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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 21, 2021
Commission File Number 000-12033
LM ERICSSON TELEPHONE COMPANY
(Translation of registrant’s name into English)
Torshamnsgatan 21, 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 ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
Announcement of LM Ericsson Telephone Company, April 21, 2021 regarding “First quarter report 2021”.
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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/ XAVIER DEDULLEN | |
| Xavier Dedullen | ||
| Senior Vice President, Chief Legal Officer | ||
| By: | /s/ CARL MELLANDER | |
| Carl Mellander | ||
| Senior Vice President, Chief Financial Officer | ||
Date: April 21, 2021
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First quarter report 2021
Stockholm, April 21, 2021
First quarter highlights
| • | Sales adjusted for comparable units and currency grew by 10% YoY despite SEK -1.6 b. lower IPR licensing revenues YoY and four of the five market areas showed double-digit growth. Reported sales were SEK 49.8 (49.8) b. |
| • | Gross margin excluding restructuring charges improved to 42.9% (40.4%) with margin improvements in all segments despite lower IPR licensing revenues. Reported gross margin improved to 42.8% (39.8%). |
| • | EBIT excluding restructuring charges improved to SEK 5.3 b. (10.7%) from SEK 4.6 b. (9.3%) YoY driven by Networks, more than offsetting the negative impact from lower IPR licensing revenues. Reported EBIT was SEK 5.3 (4.3) b. |
| • | Networks sales increased by 15% YoY, adjusted for comparable units and currency, driven by market share gains. Networks EBIT margin excluding restructuring charges was 19.9% (16.8%). |
| • | Reported net income was SEK 3.2 (2.3) b. |
| • | Free cash flow before M&A was SEK 1.6 (2.3) b. mainly impacted by lower incoming IPR payments. Net cash per March 31, 2021 was SEK 43.0 (38.4) b. |
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | QoQ change | |||||||||||||||
Net sales | 49.8 | 49.8 | 0 | % | 69.6 | -28 | % | |||||||||||||
Sales growth adj. for comparable units and currency ¹ | — | — | 10 | % | — | — | ||||||||||||||
Gross margin ¹ | 42.8 | % | 39.8 | % | — | 40.6 | % | — | ||||||||||||
EBIT | 5.3 | 4.3 | 22 | % | 11.0 | -52 | % | |||||||||||||
EBIT margin ¹ | 10.6 | % | 8.7 | % | — | 15.8 | % | — | ||||||||||||
Net income | 3.2 | 2.3 | 39 | % | 7.2 | -56 | % | |||||||||||||
EPS diluted, SEK | 0.96 | 0.65 | 48 | % | 2.26 | -58 | % | |||||||||||||
Measures excluding restructuring charges and other items affecting comparability¹ | ||||||||||||||||||||
Gross margin excluding restructuring charges | 42.9 | % | 40.4 | % | — | 40.6 | % | — | ||||||||||||
EBIT excluding restructuring charges | 5.3 | 4.6 | 16 | % | 11.0 | -51 | % | |||||||||||||
EBIT margin excluding restructuring charges | 10.7 | % | 9.3 | % | — | 15.8 | % | — | ||||||||||||
Free cash flow before M & A | 1.6 | 2.3 | -33 | % | 12.8 | -88 | % | |||||||||||||
Net cash, end of period | 43.0 | 38.4 | 12 | % | 41.9 | 3 | % | |||||||||||||
| 1 | Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
| 1 Ericsson | First Quarter Report 2021 | ||
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CEO comments
Our strategy, built on increased investments in R&D for technology and cost leadership, continued to bear fruit in the first quarter of 2021. We saw organic sales1 growth of 10%, primarily driven by market share gains in Networks. Adjusting for declining IPR revenues, organic sales1 growth was 14%. Gross margin2 improved to 42.9% (40.4%) YoY and margin increases in all segments more than offset lower IPR licensing revenues. Our EBIT margin2 increased to 10.7% despite significant investments in our business and headwind from currency. We are well positioned to take advantage of the continued market momentum with a competitive 5G product portfolio and cost structure.
Networks sales1 grew organically by 15%, despite a decline in IPR licensing revenues. This growth is reflecting continued high activity levels in all market areas, except in the Middle East and Africa. We continued to grow market share in the quarter with strong order intake. The gross margin2 for Q1 improved to 46.0% (44.6%). With proactive and continuous measures for supply chain resilience we have to date been able to manage the global semiconductors shortage situation without impact on our customer deliveries. Our increased R&D investments have accelerated product development, evidenced by our recently launched lightweight, energy-efficient Massive MIMO radios for 5G mid-band as well as the Cloud RAN portfolio. These are complementing our radio portfolio, giving customers more deployment options and are receiving good customer traction. We expect the overall market to develop favorably during 2021. We intend to continue to invest for market share gains as well as supply chain resilience during the rest of the year.
Digital Services shows good momentum in contract awards primarily in our cloud native 5G Core portfolio and continues to execute on the plan, visible in the gross margin2 increase to 43.6% (40.1%). Growing topline for Digital Services is a key driver, and it is encouraging to see sales1 growing 3% organically in the quarter, despite lower IPR licensing revenues as well as continued fall in the legacy portfolio. The EBIT loss in the quarter is a result of seasonally low sales, lower IPR licensing revenues and ongoing ramp-up in R&D investments. We will continue to invest in R&D for the new cloud native 5G Core portfolio and we will see initial deployment costs impacting 2021. However, we expect revenues from awarded 5G Core contracts to start late 2021 or early 2022. 2021 will be an investment year and a similar earnings level in Q2 as in Q1 is expected. We are confident that we are building a strong platform for Digital Services and the target to reach an EBIT margin2 of 4%-7% in 2022 remains.
Managed Services delivered a gross margin2 of 21.0% (20.6%) in the quarter. EBIT margin2 decreased to 8.1% (11.4%), including a one percentage point one-time negative impact related to an exit from a non-core business. Going forward, we continue to focus on further improving the margin profile based on increased R&D investments in automation and AI.
We are encouraged to see Cradlepoint, reported in segment Emerging Business and Other, developing according to plan.
IPR licensing revenues amounted to SEK 0.8 (2.5) b. in the quarter. The decline is mainly related to expired contracts pending renewal and lower volumes with one licensee. For the largest contract under renewal, both legal and negotiation processes are continuing.
Free cash flow before M&A amounted to SEK 1.6 (2.3) b. in the quarter. Normally the majority of the annual IPR licensing fees are received in Q1. Excluding the IPR impact, the cash flow improved significantly YoY as a result of improved earnings and continued working capital discipline. We are well positioned with a resilient balance sheet and a solid competitive position based on our 5G portfolio giving us the opportunity to further grow the company both organically and through acquisitions.
The ongoing global pandemic has fast-forwarded the digitalization of societies, placing a significant economic and social premium on high-quality network connectivity. A resilient global digital infrastructure is critical. We see positive signs of governments and enterprises increasingly recognizing 5G as a preferred choice for connectivity with accelerating deployment.
We continue to reinforce our strong commitment to ethics and compliance. We are further increasing our investments to strengthen our capabilities, and at the same time deploying new or revised processes and internal controls. A vital cornerstone is establishing a durable ethical culture built on individual accountability for responsible business practices. The ongoing independent monitorship is providing valuable contributions to achieving our ambition.
There is strong momentum in the global 5G demand with lead markets moving forward at high pace, creating opportunities for us to grow our core business. To that end we continue to invest in further strengthening our portfolio and growing our global footprint. The Enterprise opportunity, on the back of 5G and IoT, offers another attractive growth area. With the investments we are making in our business in 2021, we are creating a strong platform for the long term with strengthened competitiveness in the core business as well as in Enterprise applications.
Our number one priority is the safety, health and well-being of our colleagues, customers and partners. Thanks to the resilience of our outstanding employees working under challenging conditions during the pandemic, we have been able to deliver to customers and manage our operations without disruption.
Stay healthy and well.
Börje Ekholm
President and CEO
| 1 | Sales adjusted for comparable units and currency |
| 2 | Excluding restructuring charges |
| 2 Ericsson | First Quarter Report 2021 | CEO Comments | |
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Financial highlights
Net sales development
SEK b. | Q1 2021 | Q1 2020 | YoY change | YoY adj.¹ | Q4 2020 | QoQ change | ||||||||||||||||||
Networks | 36.3 | 35.1 | 3 | % | 15 | % | 49.4 | -27 | % | |||||||||||||||
Digital Services | 6.9 | 7.3 | -6 | % | 3 | % | 12.7 | -46 | % | |||||||||||||||
Managed Services | 4.9 | 5.7 | -15 | % | -8 | % | 5.8 | -16 | % | |||||||||||||||
Emerging Business and Other | 1.7 | 1.6 | 11 | % | 9 | % | 1.7 | 0 | % | |||||||||||||||
Total | 49.8 | 49.8 | 0 | % | 10 | % | 69.6 | -28 | % | |||||||||||||||
| 1 | Sales growth adjusted for comparable units and currency. Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
Group reported sales were SEK 49.8 b. Sales adjusted for comparable units and currency grew by 10%, with double-digit currency adjusted growth in four of the five market areas. Sales in the Middle East and Africa declined.
IPR licensing revenues decreased to SEK 0.8 (2.5) b. due to expired contracts being under renewal negotiations, lower volumes with one licensee and fluctuations in the timing of revenues in certain contracts. IPR licensing revenues accounted for 2% (5%) of total sales.
Networks sales adjusted for comparable units and currency increased by 15% YoY driven by growth in LTE and deployment of 5G across four of the five market areas. Networks accounted for 73% (71%) of total sales.
Digital Services sales adjusted for comparable units and currency grew by 3% YoY driven by packet core sales in Europe and in North America. Sales adjusted for currency increased in four of the five market areas. Digital Services share of total sales was 14% (15%).
Managed Services sales adjusted for comparable units and currency decreased by -8% YoY, mainly due to lower variable sales in a managed services contract in North America post the merger between two large operators. Managed Services share of total sales was 10% (11%).
Emerging Business and Other sales adjusted for comparable units and currency increased by 9%, driven by growth in Emerging Business. Emerging Business and Other share of total sales was 3% (3%).
Income and margin development
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | QoQ change | |||||||||||||||
Net sales | 49.8 | 49.8 | 0 | % | 69.6 | -28 | % | |||||||||||||
Gross income | 21.3 | 19.8 | 8 | % | 28.3 | -25 | % | |||||||||||||
Gross margin | 42.8 | % | 39.8 | % | — | 40.6 | % | — | ||||||||||||
Research and development (R&D) expenses | -9.6 | -9.1 | — | -10.4 | — | |||||||||||||||
Selling and administrative expenses | -6.2 | -6.2 | — | -7.4 | — | |||||||||||||||
Impairment losses on trade receivables | -0.2 | -0.2 | — | 0.3 | — | |||||||||||||||
Other operating income and expenses | 0.0 | 0.1 | -85 | % | 0.4 | -97 | % | |||||||||||||
EBIT | 5.3 | 4.3 | 22 | % | 11.0 | -52 | % | |||||||||||||
of which Networks | 7.2 | 5.8 | 24 | % | 10.6 | -32 | % | |||||||||||||
of which Digital Services | -1.5 | -1.4 | — | 0.5 | — | |||||||||||||||
of which Managed Services | 0.3 | 0.4 | -23 | % | 0.4 | -22 | % | |||||||||||||
of which Emerging Business & Other | -0.8 | -0.5 | - | -0.5 | - | |||||||||||||||
EBIT margin | 10.6 | % | 8.7 | % | — | 15.8 | % | — | ||||||||||||
Financial income and expenses, net | -0.5 | -0.9 | — | -0.1 | — | |||||||||||||||
Income tax | -1.6 | -1.1 | — | -3.7 | — | |||||||||||||||
Net income | 3.2 | 2.3 | 39 | % | 7.2 | -56 | % | |||||||||||||
Restructuring charges | -0.1 | -0.3 | — | 0.0 | — | |||||||||||||||
Measures excl. restructuring charges and other items affecting comparability¹ | ||||||||||||||||||||
Gross margin excluding restructuring charges | 42.9 | % | 40.4 | % | — | 40.6 | % | — | ||||||||||||
EBIT margin excluding restructuring charges | 10.7 | % | 9.3 | % | — | 15.8 | % | — | ||||||||||||
EBITA excluding restructuring charges | 5.6 | 4.9 | 14 | % | 11.3 | -50 | % | |||||||||||||
EBITA margin excluding restructuring charges | 11.3 | % | 9.9 | % | — | 16.2 | % | — | ||||||||||||
| 1 | Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
Gross margin
Reported gross margin was 42.8% (39.8%). Gross margin excluding restructuring charges increased to 42.9% (40.4%) with margin improvements in all segments. Operational leverage contributed to the higher margins in Networks and in Digital Services. There was
limited impact of critical contracts in Digital Services in Q1 2021 while the impact in Q1 2020 was SEK -0.2 b. Managed Services gross margin improved mainly as an effect of efficiency gains.
| 3 Ericsson | First Quarter Report 2021 | Financial highlights | |
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Sequentially, reported gross margin increased to 42.8% from 40.6%. Gross margin in Q1 was positively impacted by operational leverage and a favorable business mix in Networks and Digital Services.
Research and development (R&D) expenses
R&D expenses amounted to SEK -9.6 (-9.1) b. R&D expenses increased in Emerging Business and Other as a result of the acquisition of Cradlepoint and in Digital Services due to increased investments in the cloud native 5G portfolio.
Selling and administrative (SG&A) expenses
SG&A expenses remained flat YoY at SEK -6.2 b. Increased SG&A expenses in Emerging Business and Other, due to the acquisition of Cradlepoint, as well as higher expenses for the long-term variable compensation programs, were offset by lower discretionary spending in the other segments.
Revaluation of customer financing was SEK 0.1 (-0.3) b.
Impairment losses on trade receivables
Impairment losses on trade receivables were SEK -0.2 (-0.2) b.
Other operating income and expenses
Other operating income and expenses was SEK 0.0 (0.1) b.
Share in earnings of JVs and associated companies was SEK -0.1 (-0.0) b.
Restructuring charges
Restructuring charges amounted to SEK -0.1 (-0.3) b.
EBIT
Reported EBIT improved to SEK 5.3 (4.3) b. YoY. EBIT excluding restructuring charges was SEK 5.3 (4.6) b. corresponding to an EBIT margin excluding restructuring charges of 10.7% (9.3%). The increase was mainly driven by the improved gross margin. The IPR contribution to EBIT decreased by SEK -1.7 b. due to lower revenues and increased litigation costs.
Sequentially, reported EBIT decreased to SEK 5.3 b. from SEK 11.0 b. due to seasonally lower sales, partly offset by an improved gross margin.
EBITA
Reported EBITA improved to SEK 5.5 (4.6) b. YoY. EBITA excluding restructuring charges was SEK 5.6 (4.9) b. corresponding to an EBITA margin excluding restructuring charges of 11.3% (9.9%).
Financial income and expenses, net
Reported financial net was SEK -0.5 (-0.9) b. The strengthened USD to SEK resulted in a negative currency hedge effect. The currency hedge effect was SEK -0.4 b. in the quarter compared with SEK -0.5 b. in Q1 2020.
Sequentially financial net declined to SEK -0.5 b. from SEK -0.1 b. with the currency hedge effect down from SEK 0.6 b. in the fourth quarter 2020. The USD strengthened against the SEK between December 31, 2020 (SEK/USD rate 8.19) and March 31, 2021 (SEK/USD rate 8.71).
Taxes
Taxes were SEK -1.6 (-1.1) b. The effective tax rate in Q1 was 33% compared with 34% in Q4 2020.
Net income
Net income improved to SEK 3.2 (2.3) b. and EPS diluted improved to SEK 0.96 (0.65) YoY driven by the stronger EBIT.
Employees
The number of employees on March 31, 2021, was 101,113 compared with 100,824 on December 31, 2020. The increase derives mainly from research and development.
| 4 Ericsson | First Quarter Report 2021 | Financial highlights | |
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Planning assumptions
Market related
| • | The global RAN equipment market is estimated to grow by 3% in 2021, with Mainland China expected to grow by 4%, North America by 2% and Europe by 3%. Source: Dell’Oro Mobile RAN 5-year forecast report, Jan 2021. |
Ericsson related
Net sales
| • | Three-year average reported sales seasonality between Q1 and Q2 is +13%, however, with large variations depending on timing of deployments and currency impact. |
| • | See IPR comment in section “EBIT”. |
Gross margin
| • | Gross margin will vary by quarter depending on business mix and seasonality; thus, a rolling four quarter gross margin gives a more relevant view of the margin development. |
| • | Networks margins could be temporarily negatively impacted by a higher share of roll-out projects during the second quarter. |
| • | See IPR comment in section “EBIT”. |
R&D and SG&A expenses
| • | Operating expenses typically increase between Q1 and Q2 due to seasonality, however, with large variations. |
EBIT
| • | IPR: The first quarter revenues reflect the portfolio of contracts, until expired contracts are renewed. Related litigation costs represent a minor share of the overall impact on EBIT. The actual financial impact going forward will depend on timing as well as terms and conditions of new agreements. |
| • | Digital Services: 2021 will be an investment year and a similar earnings level in Q2 2021 as in Q1 2021 is expected. |
Restructuring charges
| • | Restructuring charges are estimated to be approximately 1% of sales per year on average. |
Currency exposure
| • | Rule of thumb: A change by 10% of USD to SEK would have an impact of approximately +/-5% on net sales and approximately +/-1 percentage point on EBIT margin. |
Cradlepoint
| • | Cradlepoint is fully consolidated into segment Emerging Business and Other. |
| • | Group EBIT is expected to be negatively impacted by approximately -1 percentage point until the end of 2022. |
| 5 Ericsson | First Quarter Report 2021 | Planning assumptions | |
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Market area sales
SEK b. | Q1 2021 | Q1 2020 | YoY change | YoY adj.¹ | Q4 2020 | QoQ change | ||||||||||||||||||
South EastAsia, Oceania and India | 6.7 | 5.9 | 13 | % | 21 | % | 9.7 | -32 | % | |||||||||||||||
North EastAsia | 6.5 | 3.9 | 66 | % | 78 | % | 12.8 | -49 | % | |||||||||||||||
North America | 17.1 | 17.9 | -5 | % | 10 | % | 19.1 | -11 | % | |||||||||||||||
Europe and Latin America | 12.6 | 12.2 | 3 | % | 12 | % | 17.1 | -26 | % | |||||||||||||||
Middle East and Africa | 4.4 | 5.8 | -25 | % | -16 | % | 6.5 | -33 | % | |||||||||||||||
Other² | 2.5 | 3.9 | -37 | % | - | 4.3 | -42 | % | ||||||||||||||||
Total | 49.8 | 49.8 | 0 | % | 10 | % | 69.6 | -28 | % | |||||||||||||||
| 1 | Sales growth adjusted for currency. |
| 2 | Market area “Other” includes primarily IPR licensing revenues and the major part of segment Emerging Business and Other. |
| Sales | breakdown by market area by segment is available at the end of this report. |
| • | Strong currency adjusted growth in four of the five market areas. |
| • | Networks and Digital Services sales continued to grow in Europe driven by market share gains. |
| • | IPR licensing revenues decreased by SEK -1.6 b. |
South East Asia, Oceania and India
Currency adjusted sales increased by 21% YoY. Sales increased YoY in Networks, driven by continued investments in LTE, primarily in India, and by 5G momentum, predominantly in Australia. Sales increased YoY in Digital Services due to timing of orders and project milestones. Managed Services sales increased YoY, mainly as a result of a new contract signed in second half of 2020. Reported sales increased by 13%.
North East Asia
Currency adjusted sales increased by 78% YoY. Networks and Digital Services sales grew in markets outside of Mainland China. Reported sales increased by 66%.
North America
Currency adjusted sales increased by 10% YoY. Sales growth was driven by strong demand for 5G solutions in Networks and for 5G Core and cloud native solutions in Digital Services. Managed Services sales decreased after the merger between two operators. Reported sales declined by -5%.
Europe and Latin America
Currency adjusted growth was 12% YoY. Sales continued to grow in Networks and in Digital Services in Europe as a result of market share gains, while sales decreased in Managed Services due to earlier decisions on contract exits. Currency adjusted sales growth in Europe was 15%. Currency adjusted sales in Latin America were flat, while reported sales declined by -17% due to macroeconomic conditions following COVID-19. Reported sales increased by 3%.
Middle East and Africa
Currency adjusted sales declined by -16% YoY. Sales declined YoY in Networks and Digital Services primarily due to timing of 5G investments in the Middle East and uncertain macroeconomic conditions in Africa, which are likely to prevail for some time. Managed Services sales were stable. Reported sales decreased by -25%.
Other
IPR licensing revenues decreased to SEK 0.8 (2.5) b. due to expired contracts under renewal negotiation, lower volumes with one licensee and fluctuations in the timing of revenues in certain contracts.
| 6 Ericsson | First Quarter Report 2021 | Market area sales | |
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Segment results
Segment Networks
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | ||||||||||||
Net sales | 36.3 | 35.1 | 3 | % | 49.4 | |||||||||||
Of which IPR licensing revenues | 0.72.0 | -67 | % | 2.1 | ||||||||||||
Sales growth adj. for comparable units and FX | — | — | 15 | % | — | |||||||||||
Gross income | 16.7 | 15.6 | 7 | % | 21.4 | |||||||||||
Gross margin | 46.1 | % | 44.4 | % | — | 43.4 | % | |||||||||
EBIT | 7.2 | 5.8 | 24 | % | 10.6 | |||||||||||
EBIT margin | 20.0 | % | 16.6 | % | — | 21.5 | % | |||||||||
Restructuring charges | 0.0 | -0.1 | — | 0.0 | ||||||||||||
Measures excl. restructuring charges | ||||||||||||||||
Gross margin excl. restructuring charges | 46.0 | % | 44.6 | % | — | 43.5 | % | |||||||||
EBIT excl. restructuring charges | 7.2 | 5.9 | 22 | % | 10.6 | |||||||||||
EBIT margin excl. restructuring charges | 19.9 | % | 16.8 | % | — | 21.5 | % | |||||||||
Breakdown of sales into products, services and IPR licensing is available in note 3.
| • | Sales adjusted for comparable units and currency grew 15% with double-digit growth in four of the five market areas. |
| • | Increased market share with notable customer wins in North America and Europe. |
| • | EBIT margin at 20%. |
Net sales
Sales adjusted for comparable units and currency grew by 15% with double-digit growth in all market areas except in market area Middle East and Africa, where sales declined as an effect of lower operator capex levels due to the macroeconomic impact. Sales growth adjusted for the IPR impact and currency was 19%. Reported sales increased by 3% YoY.
Reported sales decreased by -27% QoQ, due to seasonally lower sales, lower IPR licensing revenues and a negative currency impact.
Gross margin
Reported gross margin increased to 46.1% (44.4%) YoY, as operational leverage and a lower share of services sales more than offset a lower contribution from IPR.
Reported gross margin increased QoQ to 46.1% from 43.4% with continued strong operational leverage and a favorable business mix.
EBIT
Reported EBIT increased to SEK 7.2 (5.8) b. YoY, with an increase in EBIT margin to 20.0% (16.6%). The increase was primarily driven by the improved gross income. Operating expenses decreased by SEK 0.3 b. to SEK -9.5 b. mainly due to a reduced risk provision for accounts receivables.
Reported EBIT decreased by SEK -3.4 b. sequentially, due to seasonally lower sales.
Net sales rolling four quarters were SEK 167.1 b. and EBIT margin rolling four quarters excluding restructuring charges was 19.7%.
Segment Digital Services
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | ||||||||||||
Net sales | 6.9 | 7.3 | -6 | % | 12.7 | |||||||||||
Of which IPR licensing revenues | 0.10.4 | -67 | % | 0.5 | ||||||||||||
Sales growth adj. for comparable units and FX | — | 3 | % | — | ||||||||||||
Gross income | 3.0 | 2.9 | 2 | % | 5.2 | |||||||||||
Gross margin | 43.5 | % | 39.9 | % | — | 40.9 | % | |||||||||
EBIT (loss) | -1.5 | -1.4 | — | 0.5 | ||||||||||||
EBIT margin | -22.0 | % | -19.3 | % | — | 3.9 | % | |||||||||
Restructuring charges | 0.0 | 0.0 | — | 0.0 | ||||||||||||
Measures excl. restructuring charges | ||||||||||||||||
Gross margin excl. restructuring charges | 43.6 | % | 40.1 | % | — | 41.0 | % | |||||||||
EBIT excl. restructuring charges | -1.5 | -1.4 | — | 0.5 | ||||||||||||
EBIT margin excl. restructuring charges | -21.9 | % | -19.6 | % | — | 3.8 | % | |||||||||
Breakdown of sales into products, services and IPR licensing is available in note 3.
| • | Sales adjusted for comparable units and currency grew 3% driven by packet core. |
| • | Currency adjusted growth in four of the five market areas. |
| • | Good traction in the new portfolio. |
Net sales
Sales adjusted for comparable units and currency increased by 3% YoY, mainly driven by growth in packet core. Sales adjusted for currency grew in four of the five market areas. Sales growth adjusted for the IPR impact and currency was 7%. Reported sales decreased by -6% YoY.
Reported sales declined by -46% QoQ, due to seasonally lower sales, lower IPR licensing revenues and a negative currency impact.
Gross margin
Reported gross margin increased to 43.5% (39.9%) YoY supported by operational leverage. In addition, Q1 2020 was negatively impacted by SEK -0.2 b. from critical contracts, while such impact was limited in Q1 2021. Lower IPR licensing revenues impacted gross margin negatively.
Reported gross margin increased to 43.5% from 40.9% QoQ as a result of operational leverage and a favorable business mix.
EBIT (loss)
Reported EBIT was SEK -1.5 (-1.4) b. with an EBIT margin of -22.0% (-19.3%). Operating expenses increased by SEK -0.2 b. to SEK -4.5 b. mainly due to acceleration of R&D investments in the cloud native 5G portfolio.
Reported EBIT decreased by SEK -2.0 b. QoQ, due to seasonally lower sales.
Net sales rolling four quarters were SEK 36.9 b. and EBIT margin rolling four quarters excluding restructuring charges was -6.1%.
| 7 Ericsson | First Quarter Report 2021 | Segment results | |
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Segment Managed Services
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | ||||||||||||
Net sales | 4.9 | 5.7 | -15 | % | 5.8 | |||||||||||
Sales growth adj. for comparable units and FX | — | -8 | % | — | ||||||||||||
Gross income | 0.9 | 0.9 | 1 | % | 1.0 | |||||||||||
Gross margin | 19.4 | % | 16.3 | % | — | 17.7 | % | |||||||||
EBIT | 0.3 | 0.4 | -23 | % | 0.4 | |||||||||||
EBIT margin | 6.4 | % | 7.1 | % | — | 6.9 | % | |||||||||
Restructuring charges | -0.1 | -0.2 | — | 0.0 | ||||||||||||
Measures excl. restructuring charges | ||||||||||||||||
Gross margin excl. restructuring charges | 21.0 | % | 20.6 | % | — | 17.7 | % | |||||||||
EBIT excl. restructuring charges | 0.4 | 0.7 | -40 | % | 0.4 | |||||||||||
EBIT margin excl. restructuring charges | 8.1 | % | 11.4 | % | — | | 6.9 | % | ||||||||
| • | Sales declined YoY mainly due to lower variable sales in North America. |
| • | Further investments in automation, analytics and AI-driven offerings – supporting 5G and efficiency in service delivery. |
Net sales
Sales adjusted for comparable units and currency decreased by -8% YoY, mainly due to reduced variable sales in a large contract in North America, post the merger between two large operators. Sales in Managed Services IT showed growth mainly in market areas South East Asia, Oceania and India and in North America. Reported sales declined by -15% YoY.
Gross margin
Reported gross margin increased to 19.4% (16.3%) YoY. Gross margin excluding restructuring charges increased to 21.0% (20.6%) YoY, mainly due to efficiency gains and higher variable sales.
Reported gross margin increased to 19.4% from 17.7% QoQ. Gross margin excluding restructuring charges increased to 21.0% from 17.7% QoQ, mainly due to seasonally lower costs.
EBIT
Reported EBIT was SEK 0.3 (0.4) b. EBIT margin excluding restructuring charges declined to 8.1% from 11.4%, mainly due to costs related to an exit from a non-core field services business in Italy, and lower sales. Adjusted for exit costs, EBIT margin excluding restructuring charges was 9.2%.
Reported EBIT excluding restructuring charges was stable at SEK 0.4 b. QoQ.
Restructuring charges in the quarter amounted to SEK -0.1 b.
Net sales rolling four quarters were SEK 21.8 b. and EBIT margin rolling four quarters excluding restructuring charges was 7.2%.
Segment Emerging Business and Other
SEK b. | Q1 2021 | Q1 2020 | YoY change | Q4 2020 | ||||||||||||
Net sales | 1.7 | 1.6 | 11 | % | 1.7 | |||||||||||
Sales growth adj. for comparable units and FX | — | — | 9 | % | — | |||||||||||
Gross income | 0.6 | 0.3 | 87 | % | 0.6 | |||||||||||
Gross margin | 36.6 | % | 21.7 | % | — | 35.3 | % | |||||||||
EBIT (loss) | -0.8 | -0.5 | — | -0.5 | ||||||||||||
EBIT margin | -44.4 | % | -32.7 | % | — | -28.5 | % | |||||||||
Restructuring charges | 0.0 | 0.0 | — | 0.0 | ||||||||||||
Measures excl. restructuring charges | ||||||||||||||||
Gross margin excl. restructuring charges | 36.8 | % | 21.9 | % | — | 33.8 | % | |||||||||
EBIT (loss) excl. restructuring charges | -0.8 | -0.5 | — | -0.5 | ||||||||||||
EBIT margin excl. restructuring charges | -43.7 | % | -32.7 | % | — | | -29.3 | % | ||||||||
| • | Continued sales and gross margin growth in Emerging Business, driven mainly by Cradlepoint. |
| • | Cradlepoint business developing according to plan. |
Net sales
Sales in Emerging Business grew, driven mainly by the acquired Cradlepoint business. Sales adjusted for comparable units and currency increased by 9%. Reported sales increased by 11% YoY.
Gross margin
Reported gross margin increased to 36.6% (21.7%) YoY. Gross margin excluding restructuring charges increased to 36.8% (21.9%). The increase was driven by Media Solutions legacy business one-time impact and Cradlepoint.
Reported gross margin increased to 36.6% from 35.3% QoQ. Gross margin excluding restructuring charges increased to 36.8% from 33.8% QoQ. The improvement was mainly driven by a one-time impact in the Media Solutions legacy business.
EBIT (loss)
Reported EBIT (loss) was SEK -0.8 (-0.5) b. Operating expenses increased mainly due to amortization of intangibles and investments in expansion of the Cradlepoint business.
Net sales rolling four quarters were SEK 6.7 b. and EBIT margin rolling four quarters excluding restructuring charges was -35.5%.
| 8 Ericsson | First Quarter Report 2021 | Segment results | |
Table of Contents
Cash flow and financial position
Free cash flow bridge, SEK b. | Q 1 2021 | Q 1 2020 | Q 4 2020 | |||||||||
EBIT excl. restructuring charges | 5.3 | 4.6 | 11.0 | |||||||||
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Depreciation, amortization and impairment losses | 1.9 | 2.1 | 2.3 | |||||||||
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Restructuring charges | -0.1 | -0.3 | 0.0 | |||||||||
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Changes in working capital1) | -3.9 | -0.2 | 1.3 | |||||||||
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Interest paid/received, taxes paid, and other | -0.1 | -1.9 | -0.7 | |||||||||
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Cash flow from operating activities | 3.2 | 4.3 | 13.9 | |||||||||
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Capex net and other investing activities | -1.1 | -1.4 | -0.5 | |||||||||
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Repayment of lease liabilities | -0.5 | -0.6 | -0.6 | |||||||||
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Free cash flow before M&A | 1.6 | 2.3 | 12.8 | |||||||||
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M&A | 0.0 | -0.2 | -9.3 | |||||||||
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Free cash flow after M&A | 1.6 | 2.1 | 3.5 | |||||||||
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Cash flow from operating activities | 3.2 | 4.3 | 13.9 | |||||||||
Cash flow from investing activities | -0.9 | -5.0 | -8.6 | |||||||||
Cash flow from financing activities | -6.2 | 1.4 | -8.5 | |||||||||
SEK b. | Mar 31 2021 | Mar 31 2020 | Dec 31 2020 | |||||||||
Gross cash | 68.6 | 79.5 | 72.0 | |||||||||
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– Borrowings, current | 2.4 | 17.8 | 7.9 | |||||||||
– Borrowings, non-current | 23.3 | 23.4 | 22.2 | |||||||||
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Net cash | 43.0 | 38.4 | 41.9 | |||||||||
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Equity | 88.1 | 79.1 | 85.2 | |||||||||
Total assets | 270.3 | 292.3 | 271.5 | |||||||||
Capital turnover (times) | 1.3 | 1.2 | 1.4 | |||||||||
Return on capital employed (%) | 13.3 | % | 10.2 | % | 17.0 | % | ||||||
Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.
| 1 | Defined as Changes in operating net assets |
| • | Free cash flow before M&A was SEK 1.6 (2.3) b. mainly impacted by lower incoming IPR payments. |
| • | Strongest Q1 Free cash flow before M&A, adjusted for IPR incoming payments since 2014. |
Cash flow from operating activities
Reported cash flow from operating activities was SEK 3.2 (4.3) b. in the quarter. Cash flow from operating activities adjusted for IPR incoming payments improved YoY. Cash flow was supported by continued business momentum and increased profit, partly offset by an increase in net operating assets, which resulted in a negative cash flow impact of SEK -3.9 b. Key movements in net operating assets include a decrease in trade payables and an increase in inventory, with a negative cash flow impact of SEK -4.1 b. and SEK -1.2 b. respectively, as a result of the strategy to increase supply chain resilience within Networks. Trade receivables and contract assets decreased and had a combined positive cash flow impact of SEK 2.0 b. attributed to normal seasonality after strong Q4 sales. Contract liabilities, partly related to customer contracts, increased with a positive cash flow impact of SEK 4.5 b. Taxes paid/received was SEK 0.2 b. in the quarter primarily due to tax refund in India.
Free cash flow
Free cash flow before M&A was SEK 1.6 (2.3) b. in the quarter and SEK 21.5 b., or 9.3% in relation to sales, on a rolling 12 months basis. The decrease in the quarter was mainly driven by lower cash flow from operating activities with lower incoming IPR payments. Capex net and other investing activities was SEK -1.1 (-1.4) b. and primarily related to 5G in Networks.
Repayments of lease liabilities were SEK -0.5 (-0.6) b. and are mainly related to property leases. There were limited M&A activities in the quarter. Free cash flow after M&A was SEK 1.6 (2.1) b.
Cash flow from investing and financing activities
Reported cash flow from investing activities was SEK -0.9 (-5.0) b. The YoY change is mainly related to interest-bearing securities.
Reported cash flow from financing activities was SEK -6.2 (1.4) b. including repayments of lease liabilities and of a EUR -500 m. bond (SEK -5.1 b.) that matured in March 2021.
Financial position
Net cash improved QoQ to SEK 43.0 b. from SEK 41.9 b. due to the positive cash flow. Current borrowings decreased from SEK 7.9 b. to SEK 2.4 b., primarily due to repayment of a EUR -500 m (SEK -5.1 b.) bond. Gross cash declined from SEK 72.0 b. to SEK 68.6 b. QoQ. The average maturity of long-term borrowings was 3.0 years as of March 31, 2021, an increase from 2.4 years 12 months earlier.
Liabilities for post-employment benefits decreased in the quarter, to SEK 31.9 b. from SEK 37.4 b., mainly as a result of higher interest rates. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the Swedish government bond yield-curve. If the discount rate had been based on Swedish covered mortgage bonds, the liability for post-employment benefits would have been approximately SEK 17.0 b. (SEK 14.9 b. lower than current DBO).
Return on capital employed (ROCE) was 13.3% (10.2%), as a result of improved profitability.
| 9 Ericsson | First Quarter Report 2021 | Cash flow and financial position | |
Table of Contents
Parent Company
Income after financial items January—March 2021 was SEK 0.8 (1.0) b. At the end of the quarter, gross cash (cash, cash equivalents, short-term investments and interest-bearing securities, non-current) amounted to SEK 53.1 (65.1) b.
There was an increase in intercompany lending of SEK 1.0 b. and in intercompany borrowing of SEK 0.7 b. in the first quarter. In the quarter, a dividend of SEK 6.7 b. was recognized, after decision by the Annual General Meeting on the 30th of March.
The first of two equal dividend payouts was made in the first week of April. The second payout will be in October.
The holding of treasury stock on March 31, 2021 was 6,043,960 Class B shares.
| 10 Ericsson | First Quarter Report 2021 | Parent Company | |
Table of Contents
Other information
Litigation with Samsung
Ericsson and Samsung were not able to renew the patent license agreement before expiry on December 31, 2020.
On December 11, 2020, Ericsson filed a lawsuit in the US District Court for the Eastern District of Texas, against Samsung, for violating contractual commitments to negotiate in good faith and to license patents on Fair, Reasonable and Non-Discriminatory (FRAND) terms and conditions. In addition, Ericsson also sought to obtain a ruling by the court that it had complied with its own FRAND commitments. The lawsuit was later amended to include claims of patent infringement against Samsung.
On December 17, 2020, Samsung informed Ericsson that it had filed suit in Wuhan, China, on December 7, 2020, seeking rate setting for Ericsson’s 4G & 5G standard essential patents.
On January 1, 2021 Ericsson filed a patent infringement case in the US District Court for the Eastern District of Texas against Samsung.
On January 4, 2021, Ericsson filed a complaint at the US International Trade Commission (ITC) as well as in Düsseldorf, Mannheim, and Munich Regional Courts in Germany, the District Court of the Hague in The Netherlands, and the Enterprise Court of Brussels in Belgium asserting infringement of patents by Samsung.
On January 7, 2021, Samsung asserted patent infringement claims against Ericsson in a complaint at the US ITC as well as in counter claims in the US District Court for the Eastern District of Texas.
On January 15, 2021, Ericsson filed an additional US ITC Action and a case in the US District Court for the Eastern District of Texas against Samsung for patent infringement.
On February 4, 2021, Samsung filed additional complaints at the ITC and in the U.S. District Court for the Eastern District of Texas against Ericsson for patent infringement.
On February 15, 2021, Ericsson filed additional complaints asserting claims of patent infringement against Samsung in the Mannheim and Munich Regional Courts in Germany, the District Court of the Hague in The Netherlands, the Enterprise Court of Brussels in Belgium, and the Patents Court of the United Kingdom.
On February 19, 2021, Samsung asserted patent infringement claims against Ericsson in complaints filed in the Paris First Instance Court in France; Düsseldorf, Mannheim, and Munich Regional Courts in Germany; the District Court of the Hague in The Netherlands; and the Enterprise Court of Brussels in Belgium.
The legal and negotiation processes are continuing. In the context of the various court proceedings, the parties are involved in filing and contesting various pre-trial motions and related court awards, including as to venue. The filing of multiple lawsuits, complaints and other proceedings, when parties take legal action over a patent license agreement renewal, is standard and consequently additional lawsuits, complaints and other proceedings, may follow.
Resolutions at the Annual General Meeting of shareholders 2021 (AGM)
On March 30, 2021, Ericsson held its AGM. Due to the COVID-19 pandemic, the AGM was conducted without the physical presence of shareholders, representatives and third parties and the shareholders were able to exercise their voting rights only by post before the meeting.
The AGM resolved to adopt the profit and loss statements and the balance sheets. The proposed dividend of SEK 2.00 per share was approved by the AGM. The dividend was to be paid in two installments, SEK 1.00 per share with the record date Thursday, April 1, 2021, and SEK 1.00 per share with the record date Friday, October 1, 2021. The Board of Director’s remuneration report for 2020 was approved.
The AGM elected Board members and resolved on fees to the Board of Directors, in accordance with the proposal of the Nomination Committee. Ronnie Leten was re-elected as Chair of the Board and Jon Fredrik Baksaas, Jan Carlson, Nora Denzel, Börje Ekholm, Eric A. Elzvik, Kurt Jofs, Ronnie Leten, Kristin S. Rinne, Helena Stjernholm and Jacob Wallenberg were re-elected as Board members. It was also noted that the unions have appointed Torbjörn Nyman, Anders Ripa and Kjell-Åke Soting as employee representatives on the Board with Per Holmberg, Ulf Rosberg and Loredana Roslund as deputies.
The AGM elected Deloitte AB as auditor for the period up until the end of the AGM 2022.
The AGM resolved to amend the articles of association in accordance with the Board of Directors’ proposal in order to facilitate and increase the flexibility in conducting General Meetings of shareholders, including through introducing a possibility of postal voting.
In accordance with the Board of Directors’ proposals, the AGM resolved on implementation of a Long-Term Variable compensation program (LTV) 2021 for the members of the Executive Team (currently 15 individuals), comprising a maximum of 2.1 million Class B shares in Ericsson.
| 11 Ericsson | First Quarter Report 2021 | Other information | |
Table of Contents
COVID-19 update
The circumstances continuously evolve with regard to the impact of the COVID-19 pandemic. As always, the well-being of Ericsson’s employees remains the priority and guides decision-making.
The company is optimistic that 2021 could be the start of the end of the pandemic. However, with an increasing infection rate in some of Ericsson’s markets, there is an increased risk for negative impact and disturbances in the Company’s operations, including in network deployments in those markets, impacting corresponding revenues.
It will take time before the full effects of vaccinations are known. Therefore, Ericsson has decided that working from home will continue for the majority of employees throughout 2021.
The company is continuously monitoring the situation and this decision will be impacted by access to vaccinations, testing and treatment. This means that:
| • | Travel restrictions for non-critical cross-border business travel will remain throughout 2021. |
| • | Event restrictions are also extended accordingly for the same time period. |
| • | The requirement to wear a face mask in all offices and locations remains until further notice. |
Employees working from home are offered the possibility to buy office furniture for their home office environment, funded by the Company. In preparation for a gradual return to the office, our Workplace of the Future program planning continues to enable future flexibility to work remotely and to increase opportunities to connect and collaborate in the office when deemed safe to do so. Work-life aspects such as culture, ways of working, well-being, digital tools and impact for leaders are also included in the program scope.
The Company decided early on not to apply for any pandemic-related government financial support. We continue to operate efficiently and profitably and believe that tax-payers’ money is better used to target the health and economic effects of COVID-19. The proactive approach to business continuity management in full alignment with customers at the beginning of the pandemic continues to pay off. Quality in Ericsson’s operations and customers´ networks are maintained. The dual mode production strategy and regionalized supply chains make it possible to keep the supply chain operational.
POST-CLOSING EVENTS
Ericsson’s Nomination Committee appointed
On April 19, 2021, Ericsson’s Nomination Committee for the Annual General Meeting 2022 was appointed in accordance with the Instruction for the Nomination Committee resolved by the Annual General Meeting 2012.
The Nomination Committee consists of:
| • | Johan Forssell, Investor AB (Chair) |
| • | Karl Åberg, AB Industrivärden |
| • | Anders Oscarsson, AMF – Försäkring och Fonder |
| • | Jonas Synnergren, Cevian Capital Partners Limited |
| • | Ronnie Leten, the Chair of the Board of Directors. |
| 12 Ericsson | First Quarter Report 2021 | Other information | |
Table of Contents
Risk factors
Ericsson is exposed to a number of risks in its activities. To stimulate identification and support cross-functional treatment within the Ericsson Group, risks are grouped in a number of categories, including for example risks relating to technology, IPR, compliance, project execution, operations, products and services, treasury and accounting, the geopolitical environment, M&A, cyber security and occupational health and safety.
Ericsson’s risk management is embedded into strategy development and operational processes and is a part of the Ericsson Group Management System to ensure accountability, effectiveness, efficiency, business continuity and compliance. Risks are defined in both a short-term and long-term perspective and are related to long-term objectives as per the strategic direction as well as to short-term objectives.
Risk factors and uncertainties of relevance to Ericsson are described in the Annual Report 2020. Updates to these risk factors and uncertainties observed by Ericsson that are deemed of short-term relevance include, but are not limited to, the following:
Pandemics, such as for example the one caused by the novel Coronavirus, COVID-19, could severely impact our local and global operations
The COVID-19 pandemic has caused challenges and risks relating to travel and lockdowns limiting access to sites, transportation and logistics and impacting the flow of goods, as well as having major parts of the workforce working remotely. With an increasing infection rate in some of Ericsson’s markets, there is an increased risk for negative impact and disturbances in the Company’s operations, including in network deployments in those markets, impacting corresponding revenues. As previously mentioned, disturbances from the pandemic may have material adverse effects on our business and financial position.
Stockholm, April 21, 2021
Telefonaktiebolaget LM Ericsson (publ)
Börje Ekholm, President and CEO
Corporate Reg. No. 556016-0680
This report has not been reviewed by Telefonaktiebolaget LM Ericsson auditors.
Date for next report: July 16, 2021
| 13 Ericsson | First Quarter Report 2021 | Risk factors | |
Table of Contents
Editor’s note
Media and analyst briefing
Ericsson invites media, investors and analysts to a conference call and live video webcast at 9:00 AM CEST on April 21, 2021.
Link to the webcast, dial-in to audio conference, supporting material and replay will be available at:
www.ericsson.com/investors and
www.ericsson.com/newsroom
For further information, please contact:
Carl Mellander, Senior Vice President, Chief Financial Officer
Phone: +46 72 583 88 70
E-mail: investor.relations@ericsson.com or
media.relations@ericsson.com
Stella Medlicott, Senior Vice President, Chief Marketing and Communications Officer Phone: +46 73 095 65 39
E-mail: investor.relations@ericsson.com or
media.relations@ericsson.com
Telefonaktiebolaget LM Ericsson
Org. number: 556016-0680
Torshamnsgatan 21
SE-164 83 Stockholm
Phone: +46 10 719 00 00
www.ericsson.com
Investors
Peter Nyquist, Vice President,
Head of Investor Relations
Phone: +46 70 575 29 06
E-mail: peter.nyquist@ericsson.com
Lena Häggblom, Director,
Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director,
Investor Relations
Phone: +46 70 986 02 27
E-mail: stefan.jelvin@ericsson.com
Media
Peter Olofsson, Head of Corporate Communication
Phone: +46 70 267 34 45
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
| 14 Ericsson | First Quarter Report 2021 | Editor’s note | |
Table of Contents
Forward-looking statements
This report includes forward‐looking statements, including statements reflecting management’s current views relating to the growth of the market, future market conditions, future events, financial condition, and expected operational and financial performance, including, the following:
| • | Our goals, targets, strategies, planning assumptions and operational or financial performance expectations, such as the investor day key messages and our targets and strategies as described in the introductory bullets, the CEO comments, the Segment descriptions and in Other information |
| • | Industry trends, future characteristics and development of the markets in which we operate |
| • | Our future liquidity, capital resources, capital expenditures, cost savings and profitability |
| • | The expected demand for our existing and new products and services as well as plans to launch new products and services including research and development expenditures |
| • | The ability to deliver on future plans and to realize potential for future growth |
| • | The expected operational or financial performance of strategic cooperation activities and joint ventures |
| • | The time until acquired entities and businesses will be integrated and accretive to income |
| • | Technology and industry trends including the regulatory and standardization environment in which we operate, competition and our customer structure. |
The words “believe,” “expect,” “foresee,” “anticipate,” “assume,” “intend,” “likely,” “projects,” “may,” “could,” “plan,” “estimate,” “forecast,” “will,” “should,” “would,” “predict,” “aim,” “ambition,” “seek,” “potential,” “target,” “might,” “continue,” or, in each case, their negative or variations, and similar words or expressions are used to identify forward-looking statements. Any statement that refers to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements.
We caution investors that these statements are subject to risks and uncertainties many of which are difficult to predict and generally beyond our control that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements.
Important factors that could affect whether and to what extent any of our forward-looking statements materialize include, but are not limited to, the factors described in the section “Risk Factors”, and in “Risk Factors” in the Annual Report 2020.
These forward-looking statements also represent our estimates and assumptions only as of the date that they were made. We expressly disclaim a duty to provide updates to these forward-looking statements, and the estimates and assumptions associated with them, after the date of this report, to reflect events or changes in circumstances or changes in expectations or the occurrence of anticipated events, whether as a result of new information, future events or otherwise, except as required by applicable law or stock exchange regulation
| 15 Ericsson | First Quarter Report 2021 | Forward-looking statements | |
Table of Contents
Financial statements and other information
Financial statements (unaudited) | 17 | |||
| 17 | ||||
| 17 | ||||
| 18 | ||||
| 19 | ||||
| 20 | ||||
| 20 | ||||
Condensed consolidated statement of cash flows – isolated quarters | 21 | |||
| 22 | ||||
Condensed Parent Company statement of comprehensive income (loss) | 22 | |||
| 23 | ||||
Accounting policies and Explanatory notes (unaudited) | 24 | |||
| 24 | ||||
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| 29 | ||||
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Note 7 – Contingent liabilities and Assets pledged as collateral | 31 | |||
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Alternative performance measures (unaudited) | 33 | |||
| 33 | ||||
| 34 | ||||
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring | 34 | |||
Rolling four quarters of net sales and operating margin excluding restructuring charges (%) | 35 | |||
| 36 | ||||
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Sales growth by segment adjusted for comparable units and currency | 39 | |||
Sales growth by market area adjusted for comparable units and currency | 39 | |||
| 40 | ||||
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| 41 | ||||
| 41 | ||||
Gross income and gross margin excluding restructuring charges by segment | 42 | |||
EBIT and EBIT margin excluding restructuring charges by segment | 43 | |||
| 43 | ||||
Rolling��four quarters of EBIT margin excluding restructuring charges by segment (%) | 43 | |||
| 44 | ||||
| 44 | ||||
| 16 Ericsson | First Quarter Report 2021 | Financial statements and other Information | |
Table of Contents
Financial statements (unaudited)
Condensed consolidated income statement
| Q1 | Jan-M ar | Jan-Dec | ||||||||||||||||||
SEK m illion | Note | 2021 | 2020 | Change | 2020 | |||||||||||||||
Net sales | 3 | 49,778 | 49,750 | 0 | % | 232,390 | ||||||||||||||
Cost of sales | -28,483 | -29,962 | -5 | % | -138,666 | |||||||||||||||
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Gross income | 3 | 21,295 | 19,788 | 8 | % | 93,724 | ||||||||||||||
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Research and development expenses | -9,576 | -9,145 | 5 | % | -39,714 | |||||||||||||||
Selling and administrative expenses | -6,188 | -6,238 | -1 | % | -26,684 | |||||||||||||||
Impairment losses on trade receivables | -212 | -160 | 33 | % | 118 | |||||||||||||||
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Operating expenses | -15,976 | -15,543 | 3 | % | -66,280 | |||||||||||||||
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Other operating income and expenses | 13 | 89 | -85 | % | 662 | |||||||||||||||
Share in earnings of JV and associated companies | -71 | -28 | 154 | % | -298 | |||||||||||||||
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Earnings before financial items and income tax (EBIT) | 3 | 5,261 | 4,306 | 22 | % | 27,808 | ||||||||||||||
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Financial income and expenses, net | -533 | -902 | -41 | % | -596 | |||||||||||||||
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Income after financial items | 4,728 | 3,404 | 39 | % | 27,212 | |||||||||||||||
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Income tax | -1,560 | -1,124 | 39 | % | -9,589 | |||||||||||||||
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Net incom e | 3,168 | 2,280 | 39 | % | 17,623 | |||||||||||||||
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Net income (loss) attributable to: | ||||||||||||||||||||
Owners of the Parent Company | 3,187 | 2,156 | 17,483 | |||||||||||||||||
Non-controlling interests | -19 | 124 | 140 | |||||||||||||||||
Other information | ||||||||||||||||||||
Average number of shares, basic (million) | 8 | 3,328 | 3,317 | 3,323 | ||||||||||||||||
Earnings per share, basic (SEK) ¹â¾ | 0.96 | 0.65 | 5.26 | |||||||||||||||||
Earnings per share, diluted (SEK) ²â¾ | 0.96 | 0.65 | 5.26 | |||||||||||||||||
| 1) | Based on net income attributable to owners of the Parent Company. |
| 2) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
Condensed statement of comprehensive income (loss)
| Q1 | Jan-Dec | |||||||||||
SEK m illion | 2021 | 2020 | 2020 | |||||||||
Net income | 3,168 | 2,280 | 17,623 | |||||||||
Other comprehensive income (loss) | ||||||||||||
Items that will not be reclassified to profit or loss | ||||||||||||
Remeasurements of defined benefits pension plans incl.asset ceiling | 6,046 | -4,683 | -4,618 | |||||||||
Revaluation of borrowings due to change in creditrisk | -55 | 1,725 | 99 | |||||||||
Tax on items that will not be reclassified to profit or loss | -1,233 | 705 | 880 | |||||||||
Items that have been or may be reclassified to profit or loss | ||||||||||||
Cash flow hedge reserve | ||||||||||||
Gains/ losses arising during the period | -31 | -241 | 136 | |||||||||
Reclassification adjustments on gains/ losses included in profit or loss | -24 | 70 | 281 | |||||||||
Translation reserves | ||||||||||||
Changes in translation reserves | 1,721 | 2,211 | -5,376 | |||||||||
Reclassification to profit and loss | — | — | 124 | |||||||||
Share of other comprehensive income (loss) of JV and associated companies | 35 | 88 | -81 | |||||||||
Tax on items that have been or may be reclassified to profit or loss | 11 | 35 | -86 | |||||||||
|
|
|
|
|
| |||||||
Total other comprehensive income, net of tax | 6,470 | -90 | -8,641 | |||||||||
|
|
|
|
|
| |||||||
Total comprehensive incom e | 9,638 | 2,190 | 8,982 | |||||||||
|
|
|
|
|
| |||||||
Total comprehensive income attributable to: | ||||||||||||
Owners of the Parent Company | 9,755 | 2,162 | 8,787 | |||||||||
Non-controlling interests | -117 | 28 | 195 | |||||||||
| 17 Ericsson | First Quarter Report 2021 | Financial statements | |
Table of Contents
Condensed consolidated balance sheet
| Mar31 | Dec31 | |||||||||||
SEK m illion | Note | 2021 | 2020 | |||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Intangible assets | ||||||||||||
Capitalized development expenses | 3,875 | 3,857 | ||||||||||
Goodwill | 36,659 | 34,945 | ||||||||||
Intellectual property rights, brands and other intangible assets | 4,623 | 4,805 | ||||||||||
Property, plantand equipment | 13,735 | 13,383 | ||||||||||
Right-of-use assets | 8,137 | 7,980 | ||||||||||
Financial assets | ||||||||||||
Equity in JV and associated companies | 1,232 | 1,274 | ||||||||||
Other investments in shares and participations | 51,541 | 1,519 | ||||||||||
Customer finance, non-current | 5 | 840 | 1,221 | |||||||||
Interest-bearing securities, non-current | 5 | 23,477 | 21,613 | |||||||||
Other financial assets, non-current | 54,816 | 4,842 | ||||||||||
Deferred tax assets | 25,079 | 26,296 | ||||||||||
|
|
|
|
|
| |||||||
| 124,014 | 121,735 | |||||||||||
|
|
|
|
|
| |||||||
Current assets | ||||||||||||
Inventories | 30,250 | 28,097 | ||||||||||
Contract assets | 11,853 | 11,273 | ||||||||||
Trade receivables | 5 | 42,068 | 42,063 | |||||||||
Customer finance, current | 5 | 2,183 | 1,916 | |||||||||
Other current receivables | 14,809 | 16,014 | ||||||||||
Interest-bearing securities, current | 5 | 4,599 | 6,820 | |||||||||
Cash and cash equivalents | 5 | 40,543 | 43,612 | |||||||||
| 146,305 | 149,795 | |||||||||||
|
|
|
|
|
| |||||||
Total assets | 270,319 | 271,530 | ||||||||||
|
|
|
|
|
| |||||||
Equity and liabilities | ||||||||||||
Equity | ||||||||||||
Stockholders’ equity | 89,782 | 86,674 | ||||||||||
Non-controlling interestin equity of subsidiaries | -1,658 | -1,497 | ||||||||||
|
|
|
|
|
| |||||||
| 88,124 | 85,177 | |||||||||||
|
|
|
|
|
| |||||||
Non-current liabilities | ||||||||||||
Post-employment benefits | 31,876 | 37,353 | ||||||||||
Provisions,non-current | 4 | 2,337 | 2,886 | |||||||||
Deferred tax liabilities | 1,049 | 1,089 | ||||||||||
Borrowings, non-current | 5 | 23,299 | 22,218 | |||||||||
Lease liabilities,non-current | 7,313 | 7,104 | ||||||||||
Other non-current liabilities | 1,326 | 1,383 | ||||||||||
|
|
|
|
|
| |||||||
| 67,200 | 72,033 | |||||||||||
|
|
|
|
|
| |||||||
Current liabilities | ||||||||||||
Provisions, current | 4 | 8,708 | 7,580 | |||||||||
Borrowings, current | 5 | 2,353 | 7,942 | |||||||||
Lease liabilities, current | 2,223 | 2,196 | ||||||||||
Contract liabilities | 32,054 | 26,440 | ||||||||||
Trade payables | 5 | 29,135 | 31,988 | |||||||||
Other current liabilities | 40,522 | 38,174 | ||||||||||
| 114,995 | 114,320 | |||||||||||
|
|
|
|
|
| |||||||
Total equity and liabilities | 270,319 | 271,530 | ||||||||||
|
|
|
|
|
| |||||||
| 18 Ericsson | First Quarter Report 2021 | Financial statements | |
Table of Contents
Condensed consolidated statement of cash flows
| Q1 | Jan-Dec | |||||||||||||||
SEK m illion | Note | 2021 | 2020 | 2020 | ||||||||||||
Operating activities | ||||||||||||||||
Net income | 3,168 | 2,280 | 17,623 | |||||||||||||
Adjustments for | ||||||||||||||||
Taxes | 1,584 | 1,237 | 10,436 | |||||||||||||
Earnings/ dividends in JV and associated companies | 76 | 30 | 374 | |||||||||||||
Depreciation, amortization and impairment losses | 61,935 | 2,120 | 8,674 | |||||||||||||
Other | 143 | 792 | 447 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| 6,906 | 6,459 | 37,554 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Changesin operating netassets | ||||||||||||||||
Inventories | -1,235 | -538 | 384 | |||||||||||||
Custom erfinance, currentand non-current | 219 | 817 | 370 | |||||||||||||
Trade receivables and contract assets | 1,979 | 5,559 | -3,185 | |||||||||||||
Trade payables | -4,112 | -2,176 | 4,303 | |||||||||||||
Provisions and post-employment benefits | 523 | 218 | -2,669 | |||||||||||||
Contract liabilities | 4,454 | 3,987 | -560 | |||||||||||||
Other operating assets and liabilities,net | -5,681 | -8,109 | -2,280 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
| -3,853 | -242 | -3,637 | ||||||||||||||
|
|
|
|
|
|
|
| |||||||||
Interest received | 242 | 132 | 763 | |||||||||||||
Interest paid | -292 | -390 | -1,434 | |||||||||||||
Taxes paid/received | 202 | -1,657 | -4,313 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flow from operating activities | 3,205 | 4,302 | 28,933 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Investing activities | ||||||||||||||||
Investm entsin property,plantand equipm ent | 6 | -915 | -1,113 | -4,493 | ||||||||||||
Sales of property, plantand equipm ent | 24 | 26 | 254 | |||||||||||||
Acquisitions/divestments of subsidiaries and other operations, net¹¾ | 5 | -208 | -9,598 | |||||||||||||
Product developm ent | 6 | -204 | -262 | -817 | ||||||||||||
Other investing activities | -5 | -42 | 801 | |||||||||||||
Interest-bearing securities | 161 | -3,432 | -1,348 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flow from investing activities | -934 | -5,031 | -15,201 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financing activities | ||||||||||||||||
Proceeds from issuance of long-term debt | 77 | 344 | 3,219 | |||||||||||||
Repayment of long-term debt | -5,242 | -291 | -9,031 | |||||||||||||
Dividends paid | -5 | -9 | -5,996 | |||||||||||||
Repayment of lease liabilities | -548 | -596 | -2,417 | |||||||||||||
Other financing activities | -449 | 1,983 | 1,733 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash flow from financing activities | -6,167 | 1,431 | -12,492 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Effect of exchange rate changes on cash | 827 | 2,566 | -2,707 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net change in cash and cash equivalents | -3,069 | 3,268 | -1,467 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash and cash equivalents, beginning of period | 43,612 | 45,079 | 45,079 | |||||||||||||
|
|
|
|
|
|
|
| |||||||||
Cash and cash equivalents, end of period | 40,543 | 48,347 | 43,612 | |||||||||||||
| 1) | Includes acquisition of Cradlepoint of SEK -9.5 b. in 2020. |
| 19 Ericsson | First Quarter Report 2021 | Condensed consolidated statement of cash flows | |
Table of Contents
Condensed consolidated statement of changes in equity
| Jan-M ar | Jan-Dec | |||||||||||
SEK million | 2021 | 2020 | 2020 | |||||||||
Opening balance | 85,177 | 81,878 | 81,878 | |||||||||
Total comprehensive incom e | 9,638 | 2,190 | 8,982 | |||||||||
Sale/repurchase of own shares | — | 43 | 163 | |||||||||
Long-term variable compensation plans | 21 | 54 | 150 | |||||||||
Dividends to shareholders¹¾ | -6,712 | -5,053 | -5,996 | |||||||||
Transactions ith non-controlling interests | — | 1 | — | |||||||||
|
|
|
|
|
| |||||||
Closing balance | 88,124 | 79,113 | 85,177 | |||||||||
|
|
|
|
|
| |||||||
| 1) | Includes accrual of SEK 6,668 (4,978) million in Jan-Mar for the dividend approved by the Annual General Meeting on March 30, 2021 (March 31, 2020). |
Condensed consolidated income statement – isolated quarters
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
Cost of sales | -28,483 | -41,333 | -32,710 | -34,661 | -29,962 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross incom e | 21,295 | 28,257 | 24,762 | 20,917 | 19,788 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Research and development expenses | -9,576 | -10,433 | -10,101 | -10,035 | -9,145 | |||||||||||||||
Selling and administrative expenses | -6,188 | -7,402 | -5,992 | -7,052 | -6,238 | |||||||||||||||
Impairment losses on trade receivables | -212 | 264 | -28 | 42 | -160 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Operating expenses | -15,976 | -17,571 | -16,121 | -17,045 | -15,543 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Otheroperating income and expenses | 13 | 381 | 61 | 131 | 89 | |||||||||||||||
Share in earnings of JV and associated companies | -71 | -59 | -59 | -152 | -28 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Earnings before financial items and income tax (EBIT) | 5,261 | 11,008 | 8,643 | 3,851 | 4,306 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financial income and expenses, net | -533 | -95 | 109 | 292 | -902 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income after financial items | 4,728 | 10,913 | 8,752 | 4,143 | 3,404 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Income tax | -1,560 | -3,721 | -3,186 | -1,558 | -1,124 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net incom e | 3,168 | 7,192 | 5,566 | 2,585 | 2,280 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net income (loss) attributable to: | ||||||||||||||||||||
Owners of the Parent Company | 3,187 | 7,522 | 5,353 | 2,452 | 2,156 | |||||||||||||||
Non-controlling interests | -19 | -330 | 213 | 133 | 124 | |||||||||||||||
Otherinform ation | ||||||||||||||||||||
Average number of shares, basic (million) | 3,328 | 3,328 | 3,326 | 3,322 | 3,317 | |||||||||||||||
Earnings per share, basic (SEK) ¹) | 0.96 | 2.26 | 1.61 | 0.74 | 0.65 | |||||||||||||||
Earnings per share, diluted (SEK) ² ) | 0.96 | 2.26 | 1.61 | 0.74 | 0.65 | |||||||||||||||
| 1) | Based on net income attributable to owners of the Parent Company. |
| 2) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
| 20 Ericsson | First Quarter Report 2021 | Financial statements | |
Table of Contents
Condensed consolidated statement of cash flows – isolated quarters
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters,SEK m illion | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Operating activities | ||||||||||||||||||||
Netincom e | 3,168 | 7,192 | 5,566 | 2,585 | 2,280 | |||||||||||||||
Adjustm entsfor | ||||||||||||||||||||
Taxes | 1,584 | 3,846 | 3,482 | 1,871 | 1,237 | |||||||||||||||
Earnings/ dividends in JV and associated companies | 76 | 115 | 74 | 155 | 30 | |||||||||||||||
Depreciation, amortization and impairment losses | 1,935 | 2,293 | 2,105 | 2,156 | 2,120 | |||||||||||||||
Other | 143 | 190 | -320 | -215 | 792 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 6,906 | 13,636 | 10,907 | 6,552 | 6,459 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Changesin operating netassets | ||||||||||||||||||||
Inventories | -1,235 | 3,753 | -1,578 | -1,253 | -538 | |||||||||||||||
Custom erfinance,currentand non-current | 219 | -119 | -635 | 307 | 817 | |||||||||||||||
Trade receivablesand contractassets | 1,979 | -7,231 | -1,513 | 0 | 5,559 | |||||||||||||||
Trade payables | -4,112 | 2,999 | -624 | 4,104 | -2,176 | |||||||||||||||
Provisionsand post-em ploym entbenefits | 523 | 199 | -1,897 | -1,189 | 218 | |||||||||||||||
Contractliabilities | 4,454 | -2,046 | -1,501 | -1,000 | 3,987 | |||||||||||||||
Otheroperating assetsand liabilities,net | -5,681 | 3,768 | 3,228 | -1,167 | -8,109 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| -3,853 | 1,323 | -4,520 | -198 | -242 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Interestreceived | 242 | 188 | 96 | 347 | 132 | |||||||||||||||
Interestpaid | -292 | -344 | -187 | -513 | -390 | |||||||||||||||
Taxespaid/received | 202 | -900 | -1,017 | -739 | -1,657 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flow from operating activities | 3,205 | 13,903 | 5,279 | 5,449 | 4,302 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Investing activities | ||||||||||||||||||||
Investm entsinproperty,plantand equipm ent | -915 | -1,090 | -963 | -1,327 | -1,113 | |||||||||||||||
Salesofproperty,plantand equipm ent | 24 | 104 | 55 | 69 | 26 | |||||||||||||||
Acquisitions/divestm entsofsubs.and otheroperations,net¹â¾ | 5 | -9,256 | -89 | -45 | -208 | |||||||||||||||
Productdevelopm ent | -204 | -177 | -167 | -211 | -262 | |||||||||||||||
Otherinvesting activities | -5 | 668 | 301 | -126 | -42 | |||||||||||||||
Interest-bearing securities | 161 | 1,189 | -246 | 1,141 | -3,432 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flow from investing activities | -934 | -8,562 | -1,109 | -499 | -5,031 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Financing activities | ||||||||||||||||||||
Proceeds from issuance of long-term debt | 77 | 2,213 | 83 | 579 | 344 | |||||||||||||||
Repaymentoflong-term debt | -5,242 | -8,036 | -160 | -544 | -291 | |||||||||||||||
Dividendspaid | -5 | -3,456 | -42 | -2,489 | -9 | |||||||||||||||
Repaym entoflease liabilities | -548 | -636 | -567 | -618 | -596 | |||||||||||||||
Otherfinancing activities | -449 | 1,436 | -200 | -1,486 | 1,983 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flow from financing activities | -6,167 | -8,479 | -886 | -4,558 | 1,431 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Effect of exchange rate changeson cash | 827 | -2,024 | -165 | -3,084 | 2,566 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Net change in cash and cash equivalents | -3,069 | -5,162 | 3,119 | -2,692 | 3,268 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents,beginning ofperiod | 43,612 | 48,774 | 45,655 | 48,347 | 45,079 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash and cash equivalents,end ofperiod | 40,543 | 43,612 | 48,774 | 45,655 | 48,347 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 1) | Includes acquisition of Cradlepoint of SEK -9.5 b. in Q4 2020. |
| 21 Ericsson | First Quarter Report 2021 | Financial statements | |
Table of Contents
Condensed Parent Company income statement
| Q1 | Jan-Dec | |||||||||||
SEK m illion | 2021 | 2020 | 2020 | |||||||||
Net sales | — | — | — | |||||||||
Cost of sales | — | — | — | |||||||||
Gross income | — | — | — | |||||||||
Operating expenses | -173 | -251 | -1,378 | |||||||||
Other operating income and expenses | 614 | 580 | 2,866 | |||||||||
|
|
|
|
|
| |||||||
EBIT | 441 | 329 | 1,488 | |||||||||
|
|
|
|
|
| |||||||
Financial net | 352 | 693 | 6,845 | |||||||||
|
|
|
|
|
| |||||||
Income after financial item s | 793 | 1,022 | 8,333 | |||||||||
|
|
|
|
|
| |||||||
Transfers to (-)/from untaxed reserves | — | — | -1,540 | |||||||||
Income tax | -126 | -174 | -408 | |||||||||
|
|
|
|
|
| |||||||
Net incom e | 667 | 848 | 6,385 | |||||||||
|
|
|
|
|
| |||||||
Condensed Parent Company statement of comprehensive income (loss)
| Q1 | Jan-Dec | |||||||||||
SEK m illion | 2021 | 2020 | 2020 | |||||||||
Netincom e | 667 | 848 | 6,385 | |||||||||
Revaluation of borrowings due to change in creditrisk | -55 | 1,725 | 99 | |||||||||
Tax on items that will not be reclassified to profit or loss | 11 | -355 | -20 | |||||||||
Other comprehensive income, net of tax | -44 | 1,370 | 79 | |||||||||
|
|
|
|
|
| |||||||
Total comprehensive income | 623 | 2,218 | 6,464 | |||||||||
|
|
|
|
|
| |||||||
| 22 Ericsson | First Quarter Report 2020 | Financial statements | |
Table of Contents
Condensed Parent Company balance sheet
| Mar31 | Dec31 | |||||||
SEK m illion | 2021 | 2020 | ||||||
Assets | ||||||||
Fixed assets | ||||||||
Intangibleassets | 19 | 26 | ||||||
Tangibleassets | 461 | 460 | ||||||
Financialassets¹â¾ | 112,737 | 104,989 | ||||||
|
|
|
| |||||
| 113,217 | 105,475 | |||||||
|
|
|
| |||||
Currentassets | ||||||||
Receivables | 24,611 | 30,230 | ||||||
Short-term investm ents | 4,337 | 6,621 | ||||||
Cash and cash equivalents | 25,262 | 28,775 | ||||||
|
|
|
| |||||
| 54,210 | 65,626 | |||||||
|
|
|
| |||||
Totalassets | 167,427 | 171,101 | ||||||
|
|
|
| |||||
Stockholders’equity,provisionsand liabilities | ||||||||
Equity | ||||||||
Restricted equity | 48,164 | 48,164 | ||||||
Non-restricted equity | 27,888 | 33,915 | ||||||
| 76,052 | 82,079 | |||||||
Provisions | 336 | 343 | ||||||
Non-currentliabilities | 23,135 | 22,111 | ||||||
Currentliabilities | 67,904 | 66,568 | ||||||
|
|
|
| |||||
Totalstockholders’equity,provisionsand liabilities | 167,427 | 171,101 | ||||||
|
|
|
| |||||
Of which interest-bearing securities, non-current | 23,454 | 21,597 | ||||||
| 23 Ericsson | First Quarter Report 2021 | Financial statements | |
Table of Contents
Accounting policies and Explanatory notes (unaudited)
The group
This condensed consolidated interim financial report for the quarterly reporting period ended March 31, 2021, has been prepared in accordance with Accounting Standard IAS 34 “Interim Financial Reporting”. 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, 2020 and should be read in conjunction with that annual report. There are no amendments of IFRS during 2021 that are estimated to have a material impact on the result and financial position of the Company.
Changes applied in Q1 2021
- Change in name from Operating income to EBIT
Operating income has been renamed as EBIT (Earnings before financial items and income tax) and Operating margin as EBIT margin. The definitions of EBIT and EBIT margin remains unchanged.
- Changes in presentation of cash flow statement
From Q1 2021, interests and tax cash flows are presented as a separate section within the “Cash flow from operating activities”. Previously, interests and tax cash flows were subsumed within various lines in the sections “Adjustments to reconcile net income to cash” and “Changes in operating net assets”, and only disclosed in note H3 “Statement of cash flow” of the Annual Report. All prior quarters in 2020 have been restated with this new section and other sections adjusted accordingly. There is no impact on Cash flows from operating activities for all periods in 2020.
From Q1 2021, the condensed consolidated statement of cash flow in the interim report is expanded to show “Proceeds from issuance of borrowings” and “Repayment of borrowings” separately. The Company also decided to present the net movements in collaterals received from CSA agreements and bank borrowings less than 3 months (used for short term liquidity purposes) as “Other financing activities” as these balances fluctuate over a short duration, therefore it is neither practical nor useful to present their gross movements on the cash flow statement.
The prior quarters in 2020 have been restated accordingly. This resulted in a reclassification between the lines “Proceeds from issuance of borrowings”, “Repayment of borrowings” and “Other financing activities” compared to the full year cash flow statement in the 2020 Annual Report. The Cash flow from financing activities remained unchanged for all periods in 2020.
Note 2 – Critical accounting estimates and judgements
COVID-19 impacts on the Financial statements
As noted in the previous interim reports in 2020, the COVID-19 pandemic has impacted certain lines within our financial statements. Fiscal stimulus provided by governments worldwide has reduced government bond yields and resulted in the significant movement in the capital and equity markets throughout 2020.
As the global economy continues to recover in Q1 2021, government bond yields and corporate bond yields increased to almost the pre-pandemic levels. The increase in government bond yields in Sweden, and corporate bond yields in US and UK resulted in a significant decrease in the net pensions liability.
The Company continually assesses the business performance and profitability for changes in expected future cash flows which could impact recoverability of assets such as deferred tax assets and intangible assets. Risk assessment on the business plans is carried out on a regular basis and an impairment review will be performed if conditions suggest that such assets may be impaired. The Company also monitors customer collections trends for changes in current and future conditions that may impact the expected credit losses model for trade receivables. At Q1 2021, the Company concluded there is no evidence of material changes to recoverability risk of business assets, including deferred tax assets and trade receivables.
| 24 Ericsson | First Quarter Report 2021 | Accounting policies and Explanatory notes | |
Table of Contents
Net sales by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 36,274 | 49,366 | 41,659 | 39,827 | 35,126 | |||||||||||||||
Of which Products | 27,495 | 37,523 | 30,992 | 28,966 | 24,748 | |||||||||||||||
Of which Services | 8,779 | 11,843 | 10,667 | 10,861 | 10,378 | |||||||||||||||
Digital Services | 6,898 | 12,671 | 8,733 | 8,575 | 7,345 | |||||||||||||||
Of which Products | 3,581 | 7,430 | 4,621 | 4,598 | 3,798 | |||||||||||||||
Of which Services | 3,317 | 5,241 | 4,112 | 3,977 | 3,547 | |||||||||||||||
Managed Services | 4,865 | 5,815 | 5,498 | 5,573 | 5,714 | |||||||||||||||
Emerging Business and Other | 1,741 | 1,738 | 1,582 | 1,603 | 1,565 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Sequential change, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | -27 | % | 19 | % | 5 | % | 13 | % | -21 | % | ||||||||||
Of which Products | -27 | % | 21 | % | 7 | % | 17 | % | -21 | % | ||||||||||
Of which Services | -26 | % | 11 | % | -2 | % | 5 | % | -22 | % | ||||||||||
Digital Services | -46 | % | 45 | % | 2 | % | 17 | % | -44 | % | ||||||||||
Of which Products | -52 | % | 61 | % | 1 | % | 21 | % | -48 | % | ||||||||||
Of which Services | -37 | % | 27 | % | 3 | % | 12 | % | -39 | % | ||||||||||
Managed Services | -16 | % | 6 | % | -1 | % | -2 | % | -19 | % | ||||||||||
Emerging Business and Other | 0 | % | 10 | % | -1 | % | 2 | % | -10 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -28 | % | 21 | % | 3 | % | 12 | % | -25 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year over year change, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 3 | % | 11 | % | 6 | % | 5 | % | 5 | % | ||||||||||
Of which Products | 11 | % | 20 | % | 13 | % | 8 | % | 4 | % | ||||||||||
Of which Services | -15 | % | -11 | % | -9 | % | -2 | % | 7 | % | ||||||||||
Digital Services | -6 | % | -4 | % | -12 | % | -5 | % | -6 | % | ||||||||||
Of which Products | -6 | % | 1 | % | -17 | % | 0 | % | -4 | % | ||||||||||
Of which Services | -6 | % | -10 | % | -4 | % | -9 | % | -9 | % | ||||||||||
Managed Services | -15 | % | -17 | % | -14 | % | -12 | % | -2 | % | ||||||||||
Emerging Business and Other | 11 | % | 0 | % | -3 | % | -4 | % | -11 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 0 | % | 5 | % | 1 | % | 1 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 36,274 | 165,978 | 116,612 | 74,953 | 35,126 | |||||||||||||||
Of which Products | 27,495 | 122,229 | 84,706 | 53,714 | 24,748 | |||||||||||||||
Of which Services | 8,779 | 43,749 | 31,906 | 21,239 | 10,378 | |||||||||||||||
Digital Services | 6,898 | 37,324 | 24,653 | 15,920 | 7,345 | |||||||||||||||
Of which Products | 3,581 | 20,447 | 13,017 | 8,396 | 3,798 | |||||||||||||||
Of which Services | 3,317 | 16,877 | 11,636 | 7,524 | 3,547 | |||||||||||||||
Managed Services | 4,865 | 22,600 | 16,785 | 11,287 | 5,714 | |||||||||||||||
Emerging Business and Other | 1,741 | 6,488 | 4,750 | 3,168 | 1,565 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year over year change,, percent | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 3 | % | 7 | % | 5 | % | 5 | % | 5 | % | ||||||||||
Of which Products | 11 | % | 12 | %9%6%4% | ||||||||||||||||
Of which Services | -15 | % | -5 | % | -2 | % | 2 | % | 7 | % | ||||||||||
Digital Services | -6 | % | -6 | % | -8 | % | -5 | % | -6 | % | ||||||||||
Of which Products | -6 | % | -5 | % | -8 | % | -2 | % | -4 | % | ||||||||||
Of which Services | -6 | % | -8 | % | -7 | % | -9 | % | -9 | % | ||||||||||
Managed Services | -15 | % | -12 | % | -9 | % | -7 | % | -2 | % | ||||||||||
Emerging Business and Other | 11 | % | -4 | % | -6 | % | -8 | % | -11 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 0 | % | 2 | % | 1 | % | 2 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 25 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Gross income by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 16,714 | 21,430 | 19,375 | 16,022 | 15,586 | |||||||||||||||
Digital Services | 3,002 | 5,183 | 3,787 | 3,738 | 2,929 | |||||||||||||||
Managed Services | 942 | 1,031 | 1,093 | 955 | 933 | |||||||||||||||
Emerging Business and Other | 637 | 613 | 507 | 202 | 340 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 21,295 | 28,257 | 24,762 | 20,917 | 19,788 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 16,714 | 72,413 | 50,983 | 31,608 | 15,586 | |||||||||||||||
Digital Services | 3,002 | 15,637 | 10,454 | 6,667 | 2,929 | |||||||||||||||
Managed Services | 942 | 4,012 | 2,981 | 1,888 | 933 | |||||||||||||||
Emerging Business and Other | 637 | 1,662 | 1,049 | 542 | 340 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 21,295 | 93,724 | 65,467 | 40,705 | 19,788 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
EBIT (loss) by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 7,240 | 10,604 | 9,165 | 5,255 | 5,827 | |||||||||||||||
Digital Services | -1,519 | 499 | -591 | -697 | -1,417 | |||||||||||||||
Managed Services | 313 | 401 | 491 | 263 | 408 | |||||||||||||||
Emerging Business and Other | -773 | -496 | -422 | -970 | -512 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 5,261 | 11,008 | 8,643 | 3,851 | 4,306 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 7,240 | 30,851 | 20,247 | 11,082 | 5,827 | |||||||||||||||
Digital Services | -1,519 | -2,206 | -2,705 | -2,114 | -1,417 | |||||||||||||||
M managed Services | 313 | 1,563 | 1,162 | 671 | 408 | |||||||||||||||
Emerging Business and Other | -773 | -2,400 | -1,904 | -1,482 | -512 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 5,261 | 27,808 | 16,800 | 8,157 | 4,306 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 26 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Net sales by market area by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
South East Asia, Oceania and India | 6,676 | 9,748 | 7,801 | 6,582 | 5,917 | |||||||||||||||
North East Asia | 6,491 | 12,823 | 8,814 | 7,790 | 3,907 | |||||||||||||||
North America | 17,081 | 19,101 | 18,356 | 18,407 | 17,911 | |||||||||||||||
Europe and Latin America ¹) | 12,647 | 17,125 | 13,318 | 13,061 | 12,241 | |||||||||||||||
Middle East and Africa | 4,393 | 6,518 | 5,520 | 5,431 | 5,829 | |||||||||||||||
Other¹)2) | 2,490 | 4,275 | 3,663 | 4,307 | 3,945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which in Sweden | 389 | 363 | 249 | 284 | 227 | |||||||||||||||
2) Of which in EU | 6,801 | 8,874 | 7,090 | 7,278 | 6,259 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Sequential change, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
South East Asia, Oceania and India | -32 | % | 25 | % | 19 | % | 11 | % | -36 | % | ||||||||||
North East Asia | -49 | % | 45 | % | 13 | % | 99 | % | -60 | % | ||||||||||
North America | -11 | % | 4 | % | 0 | % | 3 | % | 3 | % | ||||||||||
Europe and Latin America ¹) | -26 | % | 29 | % | 2 | % | 7 | % | -30 | % | ||||||||||
Middle East and Africa | -33 | % | 18 | % | 2 | % | -7 | % | -31 | % | ||||||||||
Other¹ | -42 | % | 17 | % | -15 | % | 9 | % | -5 | % | ||||||||||
Total | -28 | % | 21 | % | 3 | % | 12 | % | -25 | % | ||||||||||
1) Of which in Sweden | 7 | % | 46 | % | -12 | % | 25 | % | -3 | % | ||||||||||
2) Of which in EU | -23 | % | 25 | % | -3 | % | 16 | % | -29 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year over year change, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
South East Asia, Oceania and India | 13 | % | 6 | % | 5 | % | -5 | % | -4 | % | ||||||||||
North East Asia | 66 | % | 32 | % | 39 | % | 20 | % | 2 | % | ||||||||||
North America | -5 | % | 10 | % | -3 | % | 4 | % | 11 | % | ||||||||||
Europe and Latin America ¹ | 3 | % | -2 | % | -7 | % | -7 | % | -7 | % | ||||||||||
Middle East and Africa | -25 | % | -23 | % | -9 | % | -4 | % | 8 | % | ||||||||||
Other¹ | -37 | % | 3 | % | -8 | % | 10 | % | -7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 0 | % | 5 | % | 1 | % | 1 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which in Sweden | 71 | % | 54 | % | 1815 | % | 91 | % | 18 | % | ||||||||||
2) Of which in EU | 9 | % | 1 | % | -4 | % | 5 | % | -4 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
South East Asia, Oceania and India | 6,676 | 30,048 | 20,300 | 12,499 | 5,917 | |||||||||||||||
North East Asia | 6,491 | 33,334 | 20,511 | 11,697 | 3,907 | |||||||||||||||
North America | 17,081 | 73,775 | 54,674 | 36,318 | 17,911 | |||||||||||||||
Europe and Latin America ¹ | 12,647 | 55,745 | 38,620 | 25,302 | 12,241 | |||||||||||||||
Middle East and Africa | 4,393 | 23,298 | 16,780 | 11,260 | 5,829 | |||||||||||||||
Other¹ | 2,490 | 16,190 | 11,915 | 8,252 | 3,945 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which in Sweden | 389 | 1,123 | 760 | 511 | 227 | |||||||||||||||
2) Of which in EU | 6,801 | 29,501 | 20,627 | 13,537 | 6,259 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Yearto date,yearoveryearchange,percent | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
South EastAsia,Oceania and India | 13 | % | 1 | % | -1 | % | -5 | % | -4 | % | ||||||||||
North EastAsia | 66 | % | 26 | % | 23 | % | 13 | % | 2 | % | ||||||||||
North Am erica | -5 | % | 5 | % | 3 | % | 7 | % | 11 | % | ||||||||||
Europe and Latin Am erica ¹ | 3 | % | -6 | % | -7 | % | -7 | % | -7 | % | ||||||||||
M iddleEastand Africa | -25 | % | -9 | % | -2 | % | 2 | % | 8 | % | ||||||||||
Other¹ | -37 | % | -1 | % | -2 | % | 1 | % | -7 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 0 | % | 2 | % | 1 | % | 2 | % | 2 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
¹) Of which in Sweden | 71 | % | 91 | % | 115 | % | 50 | % | 18 | % | ||||||||||
²) Of which in EU | 9 | % | 0 | % | -1 | % | 1 | % | -4 | % | ||||||||||
| 27 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Net sales by market area by segment
| Q1 2021 | ||||||||||||||||||||
SEK million | Networks | Digital Services | Managed Services | Emerging Business and Other | Total | |||||||||||||||
South East Asia, Oceania and India | 4,843 | 765 | 1,061 | 7 | 6,676 | |||||||||||||||
North East Asia | 5,391 | 859 | 170 | 71 | 6,491 | |||||||||||||||
North America | 14,954 | 1,478 | 636 | 13 | 17,081 | |||||||||||||||
Europe and Latin America | 7,957 | 2,483 | 2,109 | 98 | 12,647 | |||||||||||||||
Middle East and Africa | 2,348 | 1,152 | 889 | 4 | 4,393 | |||||||||||||||
Other | 781 | 161 | 0 | 1,548 | 2,490 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 36,274 | 6,898 | 4,865 | 1,741 | 49,778 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Share of total | 73 | % | 14 | % | 10 | % | 3 | % | 100 | % | ||||||||||
| Q1 2021 | ||||||||||||||||||||
Sequential change, percent | Networks | Digital Services | Managed Services | Emerging Business and Other | Total | |||||||||||||||
South East and, Oceania and India | -33 | % | -45 | % | -5 | % | -13 | % | -32 | % | ||||||||||
North East Asia | -49 | % | -56 | % | -42 | % | 48 | % | -49 | % | ||||||||||
North America | -4 | % | -46 | % | -19 | % | -41 | % | -11 | % | ||||||||||
Europe and Latin America | -22 | % | -41 | % | -20 | % | -3 | % | -26 | % | ||||||||||
Middle East and Africa | -35 | % | -40 | % | -10 | % | -33 | % | -33 | % | ||||||||||
Other | -65 | % | -65 | % | — | 0 | % | -42 | % | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | -27 | % | -46 | % | -16 | % | 0 | % | -28 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| Q1 2021 | ||||||||||||||||||||
Year over year change, percent | Networks | Digital Services | Managed Services | Emerging Business and Other | Total | |||||||||||||||
South East Asia, Oceania and India | 15 | % | -1 | % | 15 | % | -59 | % | 13 | % | ||||||||||
North East Asia | 94 | % | 0 | % | -16 | % | 8 | % | 66 | % | ||||||||||
North America | -2 | % | -4 | % | -43 | % | 8 | % | -5 | % | ||||||||||
Europe and Latin America | 10 | % | 4 | % | -18 | % | 14 | % | 3 | % | ||||||||||
Middle East and Africa | -34 | % | -14 | % | -2 | % | -43 | % | -25 | % | ||||||||||
Other | -63 | % | -64 | % | -100 | % | 12 | % | -37 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 3 | % | -6 | % | -15 | % | 11 | % | 0 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Top 5 countries in sales
| Q1 | Jan-Dec | |||||||||||
Country, percentage of net sales | 2021 | 2020 | 2020 | |||||||||
United States | 36 | % | 38 | % | 33 | % | ||||||
Japan | 8 | % | 4 | % | 5 | % | ||||||
Australia | 4 | % | 3 | % | 4 | % | ||||||
India | 3 | % | 3 | % | 3 | % | ||||||
United Kingdom | 3 | % | 3 | % | 3 | % | ||||||
| 1) | Based on Q1 2021. |
| 28 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
IPR licensing revenues by segment by quarter
Provisions
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 671 | 2,105 | 1,773 | 2,282 | 2,019 | |||||||||||||||
Digital Services | 147 | 463 | 389 | 501 | 443 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 818 | 2,568 | 2,162 | 2,783 | 2,462 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 671 | 8,179 | 6,074 | 4,301 | 2,019 | |||||||||||||||
Digital Services | 147 | 1,796 | 1,333 | 944 | 443 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 818 | 9,975 | 7,407 | 5,245 | 2,462 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Note 4 – Provisions
Provisions
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Opening balance | 10,466 | 10,922 | 10,603 | 11,060 | 10,923 | |||||||||||||||
Additions | 1,753 | 1,245 | 1,093 | 2,116 | 793 | |||||||||||||||
Utilization/Cash out | -979 | -761 | -475 | -2,066 | -673 | |||||||||||||||
Of which restructuring | -336 | -332 | -160 | -137 | -186 | |||||||||||||||
Reversal of excess amounts | -339 | -673 | -172 | -192 | -124 | |||||||||||||||
Reclassification, translation difference and other | 144 | -267 | -127 | -315 | 141 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Closing balance | 11,045 | 10,466 | 10,922 | 10,603 | 11,060 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Of which restructuring | 950 | 1,200 | 1,659 | 1,594 | 1,202 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Opening balance | 10,466 | 10,923 | 10,923 | 10,923 | 10,923 | |||||||||||||||
Additions | 1,753 | 5,247 | 4,002 | 2,909 | 793 | |||||||||||||||
Utilization/Cash out | -979 | -3,975 | -3,214 | -2,739 | -673 | |||||||||||||||
of which restructuring | -336 | -815 | -483 | -323 | -186 | |||||||||||||||
Reversal of excess amounts | -339 | -1,161 | -488 | -316 | -124 | |||||||||||||||
Reclassification, translation difference and other | 144 | -568 | -301 | -174 | 141 | |||||||||||||||
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|
| |||||||||||
Closing balance | 11,045 | 10,466 | 10,922 | 10,603 | 11,060 | |||||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||
Of which restructuring | 950 | 1,200 | 1,659 | 1,594 | 1,202 | |||||||||||||||
| 29 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Note 5 – Financial risk management
There have been no changes to the classification of financial instruments or fair value hierarchy categorization from that presented in the latest Annual Report. Where Level 2 and Level 3 fair value hierarchies apply, the inputs and valuation methods used remained unchanged. The book values and fair values of financial instruments are as follows:
Financial instruments
SEK billion | Mar31 2021 | Dec 31 2020 | ||||||||||||||||||||||||||||||
| Fair value hierarchy level | Fair value hierarchy level | |||||||||||||||||||||||||||||||
| Carrying value | Level 1 | Level2 | Level 3 | Carrying value | Level 4 | Level2 | Level 3 | |||||||||||||||||||||||||
Assets at fair value through profit loss | ||||||||||||||||||||||||||||||||
Customer finance ¹) | 3.0 | — | — | 3.0 | 3.1 | — | — | 3.1 | ||||||||||||||||||||||||
Interest bearing securities | 27.6 | 27.6 | — | — | 28.1 | 28.1 | — | — | ||||||||||||||||||||||||
Cash equivalents 2) | 18.2 | — | 18.2 | — | 23.6 | — | 23.6 | — | ||||||||||||||||||||||||
Other financial assets | 1.5 | — | — | 1.5 | 1.5 | — | — | 1.5 | ||||||||||||||||||||||||
Other current assets | 0.6 | — | 0.6 | — | 1.5 | — | 1.5 | — | ||||||||||||||||||||||||
Assets at fair value through OCI | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Trade receivables | 42.1 | — | — | 42.1 | 42.1 | — | — | 42.1 | ||||||||||||||||||||||||
Assets at mortized costs | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Interest bearing securities | 0.5 | — | — | — | 0.4 | — | — | — | ||||||||||||||||||||||||
Cash equivalents 2) | 2.4 | — | — | — | 3.6 | — | — | — | ||||||||||||||||||||||||
Other financial assets | 0.5 | — | — | — | 0.5 | — | — | — | ||||||||||||||||||||||||
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|
| |||||||||||||||||
Total financial assets | 96.4 | 104.4 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||
Financial liabilities at resignated FVTPL | ||||||||||||||||||||||||||||||||
Parent company borrowings | -23.2 | -14.4 | -8.8 | — | -27.2 | -18.9 | -8.3 | — | ||||||||||||||||||||||||
| — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Financial liabilities at FVTPL | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Other current liabilities | -0.5 | — | -0.5 | — | -0.2 | — | -0.2 | — | ||||||||||||||||||||||||
Liabilities at mortized cost | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Trade payables | -29.1 | — | — | — | -32.0 | — | — | — | ||||||||||||||||||||||||
Borrowings | -2.5 | — | — | — | -2.9 | — | — | — | ||||||||||||||||||||||||
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| |||||||||||||||||
Financialliabilities | -55.3 | -62.3 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||
| 1) | Year to date movements of customer finance receivables are as follows: additions of SEK 5.9 billion, disposals and repayments of SEK 6.0 billion and revaluation gain of SEK 0 billion. |
| 2) | Total Cash and cash equivalent is SEK 40.5 (43.6) billion, of which SEK 20.6 (27.2) billion relating to Cash equivalents are presented in the table above. |
Exchange rates used in the consolidation
| Q1 | Jan-Dec | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
SEK/EUR -closing rate | 10.22 | 11.09 | 10.06 | |||||||||
SEK/USD -closing rate | 8.71 | 10.13 | 8.19 | |||||||||
| 30 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Information on investments
Investments in assets subject to depreciation, amortization, impairment and write-downs
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters,SEKmillion | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Additions | ||||||||||||||||||||
Property, plant and equipment | 915 | 1,090 | 963 | 1,327 | 1,113 | |||||||||||||||
Capitalized development expenses | 204 | 177 | 167 | 211 | 262 | |||||||||||||||
IPR, brands and other intangible assets | 4 | 124 | — | 97 | 1 | |||||||||||||||
Total | 1,123 | 1,391 | 1,130 | 1,635 | 1,376 | |||||||||||||||
Depreciation,amortization and im pairment losses | ||||||||||||||||||||
Property, plant and equipment | 874 | 1,186 | 916 | 1,003 | 1,009 | |||||||||||||||
Capitalized development expenses | 224 | 230 | 230 | 272 | 174 | |||||||||||||||
Goodwill, IPR, brands and other intangible assets | 283 | 276 | 365 | 258 | 321 | |||||||||||||||
Right-of-use assets | 554 | 601 | 594 | 623 | 616 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 1,935 | 2,293 | 2,105 | 2,156 | 2,120 | |||||||||||||||
|
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|
|
|
|
|
|
|
| |||||||||||
| 2021 |
| 2020 |
|
| ||||||||||||||||
Yearto date,SEKmillion | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Additions | ||||||||||||||||||||
Property, plant and equipment | 915 | 4,493 | 3,403 | 2,440 | 1,113 | |||||||||||||||
Capitalized development expenses | 204 | 817 | 640 | 473 | 262 | |||||||||||||||
IPR, brands and other intangible assets | 4 | 222 | 98 | 98 | 1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 1,123 | 5,532 | 4,141 | 3,011 | 1,376 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Depreciation, amortization and impairment losses | ||||||||||||||||||||
Property, plant and equipment | 874 | 4,114 | 2,928 | 2,012 | 1,009 | |||||||||||||||
Capitalized development expenses | 224 | 906 | 676 | 446 | 174 | |||||||||||||||
Goodwill, IPR, brands and other intangible assets | 283 | 1,220 | 944 | 579 | 321 | |||||||||||||||
Right-of-use assets | 554 | 2,434 | 1,833 | 1,239 | 616 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 1,935 | 8,674 | 6,381 | 4,276 | 2,120 | |||||||||||||||
|
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|
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|
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|
|
| |||||||||||
Note 7 – Contingent liabilities and Assets pledged as collateral
Contingent liabilities and Assets pledged as collateral
| Mar31 2021 | Dec31 2020 | |||||||
SEKmillion | ||||||||
Contingent liabilities | 1,322 | 1,198 | ||||||
Assets pledged as collateral | 6,801 | 6,808 | ||||||
| 31 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Number of shares and earnings per share
| Q1 | Jan-Dec | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
Num berofshares,end ofperiod (m illion) | 3,334 | 3,334 | 3,334 | |||||||||
Of which class A-shares (million) | 262 | 262 | 262 | |||||||||
Of which class B-shares (million) | 3,072 | 3,072 | 3,072 | |||||||||
Num ber of treasury shares,end ofperiod (m illion) | 6 | 15 | 6 | |||||||||
Num ber of shares outstanding,basic,end of period ( million) | 3,328 | 3,319 | 3,328 | |||||||||
Num bersofsharesoutstanding,diluted,end ofperiod (million) | 3,328 | 3,329 | 3,331 | |||||||||
Average num beroftreasuryshares(m illion) | 6 | 17 | 11 | |||||||||
Average num berofsharesoutstanding,basic(million) | 3,328 | 3,317 | 3,323 | |||||||||
Average num berofsharesoutstanding,diluted (m illion)1) | 3,328 | 3,328 | 3,326 | |||||||||
Earningspershare,basic(SEK)²) | 0.96 | 0.65 | 5.26 | |||||||||
Earningspershare,diluted (SEK)1) | 0.96 | 0.65 | 5.26 | |||||||||
| 1) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
| 2) | Based on net income attributable to owners of the Parent Company. |
Number of employees
| 2021 | 2020 | |||||||||||||||||||
End ofperiod | M ar31 | Dec31 | Sep 30 | Jun 30 | M ar31 | |||||||||||||||
South EastAsia,Oceania and India | 26,123 | 25,869 | 25,633 | 25,265 | 24,942 | |||||||||||||||
North EastAsia | 14,033 | 13,944 | 13,955 | 13,965 | 13,786 | |||||||||||||||
North Am erica | 10,161 | 10,175 | 9,537 | 9,785 | 9,718 | |||||||||||||||
Europe and Latin Am erica1) | 46,482 | 46,580 | 46,495 | 46,521 | 46,402 | |||||||||||||||
M iddleEastand Africa | 4,314 | 4,256 | 4,206 | 4,264 | 4,247 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 101,113 | 100,824 | 99,826 | 99,800 | 99,095 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
1) Of which Sweden | 13,379 | 13,173 | 13,046 | 12,884 | 12,746 | |||||||||||||||
| 32 Ericsson | First Quarter Report 2021 | ||
Table of Contents
Alternative performance measures (unaudited)
In this section, the Company presents its Alternative Performance Measures (APMs), which are not recognized measures of financial performance under IFRS. The presentation of APMs has limitations as analytical tools and should not be considered in isolation or as a substitute for related financial measures prepared in accordance with IFRS.
APMs are presented to enhance an investor’s evaluation of ongoing operating results, to aid in forecasting future periods and to facilitate meaningful comparison of results between periods.
Management uses these APMs to, among other things, evaluate ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of certain performance-based compensation. APM’s should not be viewed as substitutes for income statement or cash flow items computed in accordance with IFRS.
As from 2021 Operating income has been renamed as EBIT and Operating margin as EBIT margin. The definitions of EBIT and EBIT margin remain unchanged. The APMs have been updated with the new names.
As from 2021 EBITA excluding restructuring charges has been added. The main reason for the update is that Ericsson’s long-term target is expressed as EBITA excluding restructuring charges as a percentage of net sales.
The APM Sales growth adjusted for comparable units and currency has been added with the split by market area. Previously the information was provided by segment, but as from 2021 the information is also provided by market area.
This section also includes a reconciliation of the APMs to the most directly reconcilable line items in the financial statements. For more information about non-IFRS key operating measures, see Ericsson Annual Report 2020.
Sales growth adjusted for comparable units and currency
Sales growth adjusted for the impact of acquisitions and divestments as well as the effects of foreign currency fluctuations. Also named organic growth.
| 2021 |
| 2020 |
|
| ||||||||||||||||
Isolated quarters,yearoveryearchange | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Reported netsales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
Acquired business | -225 | -206 | -415 | -422 | -319 | |||||||||||||||
Net FX impact | 5,341 | 5,472 | 4,304 | -326 | -1,654 | |||||||||||||||
Com parablenetsales,excluding FX im pact | 54,894 | 74,856 | 61,361 | 54,830 | 47,777 | |||||||||||||||
Com parablequarternetsalesadj.foracq/divbusiness¹â¾ | 49,750 | 66,373 | 57,150 | 54,810 | 48,798 | |||||||||||||||
Salesgrow th adjusted forcom parableunitsand currency (% ) | 10 | % | 13 | % | 7 | % | 0 | % | -2 | % | ||||||||||
| 2021 |
| 2020 |
|
| ||||||||||||||||
Yearto date,yearoveryearchange | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Reported netsales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
Acquired business | -225 | -1,362 | -1,156 | -741 | -319 | |||||||||||||||
Net FX impact | 5,341 | 7,796 | 2,324 | -1,980 | -1,654 | |||||||||||||||
Com parablenetsales,excluding FX im pact | 54,894 | 238,824 | 163,968 | 102,607 | 47,777 | |||||||||||||||
Com parablequarternetsalesadj.foracq/divbusiness¹â¾ | 49,750 | 227,132 | 160,758 | 103,608 | 48,798 | |||||||||||||||
Salesgrow th adjusted forcom parableunitsand currency (% ) | 10 | % | 5 | % | 2 | % | -1 | % | -2 | % | ||||||||||
| 1) | Adjusted for acquisition of Cradlepoint in November 2020. |
| 33 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Items excluding restructuring charges
Gross income, operating expenses, and EBIT are presented excluding restructuring charges and, for certain measures, as a percentage of net sales. Operating income has been renamed to EBIT and Operating margin to EBIT margin. The definition on EBIT and EBIT margin remain unchanged.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Gross income | 21,295 | 28,257 | 24,762 | 20,917 | 19,788 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
Gross margin (%) | 42.8 | % | 40.6 | % | 43.1 | % | 37.6 | % | 39.8 | % | ||||||||||
Gross income | 21,295 | 28,257 | 24,762 | 20,917 | 19,788 | |||||||||||||||
Restructuring charges included in cost of sales | 62 | 5 | 73 | 312 | 335 | |||||||||||||||
Gross income excluding restructuring charges | 21,357 | 28,262 | 24,835 | 21,229 | 20,123 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
Gross margin excluding restructuring charges (%) | 42.9 | % | 40.6 | % | 43.2 | % | 38.2 | % | 40.4 | % | ||||||||||
Operating expenses | -15,976 | -17,571 | -16,121 | -17,045 | -15,543 | |||||||||||||||
Restructuring charges included in R&D expenses | — | -21 | 244 | 227 | -39 | |||||||||||||||
Restructuring charges included in selling and administrative expenses | 15 | 8 | 13 | 144 | 5 | |||||||||||||||
Operating expenses excluding restructuring charges | -15,961 | -17,584 | -15,864 | -16,674 | -15,577 | |||||||||||||||
EBIT | 5,261 | 11,008 | 8,643 | 3,851 | 4,306 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
EBIT margin (%) | 10.6 | % | 15.8 | % | 15.0 | % | 6.9 | % | 8.7 | % | ||||||||||
EBIT | 5,261 | 11,008 | 8,643 | 3,851 | 4,306 | |||||||||||||||
Total restructuring charges | 77 | -8 | 330 | 683 | 301 | |||||||||||||||
EBIT excluding restructuring charges | 5,338 | 11,000 | 8,973 | 4,534 | 4,607 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
EBIT margin excluding restructuring charges (%) | 10.7 | % | 15.8 | % | 15.6 | % | 8.2 | % | 9.3 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Gross income | 21,295 | 93,724 | 65,467 | 40,705 | 19,788 | |||||||||||||||
Net sales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
Gross margin (%) | 42.8 | % | 40.3 | % | 40.2 | % | 38.6 | % | 39.8 | % | ||||||||||
Gross income | 21,295 | 93,724 | 65,467 | 40,705 | 19,788 | |||||||||||||||
Restructuring charges included in cost of sales | 62 | 725 | 720 | 647 | 335 | |||||||||||||||
Gross income excluding restructuring charges | 21,357 | 94,449 | 66,187 | 41,352 | 20,123 | |||||||||||||||
Net sales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
Gross margin excluding restructuring charges (%) | 42.9 | % | 40.6 | % | 40.7 | % | 39.3 | % | 40.4 | % | ||||||||||
Operating expenses | -15,976 | -66,280 | -48,709 | -32,588 | -15,543 | |||||||||||||||
Restructuring charges included in R&D expenses | — | 411 | 432 | 188 | -39 | |||||||||||||||
Restructuring charges included in selling and administrative expenses | 15 | 170 | 162 | 149 | 5 | |||||||||||||||
Operating expenses excluding restructuring charges | -15,961 | -65,699 | -48,115 | -32,251 | -15,577 | |||||||||||||||
EBIT | 5,261 | 27,808 | 16,800 | 8,157 | 4,306 | |||||||||||||||
Net sales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
EBIT margin (% ) | 10.6 | % | 12.0 | % | 10.3 | % | 7.7 | % | 8.7 | % | ||||||||||
EBIT | 5,261 | 27,808 | 16,800 | 8,157 | 4,306 | |||||||||||||||
Total restructuring charges | 77 | 1,306 | 1,314 | 984 | 301 | |||||||||||||||
EBIT excluding restructuring charges | 5,338 | 29,114 | 18,114 | 9,141 | 4,607 | |||||||||||||||
Net sales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
EBIT margin excluding restructuring charges (%) | 10.7 | % | 12.5 | % | 11.1 | % | 8.7 | % | 9.3 | % | ||||||||||
| 34 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges
Earnings before interest, taxes, amortizations, write-downs of acquired intangibles and excluding restructuring charges also expressed as a percentage of net sales.
EBITA and EBITA margin excluding restructuring charges has been added to the APM.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Net income | 3,168 | 7,192 | 5,566 | 2,585 | 2,280 | |||||||||||||||
Taxes | 1,560 | 3,721 | 3,186 | 1,558 | 1,124 | |||||||||||||||
Financial income and expenses, net | 533 | 95 | -109 | -292 | 902 | |||||||||||||||
A mortizations and write-downs of acquired intangibles | 283 | 276 | 365 | 258 | 321 | |||||||||||||||
EBITA | 5,544 | 11,284 | 9,008 | 4,109 | 4,627 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
EBITA margin (% ) | 11.1 | % | 16.2 | % | 15.7 | % | 7.4 | % | 9.3 | % | ||||||||||
Restructuring charges | 77 | -8 | 330 | 683 | 301 | |||||||||||||||
EBITA excluding restructuring charges | 5,621 | 11,276 | -28,778 | 4,792 | 4,928 | |||||||||||||||
EBITA margin excluding restructuring charges (% ) | 11.3 | % | 16.2 | % | -50.1 | % | 8.6 | % | 9.9 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Net income | 3,168 | 17,623 | 10,431 | 4,865 | 2,280 | |||||||||||||||
Taxes | 1,560 | 9,589 | 5,868 | 2,682 | 1,124 | |||||||||||||||
Financial income and expenses, net | 533 | 596 | 501 | 610 | 902 | |||||||||||||||
A mortizations and write-downs of acquired intangibles | 283 | 1,220 | 944 | 579 | 321 | |||||||||||||||
EBITA | 5,544 | 29,028 | 17,744 | 8,736 | 4,627 | |||||||||||||||
Net sales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
EBITA margin (% ) | 11.1 | % | 12.5 | % | 10.9 | % | 8.3 | % | 9.3 | % | ||||||||||
Restructuring charges | 77 | 1,306 | 1,314 | 984 | 301 | |||||||||||||||
EBITA excluding restructuring charges | 5,621 | 30,334 | 19,058 | 9,720 | 4,928 | |||||||||||||||
EBITA margin excluding restructuring charges (% ) | 11.3 | % | 13.1 | % | 11.7 | % | 9.2 | % | 9.9 | % | ||||||||||
Rolling four quarters of net sales and EBIT margin excluding restructuring charges (%)
Net sales, operating margin and restructuring charges as a sum of last four quarters.
| 2021 | 2020 | |||||||||||||||||||
Rolling fourquarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Net sales | 232,418 | 232,390 | 229,173 | 228,828 | 228,060 | |||||||||||||||
EBIT | 28,763 | 27,808 | 22,925 | 10,086 | 9,974 | |||||||||||||||
Restructuring charges | 1,082 | 1,306 | 1,641 | 1,458 | 893 | |||||||||||||||
EBIT excl. restr. charges | 29,845 | 29,114 | 24,566 | 11,544 | 10,867 | |||||||||||||||
EBIT margin excl. restr.charges (% ) | 12.8 | % | 12.5 | % | 10.7 | % | 5.0 | % | 4.8 | % | ||||||||||
| 35 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Gross cash and net cash, end of period
Gross cash: Cash and cash equivalents plus interest-bearing securities (current and non-current).
Net cash: Cash and cash equivalents plus interest-bearing securities (current and non-current) less borrowings (current and non-current).
| 2021 | 2020 | |||||||||||||||||||
SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Cash and cash equivalents | 40,543 | 43,612 | 48,774 | 45,655 | 48,347 | |||||||||||||||
+ Interest-bearing securities, current | 4,599 | 6,820 | 5,552 | 5,739 | 7,834 | |||||||||||||||
+ Interest-bearing securities, non- current | 23,477 | 21,613 | 23,898 | 24,025 | 23,335 | |||||||||||||||
Gross cash, end of period | 68,619 | 72,045 | 78,224 | 75,419 | 79,516 | |||||||||||||||
-Borrowings, current | 2,353 | 7,942 | 14,587 | 15,290 | 17,759 | |||||||||||||||
-Borrowings, non-current | 23,299 | 22,218 | 22,132 | 22,581 | 23,381 | |||||||||||||||
Net cash, end of period | 42,967 | 41,885 | 41,505 | 37,548 | 38,376 | |||||||||||||||
Total assets less non- interest- bearing provisions and liabilities.
| 2021 | 2020 | |||||||||||||||||||
SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Total assets | 270,319 | 271,530 | 277,187 | 276,778 | 292,307 | |||||||||||||||
Non- interest- bearing provision sand liabilities | ||||||||||||||||||||
Provisions, non-current | 2,337 | 2,886 | 2,378 | 2,240 | 2,703 | |||||||||||||||
Deferred tax liabilities | 1,049 | 1,089 | 1,102 | 1,164 | 1,060 | |||||||||||||||
Other non-current liabilities | 1,326 | 1,383 | 1,759 | 1,813 | 2,178 | |||||||||||||||
Provisions, current | 8,708 | 7,580 | 8,544 | 8,363 | 8,357 | |||||||||||||||
Contract liabilities | 32,054 | 26,440 | 29,393 | 31,532 | 34,265 | |||||||||||||||
Trade payables | 29,135 | 31,988 | 30,704 | 32,182 | 29,840 | |||||||||||||||
Other current liabilities | 40,522 | 38,174 | 37,905 | 34,834 | 40,521 | |||||||||||||||
Capitalem ployed | 155,188 | 161,990 | 165,402 | 164,650 | 173,383 | |||||||||||||||
Annualized net sales divided by average capital employed.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2021 |
| 2020 |
|
| ||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Net sales | 49,778 | 69,590 | 57,472 | 55,578 | 49,750 | |||||||||||||||
Annualized net sales | 199,112 | 278,360 | 229,888 | 222,312 | 199,000 | |||||||||||||||
Average capitalem ployed | ||||||||||||||||||||
Capital employed at beginning of period | 161,990 | 165,402 | 164,650 | 173,383 | 165,273 | |||||||||||||||
Capital employed at end of period | 155,188 | 161,990 | 165,402 | 164,650 | 173,383 | |||||||||||||||
Average capital employed | 158,589 | 163,696 | 165,026 | 169,017 | 169,328 | |||||||||||||||
Capital turnover (times) | 1.3 | 1.7 | 1.4 | 1.3 | 1.2 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Netsales | 49,778 | 232,390 | 162,800 | 105,328 | 49,750 | |||||||||||||||
Annualized netsales | 199,112 | 232,390 | 217,067 | 210,656 | 199,000 | |||||||||||||||
Average capitalem ployed | ||||||||||||||||||||
Capital employed at beginning of period | 161,990 | 165,273 | 165,273 | 165,273 | 165,273 | |||||||||||||||
Capital employed at end of period | 155,188 | 161,990 | 165,402 | 164,650 | 173,383 | |||||||||||||||
Average capital employed | 158,589 | 163,632 | 165,338 | 164,962 | 169,328 | |||||||||||||||
Capital turnover (times) | 1.3 | 1.4 | 1.3 | 1.3 | 1.2 | |||||||||||||||
| 36 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
The annualized total of EBIT as a percentage of average capital employed.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
EBIT | 5,261 | 11,008 | 8,643 | 3,851 | 4,306 | |||||||||||||||
Annualized EBIT | 21,044 | 44,032 | 34,572 | 15,404 | 17,224 | |||||||||||||||
Average capital employed | ||||||||||||||||||||
Capital employed at beginning of period | 161,990 | 165,402 | 164,650 | 173,383 | 165,273 | |||||||||||||||
Capital employed at end of period | 155,188 | 161,990 | 165,402 | 164,650 | 173,383 | |||||||||||||||
Average capital employed | 158,589 | 163,696 | 165,026 | 169,017 | 169,328 | |||||||||||||||
Return on capitalem ployed (% ) | 13.3 | % | 26.9 | % | 20.9 | % | 9.1 | % | 10.2 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-M ar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-M ar | |||||||||||||||
EBIT | 5,261 | 27,808 | 16,800 | 8,157 | 4,306 | |||||||||||||||
Annualized EBIT | 21,044 | 27,808 | 22,400 | 16,314 | 17,224 | |||||||||||||||
Average capitalem ployed | ||||||||||||||||||||
Capital employed at beginning of period | 161,990 | 165,273 | 165,273 | 165,273 | 165,273 | |||||||||||||||
Capital employed at end of period | 155,188 | 161,990 | 165,402 | 164,650 | 173,383 | |||||||||||||||
Average capital employed | 158,589 | 163,632 | 165,338 | 164,962 | 169,328 | |||||||||||||||
Return on capitalem ployed (% ) | 13.3 | % | 17.0 | % | 13.5 | % | 9.9 | % | 10.2 | % | ||||||||||
Equity expressed as a percentage of total assets.
| 2021 | 2020 | |||||||||||||||||||
SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Total equity | 88,124 | 85,177 | 82,485 | 78,472 | 79,113 | |||||||||||||||
Total assets | 270,319 | 271,530 | 277,187 | 276,778 | 292,307 | |||||||||||||||
Equity ratio (% ) | 32.6 | % | 31.4 | % | 29.8 | % | 28.4 | % | 27.1 | % | ||||||||||
Annualized net income attributable to owners of the Parent Company as a percentage of average stockholders’ equity.
Annualization factor of four is used for isolated quarter.
Annualization factor of four is used for Jan-Mar, two is used for Jan-Jun, 4/3 is used for Jan-Sep and one is used for Jan-Dec.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Net income attributableto owners of the Parent Company | 3,187 | 7,522 | 5,353 | 2,452 | 2,156 | |||||||||||||||
Annualized | 12,748 | 30,088 | 21,412 | 9,808 | 8,624 | |||||||||||||||
Average stockholders’equity | ||||||||||||||||||||
Stockholders’ equity, beginning of period | 86,674 | 82,830 | 79,005 | 79,841 | 82,559 | |||||||||||||||
Stockholders’ equity, end of period | 89,782 | 86,674 | 82,830 | 79,005 | 79,841 | |||||||||||||||
Average stockholders’ equity | 88,228 | 84,752 | 80,918 | 79,423 | 81,200 | |||||||||||||||
Return on equity (% ) | 14.4 | % | 35.5 | % | 26.5 | % | 12.3 | % | 10.6 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Net income attributable to owners of the Parent Company | 3,187 | 17,483 | 9,961 | 4,608 | 2,156 | |||||||||||||||
Annualized | 12,748 | 17,483 | 13,281 | 9,216 | 8,624 | |||||||||||||||
Average stockholders’equity | ||||||||||||||||||||
Stockholders’ equity, beginning of period | 86,674 | 82,559 | 82,559 | 82,559 | 82,559 | |||||||||||||||
Stockholders’ equity, end of period | 89,782 | 86,674 | 82,830 | 79,005 | 79,841 | |||||||||||||||
Average stockholders’ equity | 88,228 | 84,617 | 82,695 | 80,782 | 81,200 | |||||||||||||||
Return on equity(% ) | 14.4 | % | 20.7 | % | 16.1 | % | 11.4 | % | 10.6 | % | ||||||||||
| 37 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Adjusted earnings per share, diluted, excluding amortizations and write-downs of acquired intangible assets and excluding restructuring charges.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Earnings per share, diluted | 0.96 | 2.26 | 1.61 | 0.74 | 0.65 | |||||||||||||||
Restructuring charges | 0.02 | 0.01 | 0.08 | 0.14 | 0.07 | |||||||||||||||
A mortizations and write-downs of acquired intangibles | 0.06 | 0.06 | 0.08 | 0.06 | 0.07 | |||||||||||||||
Adjusted earningspershare | 1.04 | 2.33 | 1.77 | 0.94 | 0.79 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Earningspershare,diluted | 0.96 | 5.26 | 3.00 | 1.39 | 0.65 | |||||||||||||||
Restructuring charges | 0.02 | 0.30 | 0.29 | 0.21 | 0.07 | |||||||||||||||
Am ortizationsand w rite-downs of acquired intangibles | 0.06 | 0.27 | 0.21 | 0.13 | 0.07 | |||||||||||||||
Adjusted earningspershare | 1.04 | 5.83 | 3.50 | 1.73 | 0.79 | |||||||||||||||
Free cash flow before M&A / Free cash flow after M&A
Free cash flow before M&A: Cash flow from operating activities less net capital expenditures, other investments (excluding M&A) and repayment of lease liabilities.
Free cash flow after M&A: Cash flow from operating activities less net capital expenditures, other investments and repayment of
lease liabilities.
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Cash flow from operating activities | 3,205 | 13,903 | 5,279 | 5,449 | 4,302 | |||||||||||||||
Net capitalexpendituresand otherinvestm ents(exclM &A) | ||||||||||||||||||||
Investments in property, plant and equipment | -915 | -1,090 | -963 | -1,327 | -1,113 | |||||||||||||||
Sales of property, plant and equipment | 24 | 104 | 55 | 69 | 26 | |||||||||||||||
Product development | -204 | -177 | -167 | -211 | -262 | |||||||||||||||
Other investing activities | -5 | 668 | 301 | -126 | -42 | |||||||||||||||
Repayment of lease liabilities | -548 | -636 | -567 | -618 | -596 | |||||||||||||||
Free cash flow beforeM &A | 1,557 | 12,772 | 3,938 | 3,236 | 2,315 | |||||||||||||||
Acquisitions/ divestments of subs and other operations, net | 5 | -9,256 | -89 | -45 | -208 | |||||||||||||||
Free cash flow afterM &A | 1,562 | 3,516 | 3,849 | 3,191 | 2,107 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year date,SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Cash flow from operating activities | 3,205 | 28,933 | 15,030 | 9,751 | 4,302 | |||||||||||||||
Netcapitalexpendituresand otherinvestm ents(exclM &A) | ||||||||||||||||||||
Investments in property, plant and equipment | -915 | -4,493 | -3,403 | -2,440 | -1,113 | |||||||||||||||
Sales of property, plant and equipment | 24 | 254 | 150 | 95 | 26 | |||||||||||||||
Product development | -204 | -817 | -640 | -473 | -262 | |||||||||||||||
Other investing activities | -5 | 801 | 133 | -168 | -42 | |||||||||||||||
Repayment of lease liabilities | -548 | -2,417 | -1,781 | -1,214 | -596 | |||||||||||||||
Free cash flow beforeM &A | 1,557 | 22,261 | 9,489 | 5,551 | 2,315 | |||||||||||||||
Acquisitions/ divestments of subs and other operations, net | 5 | -9,598 | -342 | -253 | -208 | |||||||||||||||
Free cash flow afterM &A | 1,562 | 12,663 | 9,147 | 5,298 | 2,107 | |||||||||||||||
| 38 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Sales growth by segment adjusted for comparable units and currency
| 2021 | 2020 | |||||||||||||||||||
Isolated quarter, year overy earchange, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 15 | % | 20 | % | 13 | % | 4 | % | 0 | % | ||||||||||
DigitalServices | 3 | % | 3 | % | -5 | % | -5 | % | -9 | % | ||||||||||
Managed Services | -8 | % | -12 | % | -9 | % | -12 | % | -5 | % | ||||||||||
Emerging Business and Other¹) | 9 | % | -4 | % | 2 | % | -6 | % | -8 | % | ||||||||||
Total¹) | 10 | % | 13 | % | 7 | % | 0 | % | -2 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, year overy earchange, percent | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 15 | % | 10 | % | 6 | % | 2 | % | 0 | % | ||||||||||
Digital Services | 3 | % | -3 | % | -6 | % | -7 | % | -9 | % | ||||||||||
Managed Services | -8 | % | -10 | % | -9 | % | -9 | % | -5 | % | ||||||||||
Emerging Business and Other¹â¾ | 9 | % | -4 | % | -4 | % | -7 | % | -8 | % | ||||||||||
Total¹) | 10 | % | 5 | % | 2 | % | -1 | % | -2 | % | ||||||||||
| 1) | Adjusted for Cradlepoint acquisition in November 2020. |
Sales growth by market area adjusted for comparable units and currency
| 2021 | 2020 | |||||||||||||||||||
Isolated quarter, year overy earchange, percent | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
South East Asia,Oceania and India | 21 | % | 13 | % | 11 | % | -3 | % | -6 | % | ||||||||||
North East Asia | 78 | % | 38 | % | 49 | % | 19 | % | -1 | % | ||||||||||
North America | 10 | % | 21 | % | 6 | % | 1 | % | 5 | % | ||||||||||
Europe and Latin America | 12 | % | 4 | % | -1 | % | -6 | % | -8 | % | ||||||||||
Middle East and Africa | -16 | % | -17 | % | -3 | % | -5 | % | 4 | % | ||||||||||
Total | 10 | % | 13 | % | 7 | % | 0 | % | -2 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, year overy earchange, percent | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
South EastAsia,Oceania and India | 21 | % | 5 | % | 1 | % | -4 | % | -6 | % | ||||||||||
North EastAsia | 78 | % | 30 | % | 26 | % | 12 | % | -1 | % | ||||||||||
North Am erica | 10 | % | 8 | % | 4 | % | 3 | % | 5 | % | ||||||||||
Europe and Latin America | 12 | % | -2 | % | -5 | % | -7 | % | -8 | % | ||||||||||
MiddleEastand Africa | -16 | % | -6 | % | -1 | % | -1 | % | 4 | % | ||||||||||
Total | 10 | % | 5 | % | 2 | % | -1 | % | -2 | % | ||||||||||
| 39 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Gross margin by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, as percentage of net sales | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 46.1 | % | 43.4 | % | 46.5 | % | 40.2 | % | 44.4 | % | ||||||||||
DigitalServices | 43.5 | % | 40.9 | % | 43.4 | % | 43.6 | % | 39.9 | % | ||||||||||
Managed Services | 19.4 | % | 17.7 | % | 19.9 | % | 17.1 | % | 16.3 | % | ||||||||||
Emerging Business and Other | 36.6 | % | 35.3 | % | 32.0 | % | 12.6 | % | 21.7 | % | ||||||||||
Total | 42.8 | % | 40.6 | % | 43.1 | % | 37.6 | % | 39.8 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, as percentage of net sales | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 46.1 | % | 43.6 | % | 43.7 | % | 42.2 | % | 44.4 | % | ||||||||||
Digital Services | 43.5 | % | 41.9 | % | 42.4 | % | 41.9 | % | 39.9 | % | ||||||||||
Managed Services | 19.4 | % | 17.8 | % | 17.8 | % | 16.7 | % | 16.3 | % | ||||||||||
Emerging Business and Other | 36.6 | % | 25.6 | % | 22.1 | % | 17.1 | % | 21.7 | % | ||||||||||
Total | 42.8 | % | 40.3 | % | 40.2 | % | 38.6 | % | 39.8 | % | ||||||||||
EBIT margin by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, as percentage of net sales | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 20.0 | % | 21.5 | % | 22.0 | % | 13.2 | % | 16.6 | % | ||||||||||
Digital Services | -22.0 | % | 3.9 | % | -6.8 | % | -8.1 | % | -19.3 | % | ||||||||||
Managed Services | 6.4 | % | 6.9 | % | 8.9 | % | 4.7 | % | 7.1 | % | ||||||||||
Emerging Business and Other | -44.4 | % | -28.5 | % | -26.7 | % | -60.5 | % | -32.7 | % | ||||||||||
Total | 10.6 | % | 15.8 | % | 15.0 | % | 6.9 | % | 8.7 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, as percentage of net sales | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 20.0 | % | 18.6 | % | 17.4 | % | 14.8 | % | 16.6 | % | ||||||||||
Digital Services | -22.0 | % | -5.9 | % | -11.0 | % | -13.3 | % | -19.3 | % | ||||||||||
Managed Services | 6.4 | % | 6.9 | % | 6.9 | % | 5.9 | % | 7.1 | % | ||||||||||
Emerging Business and Other | -44.4 | % | -37.0 | % | -40.1 | % | -46.8 | % | -32.7 | % | ||||||||||
Total | 10.6 | % | 12.0 | % | 10.3 | % | 7.7 | % | 8.7 | % | ||||||||||
| 40 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Restructuring charges by function
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Cost of sales | -62 | -5 | -73 | -312 | -335 | |||||||||||||||
Research and developm entexpenses | 0 | 21 | -244 | -227 | 39 | |||||||||||||||
Selling and administrative expenses | -15 | -8 | -13 | -144 | -5 | |||||||||||||||
Total | -77 | 8 | -330 | -683 | -301 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Cost of sales | -62 | -725 | -720 | -647 | -335 | |||||||||||||||
Research and developm entexpenses | 0 | -411 | -432 | -188 | 39 | |||||||||||||||
Selling and administrative expenses | -15 | -170 | -162 | -149 | -5 | |||||||||||||||
Total | -77 | -1,306 | -1,314 | -984 | -301 | |||||||||||||||
Restructuring charges by segment
| 2021 |
| 2020 | ||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 24 | -19 | -272 | -380 | -75 | |||||||||||||||
of which cost of sales | 24 | -20 | -79 | -110 | -72 | |||||||||||||||
of which operating expenses | 0 | 1 | -193 | -270 | -3 | |||||||||||||||
Digital Services | -8 | 14 | -87 | 34 | 20 | |||||||||||||||
of which cost of sales | -3 | -10 | -8 | 3 | -16 | |||||||||||||||
of which operating expenses | -5 | 24 | -79 | 31 | 36 | |||||||||||||||
Managed Services | -79 | 0 | -11 | -2 | -245 | |||||||||||||||
of which cost of sales | -79 | 0 | -11 | -2 | -245 | |||||||||||||||
of which operating expenses | 0 | 0 | 0 | 0 | 0 | |||||||||||||||
Emerging Business and Other | -14 | 13 | 40 | -335 | -1 | |||||||||||||||
of which cost of sales | -4 | 25 | 25 | -203 | -2 | |||||||||||||||
of which operating expenses | -10 | -12 | 15 | -132 | 1 | |||||||||||||||
Total | -77 | 8 | -330 | -683 | -301 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 24 | -746 | -727 | -455 | -75 | |||||||||||||||
of which cost of sales | 24 | -281 | -261 | -182 | -72 | |||||||||||||||
of which operating expenses | 0 | -465 | -466 | -273 | -3 | |||||||||||||||
Digital Services | -8 | -19 | -33 | 54 | 20 | |||||||||||||||
of which cost of sales | -3 | -31 | -21 | -13 | -16 | |||||||||||||||
of which operating expenses | -5 | 12 | -12 | 67 | 36 | |||||||||||||||
Managed Services | -79 | -258 | -258 | -247 | -245 | |||||||||||||||
of which cost of sales | -79 | -258 | -258 | -247 | -245 | |||||||||||||||
of which operating expenses | 0 | 0000 | ||||||||||||||||||
Emerging Busines sand Other | -14 | -283 | -296 | -336 | -1 | |||||||||||||||
of which cost of sales | -4 | -155 | -180 | -205 | -2 | |||||||||||||||
of which operating expenses | -10 | -128 | -116 | -131 | 1 | |||||||||||||||
Total | -77 | -1,306 | -1,314 | -984 | -301 | |||||||||||||||
| 41 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
Gross income and gross margin excluding restructuring charges by segment
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 16,690 | 21,450 | 19,454 | 16,132 | 15,658 | |||||||||||||||
Digital Services | 3,005 | 5,193 | 3,795 | 3,735 | 2,945 | |||||||||||||||
Managed Services | 1,021 | 1,031 | 1,104 | 957 | 1,178 | |||||||||||||||
Emerging Business and Other | 641 | 588 | 482 | 405 | 342 | |||||||||||||||
Total | 21,357 | 28,262 | 24,835 | 21,229 | 20,123 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, as percentage of net sales | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 46.0 | % | 43.5 | % | 46.7 | % | 40.5 | % | 44.6 | % | ||||||||||
Digital Services | 43.6 | % | 41.0 | % | 43.5 | % | 43.6 | % | 40.1 | % | ||||||||||
Managed Services | 21.0 | % | 17.7 | % | 20.1 | % | 17.2 | % | 20.6 | % | ||||||||||
Emerging Business and Other | 36.8 | % | 33.8 | % | 30.5 | % | 25.3 | % | 21.9 | % | ||||||||||
Total | 42.9 | % | 40.6 | % | 43.2 | % | 38.2 | % | 40.4 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 16,690 | 72,694 | 51,244 | 31,790 | 15,658 | |||||||||||||||
Digital Services | 3,005 | 15,668 | 10,475 | 6,680 | 2,945 | |||||||||||||||
Managed Services | 1,021 | 4,270 | 3,239 | 2,135 | 1,178 | |||||||||||||||
Emerging Business and Other | 641 | 1,817 | 1,229 | 747 | 342 | |||||||||||||||
Total | 21,357 | 94,449 | 66,187 | 41,352 | 20,123 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date,aspercentage ofnetsales | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 46.0 | % | 43.8 | % | 43.9 | % | 42.4 | % | 44.6 | % | ||||||||||
DigitalServices | 43.6 | % | 42.0 | % | 42.5 | % | 42.0 | % | 40.1 | % | ||||||||||
Managed Services | 21.0 | % | 18.9 | % | 19.3 | % | 18.9 | % | 20.6 | % | ||||||||||
Emerging Business and Other | 36.8 | % | 28.0 | % | 25.9 | % | 23.6 | % | 21.9 | % | ||||||||||
Total | 42.9 | % | 40.6 | % | 40.7 | % | 39.3 | % | 40.4 | % | ||||||||||
| 42 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
EBIT and EBIT margin excluding restructuring charges by segment
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 7,217 | 10,623 | 9,437 | 5,635 | 5,902 | |||||||||||||||
Digital Services | -1,510 | 485 | -504 | -731 | -1,437 | |||||||||||||||
Managed Services | 392 | 401 | 502 | 265 | 653 | |||||||||||||||
Emerging Business and Other | -761 | -509 | -462 | -635 | -511 | |||||||||||||||
Total | 5,338 | 11,000 | 8,973 | 4,534 | 4,607 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, as percentage of net sales | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 19.9 | % | 21.5 | % | 22.7 | % | 14.1 | % | 16.8 | % | ||||||||||
Digital Services | -21.9 | % | 3.8 | % | -5.8 | % | -8.5 | % | -19.6 | % | ||||||||||
Managed Services | 8.1 | % | 6.9 | % | 9.1 | % | 4.8 | % | 11.4 | % | ||||||||||
Emerging Business and Other | -43.7 | % | -29.3 | % | -29.2 | % | -39.6 | % | -32.7 | % | ||||||||||
Total | 10.7 | % | 15.8 | % | 15.6 | % | 8.2 | % | 9.3 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 7,217 | 31,597 | 20,974 | 11,537 | 5,902 | |||||||||||||||
Digital Services | -1,510 | -2,187 | -2,672 | -2,168 | -1,437 | |||||||||||||||
Managed Services | 392 | 1,821 | 1,420 | 918 | 653 | |||||||||||||||
Em erging Businessand Other | -761 | -2,117 | -1,608 | -1,146 | -511 | |||||||||||||||
Total | 5,338 | 29,114 | 18,114 | 9,141 | 4,607 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, as percentage of net sales | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 19.9 | % | 19.0 | % | 18.0 | % | 15.4 | % | 16.8 | % | ||||||||||
Digital Services | -21.9 | % | -5.9 | % | -10.8 | % | -13.6 | % | -19.6 | % | ||||||||||
Managed Services | 8.1 | % | 8.1 | % | 8.5 | % | 8.1 | % | 11.4 | % | ||||||||||
Emerging Business and Other | -43.7 | % | -32.6 | % | -33.9 | % | -36.2 | % | -32.7 | % | ||||||||||
Total | 10.7 | % | 12.5 | % | 11.1 | % | 8.7 | % | 9.3 | % | ||||||||||
Rolling four quarters of net sales by segment
| 2021 | 2020 | |||||||||||||||||||
Rolling fourquarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 167,126 | 165,978 | 161,060 | 158,662 | 156,654 | |||||||||||||||
Digital Services | 36,877 | 37,324 | 37,821 | 38,969 | 39,385 | |||||||||||||||
Managed Services | 21,751 | 22,600 | 23,812 | 24,673 | 25,423 | |||||||||||||||
Emerging Business and Other | 6,664 | 6,488 | 6,480 | 6,524 | 6,598 | |||||||||||||||
Total | 232,418 | 232,390 | 229,173 | 228,828 | 228,060 | |||||||||||||||
Rolling four quarters of EBIT margin excluding restructuring charges by segment (%)
| 2021 | 2020 | |||||||||||||||||||
Rolling fourquarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Netw orks | 19.7 | % | 19.0 | % | 17.0 | % | 15.9 | % | 16.1 | % | ||||||||||
DigitalServices | -6.1 | % | -5.9 | % | -7.0 | % | -6.8 | % | -8.2 | % | ||||||||||
Managed Services | 7.2 | % | 8.1 | % | 7.4 | % | 7.4 | % | 6.9 | % | ||||||||||
Emerging Businessand Other | -35.5 | % | -32.6 | % | -30.5 | % | -196.5 | % | -195.5 | % | ||||||||||
Total | 12.8 | % | 12.5 | % | 10.7 | % | 5.0 | % | 4.8 | % | ||||||||||
| 43 Ericsson | First Quarter Report 2021 | Alternative performance measures | |
Table of Contents
EBITA and EBITA margin by segment by quarter
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, SEK million | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 7,274 | 10,636 | 9,347 | 5,321 | 5,957 | |||||||||||||||
DigitalServices | -1,400 | 625 | -461 | -563 | -1,283 | |||||||||||||||
Managed Services | 314 | 403 | 492 | 264 | 409 | |||||||||||||||
Emerging Business and Other | -644 | -380 | -370 | -913 | -456 | |||||||||||||||
Total | 5,544 | 11,284 | 9,008 | 4,109 | 4,627 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Isolated quarters, as percentage of net sales | Q1 | Q4 | Q3 | Q2 | Q1 | |||||||||||||||
Networks | 20.1 | % | 21.5 | % | 22.4 | % | 13.4 | % | 17.0 | % | ||||||||||
Digital Services | -20.3 | % | 4.9 | % | -5.3 | % | -6.6 | % | -17.5 | % | ||||||||||
Managed Services | 6.5 | % | 6.9 | % | 8.9 | % | 4.7 | % | 7.2 | % | ||||||||||
Emerging Business and Other | -37.0 | % | -21.9 | % | -23.4 | % | -57.0 | % | -29.1 | % | ||||||||||
Total | 11.1 | % | 16.2 | % | 15.7 | % | 7.4 | % | 9.3 | % | ||||||||||
| 2021 | 2020 | |||||||||||||||||||
Year to date, SEK million | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Netw orks | 7,274 | 31,261 | 20,625 | 11,278 | 5,957 | |||||||||||||||
Digital Services | -1,400 | -1,682 | -2,307 | -1,846 | -1,283 | |||||||||||||||
Managed Services | 314 | 1,568 | 1,165 | 673 | 409 | |||||||||||||||
Emerging Business and Other | -644 | -2,119 | -1,739 | -1,369 | -456 | |||||||||||||||
Total | 5,544 | 29,028 | 17,744 | 8,736 | 4,627 | |||||||||||||||
| 2021 | 2020 | |||||||||||||||||||
Yearto date, as percentage of net sales | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | |||||||||||||||
Networks | 20.1 | % | 18.8 | % | 17.7 | % | 15.0 | % | 17.0 | % | ||||||||||
Digital Services | -20.3 | % | -4.5 | % | -9.4 | % | -11.6 | % | -17.5 | % | ||||||||||
Managed Services | 6.5 | % | 6.9 | % | 6.9 | % | 6.0 | % | 7.2 | % | ||||||||||
Emerging Businessand Other | -37.0 | % | -32.7 | % | -36.6 | % | -43.2 | % | -29.1 | % | ||||||||||
Total | 11.1 | % | 12.5 | % | 10.9 | % | 8.3 | % | 9.3 | % | ||||||||||
| Q1 | Jan-Dec | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
Days sale soutstanding | 95 | 94 | 69 | |||||||||
Inventory turn over days | 93 | 97 | 78 | |||||||||
Payable days | 98 | 92 | 82 | |||||||||
| 44 Ericsson | First Quarter Report 2021 | Alternative performance measures | |