | ||||||
Net cash, end of period | 38,538 | 32,231 |
Ericsson First Quarter Report 2013 | 32 |
Table of Contents
Jan - Mar | Jan - Dec | |||||||||||
2012 | 2013 | 2012 | ||||||||||
Number of shares and earnings per share | ||||||||||||
Number of shares, end of period (million) | 3,273 | 3,305 | 3,305 | |||||||||
Of which class A-shares (million) | 262 | 262 | 262 | |||||||||
Of which class B-shares (million) | 3,011 | 3,043 | 3,043 | |||||||||
Number of treasury shares, end of period (million) | 60 | 82 | 85 | |||||||||
Number of shares outstanding, basic, end of period (million) | 3,213 | 3,223 | 3,220 | |||||||||
Numbers of shares outstanding, diluted, end of period (million) | 3,242 | 3,254 | 3,251 | |||||||||
Average number of treasury shares (million) | 61 | 83 | 76 | |||||||||
Average number of shares outstanding, basic (million) | 3,212 | 3,222 | 3,216 | |||||||||
Average number of shares outstanding, diluted (million)1) | 3,241 | 3,253 | 3,247 | |||||||||
Earnings per share, basic (SEK) | 2.79 | 0.37 | 1.80 | |||||||||
Earnings per share, diluted (SEK)1) | 2.76 | 0.37 | 1.78 | |||||||||
Earnings per share (Non-IFRS), diluted (SEK)2) | 3.01 | 0.61 | 2.74 | |||||||||
Earnings per share (Non-IFRS, excluding restructuring), diluted (SEK)2) | 3.14 | 0.99 | 3.55 | |||||||||
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Ratios | ||||||||||||
Days sales outstanding | 104 | 108 | 86 | |||||||||
Inventory turnover days | 88 | 76 | 73 | |||||||||
Payable days | 64 | 55 | 57 | |||||||||
Equity ratio (%) | 54.3 | % | 51.4 | % | 50.4 | % | ||||||
Return on equity (%) | 24.4 | % | 3.5 | % | 4.1 | % | ||||||
Return on capital employed (%) | 19.8 | % | 5.1 | % | 6.7 | % | ||||||
Capital turnover (times) | 1.1 | 1.2 | 1.3 | |||||||||
Cash conversion %, end of period | 17.1 | % | -185.9 | % | 115.9 | % | ||||||
Payment readiness, end of period | 82,657 | 80,024 | 84,951 | |||||||||
Payment readiness, as percentage of sales | 40.5 | % | 38.4 | % | 37.3 | % | ||||||
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Exchange rates used in the consolidation | ||||||||||||
SEK/EUR—average rate | 8.86 | 8.50 | 8.70 | |||||||||
—closing rate | 8.84 | 8.34 | 8.58 | |||||||||
SEK/USD—average rate | 6.70 | 6.46 | 6.73 | |||||||||
—closing rate | 6.63 | 6.51 | 6.51 | |||||||||
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Other | ||||||||||||
Regional inventory, end of period, | 20,987 | 20,781 | 19,353 | |||||||||
Export sales from Sweden | 27,194 | 26,154 | 106,997 | |||||||||
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1) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share |
2) | Excluding amortizations and write-downs of acquired intangibles |
2012 | 2013 | |||||||||||||||||||
End of period | Mar 31 | Jun 30 | Sep 30 | Dec 31 | Mar 31 | |||||||||||||||
North America | 16,281 | 15,872 | 15,486 | 15,501 | 15,404 | |||||||||||||||
Latin America | 11,538 | 11,176 | 10,920 | 11,219 | 11,153 | |||||||||||||||
Northern Europe & Central Asia1) | 21,341 | 21,457 | 21,334 | 21,211 | 21,043 | |||||||||||||||
Western & Central Europe | 10,900 | 10,837 | 11,897 | 11,257 | 11,118 | |||||||||||||||
Mediterranean | 11,858 | 11,986 | 12,321 | 12,205 | 12,015 | |||||||||||||||
Middle East | 4,361 | 4,231 | 4,065 | 3,992 | 3,951 | |||||||||||||||
Sub Saharan Africa | 2,317 | 2,277 | 1,669 | 2,014 | 1,967 | |||||||||||||||
India | 12,567 | 12,644 | 13,269 | 14,303 | 14,588 | |||||||||||||||
North East Asia | 13,016 | 13,233 | 13,853 | 14,157 | 14,088 | |||||||||||||||
South East Asia & Oceania | 4,372 | 4,382 | 4,400 | 4,396 | 4,321 | |||||||||||||||
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Total | 108,551 | 108,095 | 109,214 | 110,255 | 109,648 | |||||||||||||||
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1)Of which Sweden | 17,767 | 17,890 | 17,768 | 17,712 | 17,550 | |||||||||||||||
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Ericsson First Quarter Report 2013 | 33 |
Table of Contents
RESTRUCTURING CHARGES BY FUNCTION
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Cost of sales | -496 | -389 | -455 | -885 | -698 | |||||||||||||||
Research and development expenses | -19 | -107 | -33 | -693 | -552 | |||||||||||||||
Selling and administrative expenses | -54 | -98 | -82 | -136 | -589 | |||||||||||||||
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Subtotal Ericsson excluding ST-Ericsson | -569 | -594 | -570 | -1,714 | -1,839 | |||||||||||||||
Share in ST-Ericsson charges | -30 | -190 | -46 | -46 | — | |||||||||||||||
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Subtotal ST-Ericsson | -30 | -190 | -46 | -46 | — | |||||||||||||||
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Total | -599 | -784 | -616 | -1,760 | -1,839 | |||||||||||||||
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2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Cost of sales | -496 | -885 | -1,340 | -2,225 | -698 | |||||||||||||||
Research and development expenses | -19 | -126 | -159 | -852 | -552 | |||||||||||||||
Selling and administrative expenses | -54 | -152 | -234 | -370 | -589 | |||||||||||||||
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Subtotal Ericsson ST-Ericsson | -569 | -1,163 | -1,733 | -3,447 | -1,839 | |||||||||||||||
Share in ST-Ericsson charges | -30 | -220 | -266 | -312 | — | |||||||||||||||
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Subtotal ST-Ericsson | -30 | -220 | -266 | -312 | — | |||||||||||||||
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Total | -599 | -1,383 | -1,999 | -3,759 | -1,839 | |||||||||||||||
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RESTRUCTURING CHARGES BY SEGMENT
2012 | 2013 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q2 | Q3 | Q4 | Q1 | |||||||||||||||
Networks | -87 | -167 | -94 | -905 | -1,251 | |||||||||||||||
Global Services | -473 | -415 | -441 | -601 | -385 | |||||||||||||||
Of which Professional Services | -358 | -302 | -305 | -371 | -270 | |||||||||||||||
Of which Network Rollout | -115 | -113 | -136 | -230 | -115 | |||||||||||||||
Support Solutions | -9 | -12 | -29 | -196 | -111 | |||||||||||||||
Unallocated | — | — | -6 | -12 | -92 | |||||||||||||||
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Subtotal Ericsson excluding ST-Ericsson | -569 | -594 | -570 | -1,714 | -1,839 | |||||||||||||||
ST-Ericsson | -30 | -190 | -46 | -46 | — | |||||||||||||||
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Subtotal ST-Ericsson | -30 | -190 | -46 | -46 | — | |||||||||||||||
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Total | -599 | -784 | -616 | -1,760 | -1,839 | |||||||||||||||
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2012 | 2013 | |||||||||||||||||||
Year to date, SEK million | Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | |||||||||||||||
Networks | -87 | -254 | -348 | -1,253 | -1,251 | |||||||||||||||
Global Services | -473 | -888 | -1,329 | -1,930 | -385 | |||||||||||||||
Of which Professional Services | -358 | -660 | -965 | -1,336 | -270 | |||||||||||||||
Of which Network Rollout | -115 | -228 | -364 | -594 | -115 | |||||||||||||||
Support Solutions | -9 | -21 | -50 | -246 | -111 | |||||||||||||||
Unallocated | — | — | -6 | -18 | -92 | |||||||||||||||
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Subtotal Ericsson excluding ST-Ericsson | -569 | -1,163 | -1,733 | -3,447 | -1,839 | |||||||||||||||
ST-Ericsson | -30 | -220 | -266 | -312 | — | |||||||||||||||
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Subtotal ST-Ericsson | -30 | -220 | -266 | -312 | — | |||||||||||||||
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Total | -599 | -1,383 | -1,999 | -3,759 | -1,839 | |||||||||||||||
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Ericsson First Quarter Report 2013 | 34 |