Table of Contents
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
January 23, 2024
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, January 23, 2024 regarding “Fourth quarter and full-year report 2023”.
Table of Contents
Fourth quarter and full-year report 2023
Stockholm, Jan 23, 2024
Fourth quarter highlights – Solid EBITA and cash flow in a challenged market
• | Sales declined organically1 by -17% YoY, driven by a -23% decline in Networks. Reported sales were down by -16% to SEK 71.9 b. |
• | Gross income excluding restructuring charges decreased to SEK 29.6 (35.7) b. Gross margin excluding restructuring charges was 41.1% (41.5%). Adjusted for the retroactive element in IPR revenues in Q4 2022 the gross margin increased YoY. |
• | Reported gross income was SEK 28.6 (35.6) b. with a gross margin of 39.8% (41.4%). |
• | EBITA excluding restructuring charges amounted to SEK 8.2 (9.3) b. with an EBITA margin of 11.4% (10.8%). |
• | EBIT excluding restructuring charges amounted to SEK 7.4 (8.1) b. with an EBIT margin of 10.3% (9.4%). |
• | Free cash flow before M&A was SEK 12.5 (16.9) b. Q4 2022 was positively impacted by retroactive IPR payments. |
Full-year highlights
• | Sales declined organically1 by -10%, impacted by a -15% decrease in Networks, partly offset by an 11% growth in Enterprise. Reported sales were SEK 263.4 (271.5) b. |
• | Gross income excluding restructuring charges was SEK 104.4 (113.5) b., mainly related to Networks. Gross margin excluding restructuring charges was 39.6% (41.8%). Reported gross income was SEK 101.6 (113.3) b. with a gross margin of 38.6% (41.7%). |
• | EBITA excluding restructuring charges was SEK 21.4 (29.5) b. with a margin of 8.1% (10.9%). EBITA was SEK 14.9 (29.1) b. with a margin of 5.7% (10.7%). |
• | Reported EBIT was SEK -20.3 (27.0) b. impacted by SEK -31.9 b. of goodwill impairment recorded in Q3 related to Vonage. |
• | Net income (loss) was SEK -26.1 (19.1) b. EPS diluted was SEK -7.94 (5.62). Net income (loss) was impacted by SEK -31.9 b. of goodwill impairment and SEK -6.5 (-0.4) b. of restructuring charges. |
• | Free cash flow before M&A amounted to SEK -1.1 (22.2) b. Net cash was SEK 7.8 (23.3) b. at year-end 2023. |
• | A dividend for 2023 of SEK 2.70 (2.70) per share will be proposed to the AGM by the Board of Directors. |
SEK b. | Q4 2023 | Q4 2022 | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | ||||||||||||||||||||||||
Net sales | 71.9 | 86.0 | -16 | % | 64.5 | 11 | % | 263.4 | 271.5 | -3 | % | |||||||||||||||||||||
Sales growth adj. for comparable units and currency ² | — | — | -17 | % | — | — | — | — | -10 | % | ||||||||||||||||||||||
Gross margin ² | 39.8 | % | 41.4 | % | — | 38.4 | % | — | 38.6 | % | 41.7 | % | — | |||||||||||||||||||
EBIT (loss) | 5.8 | 7.9 | -26 | % | -28.9 | — | -20.3 | 27.0 | — | |||||||||||||||||||||||
EBIT margin ² | 8.1 | % | 9.1 | % | — | -44.8 | % | — | -7.7 | % | 10.0 | % | — | |||||||||||||||||||
EBITA ² | 6.7 | 9.0 | -26 | % | 3.8 | 75 | % | 14.9 | 29.1 | -49 | % | |||||||||||||||||||||
EBITA margin ² | 9.3 | % | 10.5 | % | — | 5.9 | % | — | 5.7 | % | 10.7 | % | — | |||||||||||||||||||
Net income (loss) | 3.4 | 6.2 | -45 | % | -30.5 | — | -26.1 | 19.1 | — | |||||||||||||||||||||||
EPS diluted, SEK | 1.02 | 1.82 | -44 | % | -9.21 | — | -7.94 | 5.62 | — | |||||||||||||||||||||||
Measures excl. restructuring charges ² | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | 41.1 | % | 41.5 | % | — | 39.2 | % | — | 39.6 | % | 41.8 | % | — | |||||||||||||||||||
EBIT (loss) excluding restructuring charges | 7.4 | 8.1 | -9 | % | -28.0 | — | -13.8 | 27.4 | — | |||||||||||||||||||||||
EBIT margin excluding restructuring charges | 10.3 | % | 9.4 | % | — | -43.5 | % | — | -5.2 | % | 10.1 | % | — | |||||||||||||||||||
EBIT excluding restructuring and good will impairments | 7.4 | 8.1 | -9 | % | 3.9 | 90 | % | 18.1 | 27.4 | -34 | % | |||||||||||||||||||||
EBIT margin excluding restructuring and good will impairments | 10.3 | % | 9.4 | % | — | 6.0 | % | — | 6.9 | % | 10.1 | % | — | |||||||||||||||||||
EBITA excluding restructuring charges | 8.2 | 9.3 | -11 | % | 4.7 | 74 | % | 21.4 | 29.5 | -27 | % | |||||||||||||||||||||
EBITA margin excluding restructuring charges | 11.4 | % | 10.8 | % | — | 7.3 | % | — | 8.1 | % | 10.9 | % | — | |||||||||||||||||||
Free cash flow before M&A | 12.5 | 16.9 | -26 | % | -0.5 | — | -1.1 | 22.2 | — | |||||||||||||||||||||||
Net cash, end of period | 7.8 | 23.3 | -66 | % | 1.6 | 386 | % | 7.8 | 23.3 | -66 | % |
1 | Sales adjusted for comparable units and currency |
2 | 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 | Fourth quarter and full-year report 2023 |
Table of Contents
CEO comments
In 2023, we continued to execute on our strategy to strengthen our leadership in mobile networks, grow our enterprise business and drive cultural transformation. We concluded 2023 with a Q4 EBITA margin2 of 11.4% and a historic 5-year USD 14 b. contract. Despite headwinds and a very weak mobile networks market, we were able to generate a full-year EBITA2 of SEK 21.4 b. While the actions we have taken to improve performance are paying off, we are not satisfied with our profitability and there is more work to do. As we look to 2024, we expect the market outside China to further decline, with similar uncertainties as experienced in 2023. In this environment, we remain laser focused on managing elements within our control, including operational efficiency and tight cost management. We are confident in our strategy and are committed to driving long-term value for our shareholders.
Q4 – solid results in challenging environment
As a result of focused execution and increased resiliency, we were able to adapt in a challenging environment and delivered solid Q4 results. While Group sales1 declined organically by -17% YoY, EBITA2 reached SEK 8.2 b. with an EBITA margin2 of 11.4%. With strong focus on profitability, we were able to deliver a 41.1% gross margin2, a YoY increase when adjusting for the retroactive element of IPR revenues in Q4 2022. Our investments in geopolitical resiliency continued at a high level.
Networks sales1 decreased organically by -23% YoY as customers continued to focus on cash flow. Sales in India declined QoQ as the market started its transition to normalized investment levels following an unprecedented roll-out pace. Q4 gross margin2 grew QoQ to 43.2%.
In Cloud Software and Services, we delivered on our EBITA2 target to reach at least breakeven in 2023 with an EBITA2 of SEK 2.0 b. in Q4 and SEK 1.7 b. for the full year. We continue to increase commercial discipline, automation and delivery efficiency, focusing on long-term profitability.
Enterprise sales1 grew by 7% organically YoY mainly driven by Enterprise Wireless Solutions. EBITA2 (loss) was stable YoY, negatively impacted by an inventory write-off in Enterprise Wireless Solutions.
Strong cash collection and released working capital from conclusion of large roll-out projects allowed a healthy free cash flow before M&A of SEK 12.5 b. in Q4. We aim to return to our long-term target of free cash flow before M&A of 9-12% of net sales as soon as possible.
We delivered on the SEK 12 b. gross cost run-rate savings, half of which positively impacted the P&L in 2023, with the remainder to impact in 2024. Considering the market outlook, we will continue our strong focus on cost discipline.
Driving execution of our strategy
Our first strategic pillar is to further enhance our leadership in mobile networks. Technology leadership is core to our strategy, enabling customers to build high-performance, programmable and open networks to deliver superior customer experience, maximize return on investment (ROI) and accelerate business innovation. With our leading technology, customers can reduce their total cost of ownership, reduce non-strategic spend and instead redirect a larger portion of capex to revenue-generating network infrastructure, enabling an accelerated network modernization - as proven by our record win in Q4.
With our second strategic pillar, expansion into Enterprise, we aim at creating new monetization opportunities for our customers. Many operators fight to earn a healthy ROI with current monetization models. By offering network APIs to developers and enterprises, we enable new revenue streams for operators, and new applications that leverage network capabilities. We see good traction with frontrunner customers who share our excitement. In addition, offerings in Enterprise Wireless Solutions expand the market for high-performance mobile technology into enterprise.
2023 has been a year in which we have continued to build and transform our culture focusing on strong decision making and risk management, effective oversight and accountability. Ethical standards shall stand in the center of everything we do and become our competitive strength.
Looking ahead
The mobile network industry remains challenging. We expect the current market uncertainties to prevail into 2024 with a further decline of the RAN market outside China as our customers remain cautious and the investment pace is normalizing in India. The new US contract will start to ramp up in the second half of 2024.
Underlying demand from growing data traffic and 5G only being in the early stages of build-out will require additional network investments. In our view, the current investment levels are unsustainably low for many operators. We are therefore confident that a market recovery should materialize. However, the timing of market recovery is ultimately in the hands of our customers. It is critical for us to lead in technology while focusing on operational efficiency, to ensure we are well positioned when the market recovers. Our strong IPR portfolio with over 60,000 patents gives us great opportunities to grow our licensing revenue, with a continued emphasis on ensuring that the full value is recognized in all contracts.
Our goal is to make Ericsson a more profitable company based on a leading position in mobile infrastructure and a high-growth Enterprise platform business.
I would like to thank all my colleagues for their dedication to execute on our strategy. Together with our customers, we are well positioned to shape the future industry.
Börje Ekholm
President and CEO
1 | Sales adjusted for comparable units and currency. |
2 | Excluding restructuring charges. |
2 Ericsson | Fourth quarter and full-year report 2023 | CEO comments |
Table of Contents
Financial highlights
Net sales Segments
SEK b. | Q4 2023 | Q4 2022 | YoY change | YoY adj.¹ | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | YoY adj.¹ | ||||||||||||||||||||||||||||||
Networks | 45.0 | 58.6 | -23 | % | -23 | % | 41.5 | 8 | % | 171.4 | 193.5 | -11 | % | -15 | % | |||||||||||||||||||||||||
Cloud Software and Services | 19.6 | 20.2 | -3 | % | -4 | % | 15.6 | 26 | % | 63.6 | 60.5 | 5 | % | 1 | % | |||||||||||||||||||||||||
Enterprise | 6.7 | 6.3 | 6 | % | 7 | % | 6.7 | 0 | % | 25.7 | 14.6 | 76 | % | 11 | % | |||||||||||||||||||||||||
Other | 0.6 | 0.8 | -24 | % | -27 | % | 0.7 | -10 | % | 2.5 | 3.0 | -14 | % | -14 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 71.9 | 86.0 | -16 | % | -17 | % | 64.5 | 11 | % | 263.4 | 271.5 | -3 | % | -10 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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. |
Net sales Market Areas
SEK b. | Q4 2023 | Q4 2022 | YoY change | YoY adj.¹ | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | YoY adj.¹ | ||||||||||||||||||||||||||||||
South East Asia, Oceania and India | 11.8 | 11.2 | 5 | % | 7 | % | 13.8 | -14 | % | 53.3 | 33.0 | 62 | % | 61 | % | |||||||||||||||||||||||||
North East Asia | 9.1 | 8.4 | 9 | % | 11 | % | 5.4 | 70 | % | 23.9 | 26.7 | -10 | % | -9 | % | |||||||||||||||||||||||||
North America | 14.4 | 25.3 | -43 | % | -43 | % | 13.5 | 7 | % | 59.2 | 95.4 | -38 | % | -41 | % | |||||||||||||||||||||||||
Europe and Latin America | 19.2 | 20.9 | -8 | % | -12 | % | 15.5 | 24 | % | 64.9 | 66.8 | -3 | % | -9 | % | |||||||||||||||||||||||||
Middle East and Africa | 7.8 | 7.4 | 5 | % | 4 | % | 6.5 | 20 | % | 23.7 | 22.6 | 5 | % | 1 | % | |||||||||||||||||||||||||
Other ² | 9.6 | 12.8 | -25 | % | -24 | % | 9.9 | -4 | % | 38.2 | 27.1 | 41 | % | 3 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 71.9 | 86.0 | -16 | % | -17 | % | 64.5 | 11 | % | 263.4 | 271.5 | -3 | % | -10 | % | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 | Sales growth adjusted for comparable units and currency. |
2 | “Other” includes primarily IPR licensing revenues and the major part of segment Enterprise. |
Sales breakdown by market area by segment is available at the end of this report.
Fourth quarter comments
Segments
Reported sales decreased by -16% YoY to SEK 71.9 b. Sales adjusted for comparable units and currency declined by -17% YoY, primarily impacted by lower sales in Networks.
IPR licensing revenues decreased to SEK 2.6 (6.0) b. The difference includes the impact from retroactive IPR licensing revenues for previously unlicensed periods, which were recognized in Q4 2022.
Networks sales adjusted for comparable units and currency declined by -23%. Networks reported sales declined by -23% to SEK 45.0 b., accounting for 63% (68%) of Group sales.
Cloud Software and Services sales adjusted for comparable units and currency declined by -4%. Cloud Software and Services reported sales declined by -3% to SEK 19.6 b., accounting for 27% (23%) of Group sales.
Enterprise sales adjusted for comparable units and currency increased by 7%. Enterprise reported sales grew by 6% to SEK 6.7 b. accounting for 9% (7%) of Group sales.
Market Areas
In market area South East Asia, Oceania and India, sales adjusted for comparable units and currency increased by 7% YoY, primarily driven by sales in India. However, sequentially, sales in India declined as the market started transitioning to normalized investment levels earlier than expected. Networks and Cloud Software and Services sales increased organically. Reported sales increased by 5%.
In market area North East Asia, sales adjusted for comparable units and currency increased by 11% YoY. Networks and Cloud Software and Services sales increased organically. Reported sales grew by 9%.
In market area North America, sales adjusted for comparable units and currency declined by -43% YoY. Networks sales adjusted for comparable units and currency declined by -50% as a result of customers reducing capex spend and lowering their inventory levels following high investment levels in 2021 and 2022. Reported sales decreased by -43%.
In market area Europe and Latin America, sales adjusted for comparable units and currency decreased by -12% YoY. Sales in both Europe and Latin America declined following high investment levels in 2022. Sales decline in Europe was partly offset by market share gains. Reported sales decreased by -8%.
In market area Middle East and Africa, sales adjusted for comparable units and currency increased by 4% YoY. Networks sales increased, primarily driven by a second wave of 5G investments in several early 5G markets in the Middle East. Cloud Software and Services sales declined slightly, primarily due to timing of project milestones. Reported sales increased by 5%.
In market area Other, sales adjusted for comparable units and currency decreased by -24% YoY as a result of lower IPR licensing revenues in Q4 2023 versus Q4 2022. Q4 2022 was positively impacted by retroactive IPR licensing revenues for unlicensed periods in 2022. Reported sales decreased by -25%.
3 Ericsson | Fourth quarter and full-year report 2023 | Financial highlights |
Table of Contents
Full-year comments
Segments
Reported sales decreased by -3% to SEK 263.4 (271.5) b. Networks sales decreased by -11% to SEK 171.4 b. Cloud Software and Services sales increased by 5% to SEK 63.6 b. Enterprise sales increased by 76% to SEK 25.7 b. Sales in segment Other decreased by -14% to SEK 2.5 b. Group sales adjusted for comparable units and currency decreased by -10%.
IPR licensing revenues increased to SEK 11.1 (10.4) b. primarily as a result of 5G license renewals, partly offset by expiring license agreements.
Networks sales adjusted for comparable units and currency decreased by -15% YoY. Sales in market area South East Asia, Oceania and India grew by 80% primarily as a result of 5G contracts in India, while sales in market area Middle East and Africa grew by 6%. Sales declined in the other three market areas, most notably in North America where sales declined by -49% YoY. Segment Networks reported sales declined by -11% and accounted for 65% (71%) of Group sales.
Cloud Software and Services sales adjusted for comparable units and currency increased by 1% YoY. Sales grew in market areas South East Asia, Oceania and India as well as in North East Asia. Segment Cloud Software and Services reported sales grew by 5% and accounted for 24% (22%) of Group sales.
Enterprise sales adjusted for comparable units and currency grew by 11% YoY primarily in business area Enterprise Wireless Solutions. Segment Enterprise reported sales grew by 76% and accounted for 10% (5%) of Group sales.
The share of hardware in the sales mix was 38% (44%), software 22% (20%) and services 40% (36%).
Market Areas
Sales adjusted for comparable units and currency increased in two of the five market areas.
Sales adjusted for comparable units and currency increased by 61% YoY in market area South East Asia, Oceania and India, driven by sales increase in India on the back of significant market share gains. The market grew significantly in India in 2023. Sales in both Networks and Cloud Software and Services grew organically. Reported sales increased by 62%.
Sales adjusted for comparable units and currency decreased by -9% YoY in market area North East Asia, as operators in several markets have finalized the first build-out phase of 5G. Reported sales decreased by -10%.
Sales adjusted for comparable units and currency decreased by -41% YoY in market area North America, with Networks declining by -49% as a result of customers reducing capex spend and lowering inventory levels following high investment levels in 2021 and 2022. Cloud Software and Services sales increased by 2%. Reported sales decreased by -38%.
Sales adjusted for comparable units and currency decreased by -9% YoY in market area Europe and Latin America. Sales in both Europe and Latin America declined following high investments in 2022. Sales in Europe were impacted by lower capex spend partly offset by market share gains. Reported sales decreased by -3%.
Sales adjusted for comparable units and currency in Middle East and Africa increased by 1% YoY. Networks sales grew, primarily driven by new 5G investments in some Middle East countries and market share gains in certain markets. Cloud Software and Services sales declined slightly primarily due to timing of project milestones. Reported sales increased by 5% YoY.
Sales adjusted for comparable units and currency in market area Other increased by 3% YoY, primarily as a result of higher sales in Enterprise Wireless Solutions and higher IPR licensing revenues. Reported sales increased by 41%.
4 Ericsson | Fourth quarter and full-year report 2023 | Financial highlights |
Table of Contents
Income and margin development
SEK b. | Q4 2023 | Q4 2022 | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | ||||||||||||||||||||||||
Net sales | 71.9 | 86.0 | -16 | % | 64.5 | 11 | % | 263.4 | 271.5 | -3 | % | |||||||||||||||||||||
Gross income | 28.6 | 35.6 | -20 | % | 24.7 | 16 | % | 101.6 | 113.3 | -10 | % | |||||||||||||||||||||
Gross margin | 39.8 | % | 41.4 | % | — | 38.4 | % | — | 38.6 | % | 41.7 | % | — | |||||||||||||||||||
Research and development (R&D) expenses | -13.0 | -13.2 | — | -11.9 | — | -50.7 | -47.3 | — | ||||||||||||||||||||||||
Selling and administrative expenses | -9.9 | -11.8 | — | -9.6 | — | -39.3 | -35.7 | — | ||||||||||||||||||||||||
Impairment losses on trade receivables | 0.2 | 0.1 | 111 | % | -0.1 | — | -0.3 | 0.0 | — | |||||||||||||||||||||||
Other operating income and expenses | -0.1 | -2.8 | — | -32.0 | — | -31.9 | -3.3 | — | ||||||||||||||||||||||||
Share in earnings of JV´s and associated companies | 0.1 | 0.0 | 218 | % | 0.0 | 125 | % | 0.1 | 0.0 | — | ||||||||||||||||||||||
EBIT (loss) | 5.8 | 7.9 | -26 | % | -28.9 | — | -20.3 | 27.0 | — | |||||||||||||||||||||||
EBIT margin ¹ | 8.1 | % | 9.1 | % | — | -44.8 | % | — | -7.7 | % | 10.0 | % | — | |||||||||||||||||||
EBITA ¹ | 6.7 | 9.0 | -26 | % | 3.8 | 75 | % | 14.9 | 29.1 | -49 | % | |||||||||||||||||||||
EBITA margin ¹ | 9.3 | % | 10.5 | % | — | 5.9 | % | — | 5.7 | % | 10.7 | % | — | |||||||||||||||||||
Financial income and expenses, net | -0.9 | -0.5 | — | -0.7 | — | -3.0 | -2.4 | — | ||||||||||||||||||||||||
Income tax | -1.5 | -1.2 | — | -0.9 | — | -2.8 | -5.5 | — | ||||||||||||||||||||||||
Net income (loss) | 3.4 | 6.2 | -45 | % | -30.5 | — | -26.1 | 19.1 | — | |||||||||||||||||||||||
Restructuring charges | -1.5 | -0.2 | — | -0.9 | — | -6.5 | -0.4 | — | ||||||||||||||||||||||||
Measures excl. restr. charges and other items affecting comparability ¹ | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | 41.1 | % | 41.5 | % | — | 39.2 | % | — | 39.6 | % | 41.8 | % | — | |||||||||||||||||||
EBIT (loss) excluding restructuring charges | 7.4 | 8.1 | -9 | % | -28.0 | — | -13.8 | 27.4 | — | |||||||||||||||||||||||
EBIT margin excluding restructuring charges | 10.3 | % | 9.4 | % | — | -43.5 | % | — | -5.2 | % | 10.1 | % | — | |||||||||||||||||||
EBIT excluding restructuring and good will impairments | 7.4 | 8.1 | -9 | % | 3.9 | 90 | % | 18.1 | 27.4 | -34 | % | |||||||||||||||||||||
EBIT margin excluding restructuring and good will impairments | 10.3 | % | 9.4 | % | — | 6.0 | % | — | 6.9 | % | 10.1 | % | — | |||||||||||||||||||
EBITA excluding restructuring charges | 8.2 | 9.3 | -11 | % | 4.7 | 74 | % | 21.4 | 29.5 | -27 | % | |||||||||||||||||||||
EBITA margin excluding restructuring charges | 11.4 | % | 10.8 | % | — | 7.3 | % | — | 8.1 | % | 10.9 | % | — |
1 | Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements. |
Fourth quarter comments
Gross income
Gross income decreased to SEK 28.6 (35.6) b. with a gross margin of 39.8% (41.4%). Gross income excluding restructuring charges decreased to SEK 29.6 (35.7) b. due to lower sales and lower gross margin in Networks. Gross margin excluding restructuring charges was 41.1% (41.5%). Excluding the retroactive IPR licensing revenues in Q4 2022, gross margin increased YoY.
Networks gross margin excluding restructuring charges decreased to 43.2% (44.6%) primarily as a result of changed business mix. When adjusting for the retroactive element of IPR licensing revenues in Q4 2022, Networks gross margin improved YoY. Cloud Software and Services gross margin increased to 37.3% (33.0%) mainly driven by a favorable business mix and improved delivery performance. Enterprise gross margin declined to 44.3% (45.7%) mainly due to an inventory write-off in Enterprise Wireless Solutions.
Research and development (R&D) expenses
R&D expenses decreased by SEK 0.2 b. and amounted to SEK -13.0 (-13.2) b. including SEK -0.5 (0.0) b. of restructuring charges. R&D expenses decreased in Networks and Cloud Software and Services while they increased in Enterprise with continued investments in Enterprise Wireless Solutions and Global Network Platform.
Selling and administrative (SG&A) expenses
SG&A expenses decreased by SEK 1.9 b. to SEK -9.9 (-11.8) b. including SEK -0.1 (-0.1) b. of restructuring charges. The reduction in SG&A expenses was due to cost-reduction activities.
Other operating income and expenses
Other operating income and expenses was SEK -0.1 (-2.8) b. Q4 2022 was negatively impacted by a provision of SEK -2.3 b. related to the DPA breach resolution with U.S. Department of Justice, including expenses for the extended monitorship, and by SEK -1.0 b. due to charges related to the divestment of IoT and other portfolio adjustments.
Restructuring charges
Restructuring charges amounted to SEK -1.5 (-0.2) b. as a result of cost-reduction activities.
EBITA
EBITA decreased to SEK 6.7 (9.0) b. corresponding to an EBITA margin of 9.3% (10.5%). EBITA excluding restructuring charges declined to SEK 8.2 (9.3) b. The decline was due to lower sales and changed business mix in Networks. EBITA was positively impacted by lower variable incentive accruals YoY resulting in lower cost of sales and operating expenses. EBITA in Q4 2022 was impacted by the above-mentioned SEK -3.3 b. for provisions in other operating income and expenses as well as by SEK -0.8 b. for exit of subscale agreements and product offerings in segment Cloud Software and Services. EBITA margin excluding restructuring charges was 11.4% (10.8%).
5 Ericsson | Fourth quarter and full-year report 2023 | Financial highlights |
Table of Contents
EBIT
Reported EBIT decreased to SEK 5.8 (7.9) b. with an EBIT margin of 9.3% (10.5%). EBIT excluding restructuring charges decreased to SEK 7.4 (8.1) b. The result includes a decrease in amortization of intangible assets of SEK -0.4 b. to SEK -0.8 b. EBIT margin excluding restructuring charges was 10.3% (9.4%).
Financial income and expenses, net
Financial net was SEK -0.9 (-0.5) b. The decline in financial net was mainly due to a negative currency hedge effect of SEK -0.2 (0.3) b. in the quarter.
Taxes
Taxes were SEK -1.5 (-1.2) b. Taxes in Q4 2022 were positively impacted by SEK 0.6 b. as a result of the utilization of previously impaired withholding tax assets in Sweden.
Net income
Net income decreased to SEK 3.4 (6.2) b. and EPS diluted declined to SEK 1.02 (1.82).
Employees
The number of employees on December 31, 2023, was 99,952 compared with 101,351 on September 30, 2023. The decrease is related to cost-reduction activities.
Full-year comments
Gross income
Reported gross income decreased to SEK 101.6 (113.3) b. with a gross margin of 38.6% (41.7%). Gross income excluding restructuring charges declined to SEK 104.4 (113.5) b. resulting in a gross margin of 39.6% (41.8%). Gross income and gross margin were impacted by lower sales and gross margin in Networks, as a result of reduction in capex spend by several operators and a business mix shift from front-runner markets to large deployments in other geographies. Gross income and gross margin improved in Cloud Software and Services.
Research and development (R&D) expenses
R&D expenses increased to SEK -50.7 (-47.3) b. including restructuring charges of SEK -2.4 (-0.1) b. and a negative currency effect of SEK -0.9 b. R&D expenses increased in segment Enterprise, as a result of continued investments in Enterprise Wireless Solutions as well as the impact of a full-year consolidation of Vonage.
Selling and administrative (SG&A) expenses
SG&A expenses increased to SEK -39.3 (-35.7) b. including restructuring charges of SEK -1.3 (-0.2) b. and a negative currency effect of SEK -0.7 b. SG&A expenses increased in segment Enterprise through continued investments in the go-to-market activities in Enterprise Wireless Solutions as well as the impact of a full-year consolidation of Vonage.
Other operating income and expenses
Other operating income and expenses was SEK -31.9 (-3.3) b. In Q3 2023, a non-cash impairment charge of SEK -31.9 b., attributed to Vonage, was recognized. The impairment did not impact EBITA. 2022 was impacted by a provision of SEK -2.3 b. related to the DPA breach resolution with U.S. Department of Justice, including expenses for the extended monitorship, and by SEK -1.0 b. due to charges related to the divestment of IoT and other portfolio adjustments.
Restructuring charges
Restructuring charges increased to SEK -6.5 (-0.4) b., as a result of cost-reduction activities.
EBITA
As a result of lower operating income, EBITA excluding restructuring charges declined to SEK 21.4 (29.5) b. with an EBITA margin of 8.1% (10.9%). EBITA was positively impacted by lower variable incentive accruals YoY resulting in lower cost of sales and operating expenses. EBITA in 2022 was impacted by charges of SEK -5.5 b. EBITA declined to SEK 14.9 (29.1) b. with an EBITA margin of 5.7% (10.7%).
EBIT
Reported EBIT decreased to SEK -20.3 (27.0) b. YoY, corresponding to an EBIT margin of -7.7% (10.0%). EBIT excluding impairment of goodwill and restructuring charges decreased to SEK 18.1 (27.4) b. YoY with an EBIT margin of 6.9% (10.1%).
Financial income and expenses, net
Financial net declined to SEK -3.0 (-2.4) b., mainly due to impact from increased market interest rates. The currency hedge effect impacted financial net by SEK -0.2 (-0.9) b. The USD weakened against the SEK between December 31, 2022 (SEK/USD rate 10.38) and December 31, 2023, (SEK/USD rate 10.01).
Taxes
Taxes were SEK -2.8 (-5.5) b. The effective tax rate for the full year, excluding the impairment of goodwill related to Vonage, was 32%. The tax rate in 2022 was 22%. The tax rate in 2022 was positively impacted by utilization of previously impaired withholding tax assets in Sweden, while the tax rate in 2023 was negatively impacted by lower Group income compared with prior years.
Net income
Net income declined to SEK -26.1 (19.1) b. impacted by impairment of goodwill of SEK -31.9 b., lower gross income of SEK -9.1 b., restructuring charges of SEK -6.5 b. and by higher operating expenses related to segment Enterprise. The negative impact was partly mitigated by lower tax of SEK 2.8 b. YoY. EPS diluted decreased to SEK -7.94 (5.62).
Employees
The number of employees on December 31, 2023, was 99,952 (105,529), a total decrease of -5,577 employees compared to 2022. The decrease was driven by cost-reduction activities.
6 Ericsson | Fourth quarter and full-year report 2023 | Financial highlights |
Table of Contents
Segment results
Mobile Networks – Segment Networks
SEK b. | Q4 2023 | Q4 2022 | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | ||||||||||||||||||||||||
Net sales | 45.0 | 58.6 | -23 | % | 41.5 | 8 | % | 171.4 | 193.5 | -11 | % | |||||||||||||||||||||
Of which IPR licensing revenues | 2.2 | 4.9 | -56 | % | 2.3 | -5 | % | 9.1 | 8.5 | 7 | % | |||||||||||||||||||||
Sales growth adj. for comparable units and FX | — | — | -23 | % | — | — | — | — | -15 | % | ||||||||||||||||||||||
Gross income | 18.6 | 26.1 | -29 | % | 16.1 | 15 | % | 68.0 | 86.4 | -21 | % | |||||||||||||||||||||
Gross margin | 41.4 | % | 44.4 | % | — | 38.9 | % | — | 39.6 | % | 44.6 | % | — | |||||||||||||||||||
EBIT | 6.1 | 12.5 | -51 | % | 4.6 | 32 | % | 19.4 | 38.5 | -50 | % | |||||||||||||||||||||
EBIT margin | 13.6 | % | 21.2 | % | — | 11.1 | % | — | 11.3 | % | 19.9 | % | — | |||||||||||||||||||
EBITA | 6.1 | 12.6 | -51 | % | 4.7 | 32 | % | 19.5 | 38.7 | -50 | % | |||||||||||||||||||||
EBITA margin | 13.6 | % | 21.4 | % | — | 11.2 | % | — | 11.4 | % | 20.0 | % | — | |||||||||||||||||||
Restructuring charges | -1.3 | -0.1 | — | -0.6 | — | -4.4 | -0.1 | — | ||||||||||||||||||||||||
Measures excluding restructuring charges | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | 43.2 | % | 44.6 | % | — | 39.9 | % | — | 40.8 | % | 44.7 | % | — | |||||||||||||||||||
EBIT excluding restructuring charges | 7.4 | 12.5 | -41 | % | 5.2 | 43 | % | 23.8 | 38.7 | -38 | % | |||||||||||||||||||||
EBIT margin excluding restructuring charges | 16.5 | % | 21.4 | % | — | 12.5 | % | — | 13.9 | % | 20.0 | % | — | |||||||||||||||||||
EBITA excluding restructuring charges | 7.4 | 12.6 | -41 | % | 5.2 | 42 | % | 23.9 | 38.8 | -38 | % | |||||||||||||||||||||
EBITA margin excluding restructuring charges | 16.5 | % | 21.5 | % | — | 12.6 | % | — | 14.0 | % | 20.1 | % | — |
Breakdown of sales into products, services and IPR licensing is available in the back-end tables.
Fourth quarter comments
• | Sales declined organically by -23% primarily due to lower sales in market area North America. |
• | Continued success in securing market share gains. |
• | Gross margin excluding restructuring charges of 43.2%, expected to be 39-41% in Q1 2024. |
Net sales
Sales adjusted for comparable units and currency declined by -23% YoY, due to a -50% sales drop in North America as a result of customers’ continued lower capex investments and focus on inventory reductions and cash flow. Sales were also negatively impacted by a -15% sales decline in market area Europe and Latin America on the back of strong sales in 2022. Sales in market area South East Asia, Oceania and India grew by 7%, while sales in India grew by 14% YoY. Sequentially, sales in India declined by almost -40%, due to a slowdown in capex investments. A reduction in capex investments in India was expected in the beginning of 2024 but occurred earlier than anticipated. Sales in Q4 2022 was positively impacted by retroactive IPR licensing revenues for unlicensed periods in 2022. Reported sales decreased by -23%.
The RAN market in 2024 is expected to contract, mainly due to the decline in India following record build-out in 2023 and generally cautious customer capex investments. The near-term outlook remains uncertain; however, it is expected that Ericsson’s market share in North America will increase towards the later part of 2024, based on the recently announced contract win.
Gross income
Gross income excluding restructuring charges declined by SEK -6.7 b. to SEK 19.4 b. with a gross margin of 43.2% (44.6%). However, when adjusting for retroactive IPR licensing revenues in Q4 2022, Networks gross margin improved YoY. The strong gross margin in Q4 2023 was driven by activities to improve the sales mix with a higher share of software and a positive impact from lower share of sales from large deployment projects in India. Reported gross income was SEK 18.6 (26.1) b. with a gross margin of 41.4% (44.4%).
Gross margin excluding restructuring charges is estimated to be within the range of 39-41% in Q1 2024.
EBIT and EBITA
EBIT excluding restructuring charges decreased to SEK 7.4 (12.5) b. with an EBIT margin of 16.5% (21.4%). EBITA excluding restructuring charges declined to SEK 7.4 (12.6) b. as a result of lower sales and the business mix shift. The decline in gross income was partly offset by lower operating expenses as a result of lower variable incentive accruals YoY, which positively impacting cost of sales and operating expenses, as well as of cost-reduction activities. EBITA margin excluding restructuring charges was 16.5% (21.5%). Reported EBIT declined to SEK 6.1 (12.5) b. while EBITA declined to SEK 6.1 (12.6) b. Reported EBIT and EBITA were both negatively impacted by lower gross income and by restructuring charges of SEK -1.3 (-0.1) b.
Full-year comments
Net sales
Reported sales decreased by -11% in 2023, to SEK 171.4 (193.5) b. Sales growth in market area South East Asia, Oceania and India was 82%, driven by 5G contracts in India. Sales in market area Middle East and Africa grew by 10%. Market area North America reported a sales decline of -46% as operators reduced capex investments after record-high investments in 2021 and 2022. Sales adjusted for comparable units and currency decreased by -15%.
Gross income
Gross income excluding restructuring charges decreased by SEK -16.6 b. to SEK 69.9 b. while gross margin decreased to 40.8% (44.7%). Gross margin was negatively impacted by the business mix shift in 2023. This shift was caused by a slowdown in investments in 5G front-runner markets, predominantly in North America, combined with large deployments with an initially dilutive effect on margins in other geographies. Reported gross income was SEK 68.0 (86.4) b. with a gross margin of 39.6% (44.6%).
EBIT and EBITA
EBIT excluding restructuring charges decreased to SEK 23.8 (38.7) b. with an EBIT margin of 13.9% (20.0%). EBITA excluding restructuring charges declined to SEK 23.9 (38.8) b. as a result of lower sales and the business mix shift. The decline in gross income was partly offset by cost-reduction activities as well as lower variable incentive accruals YoY, positively impacting cost of sales and operating expenses. EBITA margin excluding restructuring charges was 14.0% (20.1%). Reported EBIT and EBITA were impacted by lower gross income and by restructuring charges of SEK -4.4 (-0.1) b.
7 Ericsson | Fourth quarter and full-year report 2023 | Segment results |
Table of Contents
Mobile Networks – Segment Cloud Software and Services
SEK b. | Q4 2023 | Q4 2022 | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 | YoY change | ||||||||||||||||||||||||
Net sales | 19.6 | 20.2 | -3 | % | 15.6 | 26 | % | 63.6 | 60.5 | 5 | % | |||||||||||||||||||||
Of which IPR licensing revenues | 0.5 | 1.1 | -56 | % | 0.5 | -5 | % | 2.0 | 1.9 | 7 | % | |||||||||||||||||||||
Sales growth adj. for comparable units and FX | — | — | -4 | % | — | — | — | — | 1 | % | ||||||||||||||||||||||
Gross income | 7.2 | 6.7 | 8 | % | 5.5 | 31 | % | 22.1 | 20.1 | 10 | % | |||||||||||||||||||||
Gross margin | 36.7 | % | 33.0 | % | — | 35.3 | % | — | 34.7 | % | 33.2 | % | — | |||||||||||||||||||
EBIT (loss) | 1.8 | 0.7 | 173 | % | 0.1 | — | -0.2 | -1.7 | — | |||||||||||||||||||||||
EBIT margin | 9.4 | % | 3.3 | % | — | 0.6 | % | — | -0.3 | % | -2.8 | % | — | |||||||||||||||||||
EBITA (loss) | 1.8 | 0.7 | 166 | % | 0.1 | — | -0.2 | -1.6 | — | |||||||||||||||||||||||
EBITA margin | 9.4 | % | 3.4 | % | — | 0.6 | % | — | -0.3 | % | -2.6 | % | — | |||||||||||||||||||
Restructuring charges | -0.2 | 0.0 | — | -0.3 | — | -1.9 | -0.1 | — | ||||||||||||||||||||||||
Measures excluding restructuring charges | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | 37.3 | % | 33.0 | % | — | 36.2 | % | — | 36.0 | % | 33.3 | % | — | |||||||||||||||||||
EBIT (loss) excluding restructuring charges | 2.0 | 0.7 | 193 | % | 0.4 | — | 1.7 | -1.6 | — | |||||||||||||||||||||||
EBIT margin excluding restructuring charges | 10.3 | % | 3.4 | % | — | 2.7 | % | — | 2.7 | % | -2.6 | % | — | |||||||||||||||||||
EBITA (loss) excluding restructuring charges | 2.0 | 0.7 | 185 | % | 0.4 | — | 1.7 | -1.5 | — | |||||||||||||||||||||||
EBITA margin excluding restructuring charges | 10.4 | % | 3.5 | % | — | 2.8 | % | — | 2.7 | % | -2.4 | % | — |
Breakdown of sales into products, services and IPR licensing is available in the back-end tables.
Fourth quarter comments
• | Delivered on the target of reaching at least EBITA1 break-even in 2023. |
• | Gross margin excluding restructuring charges of 37.3%. |
• | Continued strategy execution to increase long-term profitability. |
1 | Excluding restructuring charges |
Net sales
Sales adjusted for comparable units and currency decreased by -4% YoY. Sales grew in market areas South East Asia, Oceania and India as well as in North East Asia, while sales declined in the other three market areas. Sales in Q4 2022 were positively impacted by retroactive IPR licensing revenues for unlicensed periods in 2022. Reported sales decreased by -3% YoY.
Gross income
Gross income increased by SEK 0.5 b. YoY to SEK 7.2 b. with a gross margin of 36.7% (33.0%). Gross income excluding restructuring charges was SEK 7.3 (6.7) b. with a gross margin of 37.3% (33.0%). Gross income and margin increases were mainly driven by activities to improve the business mix, delivery performance and commercial discipline. In addition, Q4 2022 was positively impacted by higher IPR licensing revenues.
The sequential improvement in gross margin was driven by seasonally higher share of software sales in Q4.
EBIT and EBITA
EBIT excluding restructuring charges increased to SEK 2.0 (0.7) b. with an EBIT margin of 10.3% (3.4%). EBITA excluding restructuring charges increased to SEK 2.0 (0.7) b., driven by gross margin improvements and reduction of operating expenses through cost-efficiency activities. EBIT and EBITA in Q4 2022 were impacted by SEK -0.8 b. of charges for exit of subscale agreements and product offerings. EBITA margin excluding restructuring charges was 10.4% (3.5%).
Reported EBIT and EBITA increased to SEK 1.8 (0.7) b. EBIT and EBITA were impacted by restructuring charges of SEK -0.2 (0.0) b.
Strategic R&D and SG&A investments for competitiveness and resilience are expected to remain at current level in Q1, as investments in the 5G portfolio are expected to continue.
Full-year comments
Net sales
Reported sales increased by 5% to SEK 63.6 b. in 2023. Sales adjusted for comparable units and currency increased by 1%. Sales growth in market areas North East Asia, South East Asia, Oceania and India as well as in North America was driven by 5G momentum but was partly offset by sales decline in managed networks services business as a result of descoping and contract exits.
Gross income
Gross income excluding restructuring charges increased by SEK 2.7 b. to SEK 22.9 b., with a gross margin of 36.0% (33.3%). Gross income and margin increases were mainly driven by improved delivery performance.
EBIT and EBITA
EBIT excluding restructuring charges was SEK 1.7 (-1.6) b. with an EBIT margin of 2.7% (-2.6%). EBITA excluding restructuring charges was SEK 1.7 (-1.5) b. with an EBITA margin of 2.7% (-2.4%). EBIT and EBITA were positively impacted by sales growth, gross margin improvement and reductions in operating expenses. EBIT and EBITA in Q4 2022 were impacted by SEK -0.8 b. of charges for exit of subscale agreements and product offerings.
Reported EBIT increased to SEK -0.2 (-1.7) b. while EBITA increased to SEK -0.2 (-1.6) b. EBIT and EBITA were impacted by restructuring charges of SEK -1.9 (-0.1) b.
Strategy execution continues, avoiding subscale business, accelerating automation capabilities and continuing the focus on commercial discipline. Results will vary between quarters.
8 Ericsson | Fourth quarter and full-year report 2023 | Segment results |
Table of Contents
Segment Enterprise
SEK b. | Q4 2023 | Q4 2022 ² | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 ² | YoY change | ||||||||||||||||||||||||
Net sales | 6.7 | 6.3 | 6 | % | 6.7 | 0 | % | 25.7 | 14.6 | 76 | % | |||||||||||||||||||||
Of which Global Comms Platform (Vonage) | 4.1 | 4.1 | 1 | % | 4.2 | -2 | % | 16.4 | 7.0 | 134 | % | |||||||||||||||||||||
Of which Enterprise Wireless Solutions | 1.2 | 0.9 | 36 | % | 1.2 | -3 | % | 4.2 | 2.7 | 53 | % | |||||||||||||||||||||
Sales growth adj. for comparable units and FX | — | — | 7 | % | — | — | — | — | 11 | % | ||||||||||||||||||||||
Gross income | 3.0 | 2.9 | 3 | % | 3.3 | -9 | % | 12.0 | 7.1 | 69 | % | |||||||||||||||||||||
Gross margin | 44.3 | % | 45.7 | % | — | 48.7 | % | — | 46.7 | % | 48.6 | % | — | |||||||||||||||||||
EBIT (loss) | -1.6 | -1.9 | — | -33.3 | — | -38.3 | -4.5 | — | ||||||||||||||||||||||||
EBIT margin | -24.5 | % | -30.0 | % | — | -499.1 | % | — | -148.9 | % | -30.6 | % | — | |||||||||||||||||||
EBITA (loss) | -0.8 | -0.8 | — | -0.6 | — | -3.3 | -2.7 | — | ||||||||||||||||||||||||
EBITA margin | -12.4 | % | -13.2 | % | — | -9.0 | % | — | -12.7 | % | -18.8 | % | — | |||||||||||||||||||
Restructuring charges | 0.0 | -0.1 | — | 0.0 | — | -0.2 | -0.1 | — | ||||||||||||||||||||||||
Measures excluding restructuring charges | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | 44.3 | % | 45.7 | % | — | 48.8 | % | — | 46.7 | % | 48.6 | % | — | |||||||||||||||||||
Global Comms Platform (Vonage) | 42.5 | % | 42.9 | % | — | 41.7 | % | — | 42.1 | % | 42.7 | % | — | |||||||||||||||||||
Enterprise Wireless Solutions | 36.1 | % | 56.6 | % | — | 60.0 | % | — | 52.2 | % | 56.2 | % | — | |||||||||||||||||||
EBIT (loss) excluding restructuring charges ¹ | -1.6 | -1.8 | — | -33.3 | — | -38.2 | -4.4 | — | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges ¹ | -24.1 | % | -29.0 | % | — | -499.0 | % | — | -148.2 | % | -30.2 | % | — | |||||||||||||||||||
EBIT (loss) excl. restructuring & good will impairments | -1.6 | -1.8 | — | -1.4 | — | -6.3 | -4.4 | — | ||||||||||||||||||||||||
EBIT margin excl. restructuring & good will impairments | -24.1 | % | -29.0 | % | — | -21.0 | % | — | -24.3 | % | -30.2 | % | — | |||||||||||||||||||
EBITA (loss) excluding restructuring charges ¹ | -0.8 | -0.8 | — | -0.6 | — | -3.1 | -2.7 | — | ||||||||||||||||||||||||
Of which Global Comms Platform (Vonage) | 0.3 | -0.1 | — | 0.0 | — | 0.3 | -0.6 | — | ||||||||||||||||||||||||
Of which Enterprise Wireless Solutions | -1.1 | -0.7 | — | -0.7 | — | -3.5 | -2.2 | — | ||||||||||||||||||||||||
EBITA margin excluding restructuring charges ¹ | -12.0 | % | -12.2 | % | — | -8.9 | % | — | -12.0 | % | -18.3 | % | — |
1 | Common costs are included at segment level only (not distributed within the segment). |
2 | Financial information by segment has been restated for all quarters in 2022, due to the divestment of IoT business moved from segment Enterprise to segment Other in Q1 2023. |
Fourth quarter comments
• | Reported sales growth driven mainly by Enterprise Wireless Solutions. |
• | Increase in gross income excluding restructuring charges to SEK 3.0 (2.9) b. |
• | EBITA (loss) mainly due to continued investments and an inventory write-off in Enterprise Wireless Solutions. |
Net sales
Sales adjusted for comparable units and currency increased by 7% YoY, driven mainly by Enterprise Wireless Solutions. Reported sales increased by SEK 0.4 b. to SEK 6.7 (6.3) b.
Reported sales in Vonage Communications Platform (VCP) grew by 2% YoY, of which sales from the current communications API offerings grew by 3% YoY. Sales growth was negatively impacted by a customer contract loss in Q4.
Investments continue in line with the strategic imperative to build the Global Network Platform (Network APIs).
Gross income
Gross income and gross income excluding restructuring charges increased to SEK 3.0 (2.9) b. driven by iconectiv within Technologies and New Businesses. Gross margin and gross margin excluding restructuring charges decreased to 44.3% (45.7%) mainly due to inventory write-off in Enterprise Wireless Solutions partly offset by higher margins in iconectiv. Gross margin excluding inventory write-off and provisions increased by 2.4 percentage points YoY in segment Enterprise.
EBITA
EBITA (loss) and EBITA (loss) excluding restructuring charges were SEK -0.8 (-0.8) b. Enterprise Wireless Solutions continued the growth investments in R&D and go-to-market activities which, together with an inventory write-off resulted in a SEK -0.4 b. decline in EBITA (loss) excluding restructuring charges to SEK -1.1 (-0.7) b. Following the business model of Cradlepoint revenues are
recognized over the customer contract period, while most of the costs are recognized at the beginning of the contract.
Global Communications Platform improved EBITA excluding restructuring charges to SEK 0.3 (-0.1) b., partly as a result of a provision reversal.
EBIT
EBIT (loss) excluding restructuring charges improved by SEK 0.2 b. to SEK -1.6 b. driven by lower amortization from acquired businesses. Reported EBIT (loss) was SEK -1.6 (-1.9) b.
Full-year comments
Net sales
Sales adjusted for comparable units and currency increased by 11% YoY, driven mainly by Enterprise Wireless Solutions. Reported sales increased by 76% YoY driven by the acquired Vonage business.
Gross income
Gross income and gross income excluding restructuring charges increased to SEK 12.0 (7.1) b., driven mainly by the Vonage acquisition as well as growth in Enterprise Wireless Solutions and in Technologies and New Businesses. Gross margin and gross margin excluding restructuring charges decreased to 46.7% (48.6%) mainly due to the dilutive effect of Vonage.
EBITA
EBITA (loss) was SEK -3.3 (-2.7) b. EBITA (loss) excluding restructuring charges was SEK -3.1 (-2.7) b. The decline is due to increased growth investments in Enterprise Wireless Solutions partly offset by Global Communications Platform contribution.
EBIT
EBIT (loss) was SEK -38.3 (-4.5) b. EBIT excluding impairment of goodwill and restructuring charges was SEK -6.3 (-4.4) b.
9 Ericsson | Fourth quarter and full-year report 2023 | Segment results |
Table of Contents
Segment Other
SEK b. | Q4 2023 | Q4 2022 ¹ | YoY change | Q3 2023 | QoQ change | Jan-Dec 2023 | Jan-Dec 2022 ¹ | YoY change | ||||||||||||||||||||||||
Net sales | 0.6 | 0.8 | -24 | % | 0.7 | -10 | % | 2.5 | 3.0 | -14 | % | |||||||||||||||||||||
Sales growth adj. for comparable units and FX | — | — | -27 | % | — | — | — | — | -14 | % | ||||||||||||||||||||||
Gross income | -0.2 | 0.0 | — | -0.2 | — | -0.5 | -0.3 | — | ||||||||||||||||||||||||
Gross margin | -26.0 | % | -4.3 | % | — | -23.6 | % | — | -18.2 | % | -9.3 | % | — | |||||||||||||||||||
EBIT (loss) | -0.5 | -3.4 | — | -0.3 | — | -1.2 | -5.3 | — | ||||||||||||||||||||||||
EBIT margin | -72.9 | % | -407.2 | % | — | -45.6 | % | — | -45.5 | % | -180.3 | % | — | |||||||||||||||||||
EBITA (loss) | -0.5 | -3.4 | — | -0.3 | — | -1.2 | -5.3 | — | ||||||||||||||||||||||||
EBITA margin | -72.9 | % | -406.0 | % | — | -45.6 | % | — | -45.4 | % | -179.9 | % | — | |||||||||||||||||||
Restructuring charges | 0.0 | -0.1 | — | 0.0 | — | 0.0 | -0.1 | — | ||||||||||||||||||||||||
Measures excluding restructuring charges | ||||||||||||||||||||||||||||||||
Gross margin excluding restructuring charges | -22.8 | % | -1.0 | % | — | -24.5 | % | — | -17.7 | % | -8.4 | % | — | |||||||||||||||||||
EBIT (loss) excluding restructuring charges | -0.4 | -3.3 | — | -0.3 | — | -1.2 | -5.2 | — | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges | -70.0 | % | -396.7 | % | — | -47.9 | % | — | -46.0 | % | -177.1 | % | — | |||||||||||||||||||
EBITA (loss) excluding restructuring charges | -0.4 | -3.3 | — | -0.3 | -1.2 | -5.2 | ||||||||||||||||||||||||||
EBITA margin excluding restructuring charges | -70.0 | % | -395.5 | % | — | -47.9 | % | — | -45.9 | % | -176.8 | % | — |
1 | Financial information by segment has been restated for all quarters in 2022, due to the divestment of IoT business moved from segment Enterprise to segment Other in Q1 2023. |
Fourth quarter comments
Net sales
Sales adjusted for comparable units and currency decreased by -27% YoY. Reported sales decreased by -24% YoY to SEK 0.6 (0.8) b. due to the divestment of IoT.
Gross income
Reported gross income decreased to SEK -0.2 (0.0) b. due to impairment of fixed assets in the media business and gross margin decreased to -26.0% (-4.3%). Gross income excluding restructuring charges decreased to SEK -0.1 (0.0) b. and gross margin excluding restructuring charges decreased to -22.8% (-1.0%).
EBITA
EBITA (loss) was SEK -0.5 (-3.4) b. EBITA (loss) excluding restructuring charges was SEK -0.4 (-3.3) b. EBITA (loss) in the quarter is a result of the impairment in the media businesses and revaluation of Ericsson Ventures portfolio. EBITA (loss) improved YoY, due to a provision taken in 2022 of SEK -2.3 b. related to the DPA breach resolution with U.S. Department of Justice, including expenses for the extended monitorship, and due to charges of SEK -1.0 b., related to the divestment of IoT and other portfolio adjustments.
EBIT
Reported EBIT (loss) was SEK -0.5 (-3.4) b. EBIT (loss) excluding restructuring charges was SEK -0.4 (-3.3) b.
Full-year comments
Net sales
Sales decreased by -14% to SEK 2.5 (3.0) b. Sales declined mainly due to the divestment of IoT. Sales in the media businesses remained stable.
Gross income
Gross income decreased YoY by SEK -0.2 b. to SEK -0.5 (-0.3) b. Gross income excluding restructuring charges decreased to SEK -0.5 (-0.2) b. The decrease is a result of impairment of fixed assets in the media business of SEK -0.4 b.
EBITA
EBITA (loss) was SEK -1.2 (-5.3) b. EBITA (loss) excluding restructuring charges was SEK -1.2 (-5.2) b. EBITA (loss) improved YoY, due to a provision taken in 2022 of SEK -2.3 b. related to the DPA breach resolution with U.S. Department of Justice, including expenses for the extended monitorship, and due to charges of SEK -1.0 b. related to the divestment of IoT and other portfolio adjustments. Furthermore, there was an impact of SEK -0.9 b. for a provision in 2022, related to an exit from operations in Russia and a market exit cost of SEK -0.2 b. The EBITA (loss) in 2023 is a result of the impairment in the media business, the divestment of IoT and revaluation of Ericsson Ventures portfolio.
EBIT (loss)
Reported EBIT (loss) was SEK -1.2 (-5.3) b. EBIT (loss) excluding restructuring charges was SEK -1.2 (-5.2) b.
10 Ericsson | Fourth quarter and full-year report 2023 | Segment results |
Table of Contents
Cash flow
Free cash flow bridge, SEK b. | Q4 2023 | Q4 2022 | Q3 2023 | Jan-Dec 2023 | Jan-Dec 2022 | |||||||||||||||
EBIT (loss) excl. restructuring charges | 7.4 | 8.1 | -28.0 | -13.8 | 27.4 | |||||||||||||||
Depreciation, amortization and impairment losses | 3.1 | 3.5 | 34.9 | 43.9 | 10.5 | |||||||||||||||
Restructuring charges | -1.5 | -0.2 | -0.9 | -6.5 | -0.4 | |||||||||||||||
Changes in working capital ¹) | 6.6 | 10.7 | -3.1 | -12.0 | 0.6 | |||||||||||||||
Interest paid/received, taxes paid, and other | -1.0 | -2.2 | -1.5 | -4.4 | -7.3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flow from operating activities | 14.5 | 19.9 | 1.4 | 7.2 | 30.9 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Capex net and other investing activities | -1.2 | -2.3 | -1.3 | -5.4 | -6.1 | |||||||||||||||
Repayment of lease liabilities | -0.8 | -0.8 | -0.7 | -2.9 | -2.6 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Free cash flow before M&A | 12.5 | 16.9 | -0.5 | -1.1 | 22.2 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
M&A | -0.2 | -0.4 | -0.2 | -2.1 | -51.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Free cash flow after M&A | 12.2 | 16.4 | -0.7 | -3.2 | -29.5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Cash flow from operating activities | 14.5 | 19.9 | 1.4 | 7.2 | 30.9 | |||||||||||||||
Cash flow from investing activities | -6.8 | -11.9 | -1.9 | -8.7 | -34.4 | |||||||||||||||
Cash flow from financing activities | 3.7 | -3.9 | 5.1 | 1.0 | -15.9 |
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 |
Fourth quarter comments
• | Inventory reduced by SEK -8.5 b. QoQ to SEK 36.1 b. |
• | Free cash flow before M&A of SEK 12.5 b. driven by strong cash collection and reduced inventory. |
Cash flow from operating activities
Cash flow from operating activities decreased to SEK 14.5 (19.9) b. YoY due to lower cash release from net operating assets and lower EBIT. Sequentially, cash flow from operating activities increased following a working capital reduction as larger deployment projects peaked in Q3, which resulted in strong collection and reduced inventory. The increase was partly offset by utilization of customer credits resulting in lower contract liabilities and seasonally higher sales with higher trade receivables. Cash flow in the quarter was impacted by cash outlays of SEK -1.2 b. related to restructuring. Taxes paid were SEK -1.0 (-1.9) b. Cash flow in Q4 2022 was positively impacted by retroactive IPR payments.
Free cash flow
Free cash flow before M&A decreased YoY to SEK 12.5 (16.9) b. Cash flow in Q4 2022 was positively impacted by retroactive IPR payments. Capex net and other investing activities decreased to SEK -1.2 (-2.3) b. Repayment of lease liabilities was flat at SEK -0.8 (-0.8) b. YoY. Free cash flow after M&A was SEK 12.2 (16.4) b.
Cash flow from investing activities
Cash flow from investing activities was SEK -6.8 (-11.9) b. mainly as a result of purchases of interest-bearing securities. M&A activities were SEK -0.2 (-0.4) b.
Cash flow from financing activities
Cash flow from financing activities was SEK 3.7 (-3.9) b. Ericsson increased its long-term funding by SEK 9.5 b. through issuance of a green Euro bond and through two new bilateral loans.
Full-year comments
Cash flow from operating activities
Cash flow from operating activities decreased to SEK 7.2 (30.9) b., as a result of lower business volumes and lower EBIT coupled with a negative cash flow impact from working capital due to market mix changes towards contracts with longer order-to-cash-cycles, partly offset by a reduction in inventories.
The change in business mix resulted in an increase in working capital days to 80 (69) days with increased accounts receivable days of sales outstanding to 63 (61) days, slightly decreased inventory turnover days to 92 (93) and decreased payable days to 75 (85). Cash flow in the year was impacted by cash outlays of SEK -2.9 b. related to restructuring.
Free cash flow
Free cash flow before M&A was SEK -1.1 (22.2) b. mainly due to lower cash flow from operating activities. Free cash flow as a percentage of sales was -0.4% (8.2%) compared with the long-term target of 9-12%. Capex net and other investing activities was SEK -5.4 (-6.1) b. Repayment of lease liabilities was SEK -2.9 (-2.6) b.
Cash flow from investing activities
Cash flow from investing activities was SEK -8.7 (-34.4) b. of which M&A activities were SEK -2.1 (-51.7) b. including the divestment of IoT and acquisition of Ericom. In 2022, Ericsson acquired Vonage with a purchase price paid of SEK 51.3 b. Free cash flow after M&A was SEK -3.2 (-29.5) b.
Cash flow from financing activities
Cash flow from financing activities was SEK 1.0 (-15.9) b. including repayment of lease liabilities. The net impact on cash flow from issuance and repayment of borrowings was SEK 11.8 b. During the year, dividends of SEK -9.1 (-8.4) b. were paid to shareholders.
11 Ericsson | Fourth quarter and full-year report 2023 | Cash flow |
Table of Contents
Financial position
Dec 31 | Dec 31 | Sep 30 | ||||||||||
SEK b. | 2023 | 2022 | 2023 | |||||||||
Gross cash | 54.7 | 56.2 | 40.5 | |||||||||
- Borrowings, current | 17.7 | 6.0 | 18.8 | |||||||||
- Borrowings, non-current | 29.2 | 26.9 | 20.1 | |||||||||
|
|
|
|
|
| |||||||
Net cash | 7.8 | 23.3 | 1.6 | |||||||||
|
|
|
|
|
| |||||||
Equity | 97.4 | 133.3 | 105.4 | |||||||||
Total assets | 297.0 | 349.5 | 306.3 | |||||||||
Capital turnover (times) | 1.4 | 1.4 | 1.4 | |||||||||
Return on capital employed (%) | -10.7 | % | 14.0 | % | -18.7 | % |
Fourth quarter comments
• | Net cash position was SEK 7.8 (23.3) b. |
• | A EUR 500 million green bond maturing in May 2028 was issued. |
• | Two 7-year loan agreements signed, amounting to USD 380 million. |
Sequentially, gross cash increased by SEK 14.2 b. to SEK 54.7 b. driven by positive Free cash flow before M&A and increased borrowings partly offset by dividends paid. In the quarter, Ericsson signed two 7-year loan agreements, one with the European Investment Bank of USD 273 million and one with the Nordic Investment Bank of USD 107 million. In addition, Ericsson issued a EUR 500 million green bond maturing in May 2028.
Net cash increased sequentially by SEK 6.2 b. to SEK 7.8 b. due to positive Free cash flow after M&A.
Liabilities for post-employment benefits increased sequentially to SEK 26.2 b. from SEK 18.4 b. due to lower discount rates. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the yields of Swedish government bonds. If the discount rate had been based on Swedish covered mortgage bonds, the liabilities for post-employment benefits would have been approximately SEK 14.1 b. (SEK 12.1 b. lower than the reported liabilities.)
Full-year comments
Gross cash was stable YoY at SEK 54.7 (56.2) b. with increased borrowings compensating for negative Free cash flow after M&A. Net cash was SEK 7.8 (23.3) b. Liabilities for post-employment benefits decreased to SEK 26.2 (27.4) b. The Swedish defined benefit obligation (DBO) was calculated using a discount rate based on the yields of Swedish government bonds. If the discount rate had been based on Swedish covered mortgage bonds, the liabilities for post-employment benefits would have been approximately SEK 14.1 b. (SEK 12.1 b. lower than the reported liabilities).
The average maturity of long-term borrowings was 3.7 years as of December 31, 2023, a decrease from 3.8 years 12 months earlier. In 2023, Ericsson established a new revolving credit facility of USD 1.0 b., of which USD 0.4 b. was utilized as of year-end. During the year, Ericsson also increased the borrowings by SEK 2.0 b. under the commercial paper program. Furthermore, Ericsson signed two 7-year loan agreements, one with the European Investment Bank of USD 273 million and one with the Nordic Investment Bank of USD 107 million. In addition, Ericsson issued a EUR 500 million green bond maturing in May 2028. The bond was issued under Ericsson’s Green Financing Framework. The proceeds from the bond and the two bilateral loans will be used to finance parts of Ericsson’s R&D investments in wireless technology between 2023 and 2025 and are linked to the Company’s long-term sustainability targets. Ericsson has an unutilized revolving credit facility of USD 2.0 b., linked to long-term sustainability targets.
Credit ratings and outlooks have been unchanged during the year. Standard & Poor’s (S&P) and Fitch both have a long-term BBB- rating on Ericsson with developing outlook from S&P and a stable outlook with Fitch. Moody’s has a Ba1 rating with stable outlook.
The capital turnover remained stable at 1.4 (1.4) times with decreased net sales offset by lower capital employed due to goodwill impairment related to Vonage. Return on Capital Employed (ROCE) decreased to -10.7% (14.0%) as a result of negative EBIT.
12 Ericsson | Fourth quarter and full-year report 2023 | Financial position |
Table of Contents
Key data points
Market related
The global RAN equipment market is estimated to decline by -4% (-3%) in 2024. North America is expected to grow by 17% (10% to 20%), Europe decline by -2% (0% to -5%) and Mainland China by -7% (-5% to -10%). Source: Dell’Oro Mobile RAN 5-year forecast, Jan 2024. Numbers in parenthesis are from Dell’Oro Mobile RAN Quarterly Report 3Q23, November 2023.
Ericsson related
Net sales
Reported average seasonality last 3 years (2021–2023), %
Q4èQ1 | Q1èQ2 | Q2èQ3 | Q3èQ4 | |||||||||||||
Networks | -25 | % | +8 | % | +1 | % | +19 | % | ||||||||
Cloud Software & Services | -34 | % | +13 | % | +3 | % | +33 | % |
Net sales may show large variations between quarters, including currency changes.
Operating expenses excluding Vonage and restructuring
Reported average seasonality last 3 years (2021–2023), SEK b. For Q1 2024, operating expenses seasonality is expected to be less pronounced.
Q4èQ1 | Q1èQ2 | Q2èQ3 | Q3èQ4 | |||||||||||||
Ericsson Group | +2.6 | -1.6 | +0.7 | -2.4 |
Operating expenses may show large variations between quarters, including currency changes.
Positive numbers = decrease in operating expenses.
Negative numbers = increase in operating expenses.
Amortization of intangible assets
Amortization of intangible assets is expected to continue to be around SEK -0.9 b. per quarter of which approximately SEK -0.8 b. related to segment Enterprise.
Currency exposure
Rule of thumb: A change by 10% of SEK to USD would have an impact of approximately +/-5% on net sales.
Restructuring charges
For 2024, restructuring charges are expected to be about 0.5% - 1% of sales.
Segments
Networks
Gross margin excluding restructuring charges is expected to be within the range of 39-41% in Q1.
Cloud Software and Services
Strategic investments for competitiveness and resilience are expected to remain at current level in Q1, as investments in the 5G portfolio are expected to continue.
13 Ericsson | Fourth quarter and full-year report 2023 | Key data points |
Table of Contents
Parent Company
Income (loss) after financial items January–December 2023, was SEK -0.7 (18.4) b.
At the end of the year, gross cash (cash, cash equivalents plus interest-bearing securities, current and non-current) amounted to SEK 34.9
(41.4) b.
There was a decrease in intercompany lending of SEK 8.8 b. and an increase in intercompany borrowing of
SEK 1.7 b. in the fourth quarter.
The Parent Company has recognized dividends from subsidiaries of SEK 15.7 (0.5) b. in the quarter.
The holding of treasury stock on December 31, 2023, was 14,009,306 Class B shares.
14 Ericsson | Fourth quarter and full-year report 2023 | Parent Company |
Table of Contents
Dividend, AGM, and Annual Report
Dividend proposal
The Board of Directors proposes to the Annual General Meeting a dividend to the shareholders of SEK 2.70 (2.70) per share for the financial year 2023, representing a total dividend of approximately SEK 9.0 (9.0) b. The dividend is proposed to be paid in two installments, SEK 1.35 per share with the record date April 5, 2024, and SEK 1.35 per share with the record date October 2, 2024. Should the Annual General Meeting decide in favor of the proposal, payment of the dividend is expected to be made on April 10, 2024, and on October 7, 2024. The dividend considers this year’s earnings and balance sheet structure, as well as coming years’ business plans and expected economic development.
Ericsson Annual General Meeting
The Annual General Meeting of shareholders will be held on April 3, 2024. Additional information about the Annual General Meeting of shareholders will be made available on Ericsson’s website.
Annual Report
The annual report will be made public and available on the Ericsson website www.ericsson.com in the beginning of March.
15 Ericsson | Fourth quarter and full-year report 2023 | Dividend, AGM and Annual Report |
Table of Contents
Other information
Legal proceedings not involving governmental authorities
On March 3, 2022, Telefonaktiebolaget LM Ericsson and certain officers of Ericsson were named as defendants in a putative class action filed on behalf of purchasers of Ericsson ADS in the United States, in the United States District Court for the Eastern District of New York. An amended complaint was filed on September 9, 2022, which added a former Ericsson officer as a defendant. The amended complaint alleged violations of United States securities laws, in connection with allegedly false and misleading statements principally concerning the Company’s adherence with its compliance and anti-corruption policies and obligations and the conduct of its business in Iraq. On May 24, 2023, the court granted Ericsson’s motion to dismiss and dismissed the case with prejudice, concluding that Ericsson did not violate any disclosure obligation to investors. On June 23, 2023, plaintiff filed a notice of appeal to the United States Court of Appeals for the Second Circuit. All briefing has been submitted and the matter is pending with the Second Circuit court. Ericsson will continue to vigorously defend this matter.
In August 2022, a civil lawsuit was filed in the United States District Court for the District of Columbia against Telefonaktiebolaget LM Ericsson and Ericsson Inc. (collectively, “Ericsson”). The lawsuit was brought by US military service members and employees of US government contractors who were killed or injured in terrorist attacks in Iraq, Afghanistan and Syria from 2005 to 2021, as well as by their family members. The lawsuit asserts claims against Ericsson under the US Anti-Terrorism Act alleging that Ericsson made payments that ultimately aided the terrorist organizations that committed, planned or authorized the attacks. In November 2022, Ericsson filed a motion to dismiss the complaint. On December 20, 2022, plaintiffs filed an amended complaint, which added additional plaintiffs, including a plaintiff injured in Turkey, and also named Ericsson AB (collectively with Ericsson, the “Ericsson corporate defendants”), CEO Börje Ekholm and a former employee (who has not been served with process) as additional defendants and also asserted additional allegations and claims. In March 2023, the Ericsson corporate defendants and Mr. Ekholm filed motions to dismiss the amended complaint. Plaintiffs filed their oppositions to defendants’ motions to dismiss the amended complaint in June 2023, and defendants filed reply briefs in support of their motions to dismiss in July 2023. All briefing has been submitted and the matter is pending with the District Court. All defendants will continue to vigorously defend this matter.
Beginning on August 4, 2023, a number of civil lawsuits have been filed against Telefonaktiebolaget LM Ericsson in Solna District Court, Sweden. As of January 23, 2024, 79 claimants have filed suit, which are coordinated and financed by a UK-based litigation funder. The claimants consist of a group of non-Swedish funds and financial institutions that allegedly are or have been shareholders of the Company. Their damages claims are primarily based on alleged inadequate disclosure of the contents of the Company’s 2019 Iraq internal investigation report. Ericsson intends to file its statement of defense on February 16, 2024 and intends to vigorously defend itself against the claims.
On October 11, 2023, Ericsson commenced patent infringement proceedings against Lenovo (Beijing) Limited (“Lenovo”) in the Eastern District of North Carolina (EDNC). In the course of the proceedings, Ericsson seeks declarations that Lenovo has lost its right to enforce Ericsson’s FRAND contracts as third-party beneficiaries and that Ericsson has complied with its FRAND commitments and with the ETSI IPR Policy. Ericsson also requests that, if Ericsson’s license offer to Lenovo is determined to be un-FRAND, that the EDNC declare a FRAND rate for a global cross-license between Ericsson and Lenovo
covering Standard Essential Patents. Ericsson has also commenced patent infringement proceedings against Lenovo at the United States International Trade Commission and in other jurisdictions (Brazil and Colombia). In return, Lenovo has filed lawsuits against Ericsson in the High Court of Justice in the UK and has applied for an anti-suit injunction in the EDNC.
In addition to the proceedings discussed above, the Company is, and in the future may be, involved in various other regulatory investigations, lawsuits, claims and proceedings incidental to the ordinary course of business.
Legal proceedings involving governmental authorities
In February 2022, the Company publicly disclosed that an internal investigation in 2019 included a review of the conduct of Ericsson employees, vendors and suppliers in Iraq during the period between 2011 to 2019. The investigation found serious breaches of compliance rules and the Company’s Code of Business Ethics and identified evidence of corruption-related misconduct and other serious violations, including payments to intermediaries and the potential use of alternate transport routes in connection with circumventing Iraqi Customs at a time when terrorist organizations, including ISIS, controlled some transport routes. The investigation also identified payment schemes and cash transactions that potentially created the risk of money laundering. The investigators could not determine the ultimate recipients of any payments, nor identify that any Ericsson employee was directly involved in financing terrorist organizations.
In March 2022, the DOJ informed Ericsson it had determined that, before entering into the DPA, the Company provided insufficient information to the DOJ about the Company’s 2019 internal investigation into conduct in Iraq. The DOJ also determined that the Company breached the DPA by failing to inform the DOJ about the investigation after entering into the DPA.
In June 2022, the SEC informed Ericsson that it opened an investigation concerning matters described in the Company’s 2019 Iraq investigation report. Under Ericsson’s consent judgment with the SEC, Ericsson is permanently enjoined from violating the antibribery, books and records and internal controls provisions in the Foreign Corrupt Practices Act (FCPA). Violations of the injunction, consent judgment or securities law could subject the Company to new civil and criminal penalties as well as new enforcement actions.
On March 2, 2023, the Company reached a resolution (Plea Agreement) with the DOJ regarding the non-criminal breaches of the DPA. Under the Plea Agreement, Ericsson pleaded guilty to previously deferred charges relating to conduct that occurred prior to 2017. In addition, Ericsson agreed to pay a fine of USD 206,728,848. The entry of the Plea Agreement brought the DPA to an end. The Company’s internal investigation and its cooperation with authorities in relation to the matters discussed in the 2019 internal Iraq investigation report remain open and ongoing and are not covered by the Plea Agreement.
On May 24, 2023, Nasdaq Stockholm concluded its review of Ericsson’s public disclosure obligations concerning its 2019 Iraq internal investigation report and dismissed the matter, stating that Nasdaq could not conclude that a reasonable investor would have used the content of the report as part of an investment decision. After having reviewed Nasdaq Stockholm’s investigation and conclusion, on June 8, 2023, the Swedish Financial Supervisory Authority also decided to formally close its review of Ericsson’s prior disclosures relating to the 2019 Iraq internal investigation report.
16 Ericsson | Fourth quarter and full-year report 2023 | Other information |
Table of Contents
As previously disclosed, the Company’s 2019 internal Iraq investigation did not conclude that Ericsson made or was responsible for any payments to any terrorist organization. With respect to the matters discussed in the 2019 internal Iraq investigation report, the Company continues to investigate these matters and related matters in full cooperation with the DOJ and the SEC. This includes a comprehensive review of the 2019 investigation and further investigation of matters relating to historical operations in Iraq. As additional information continues to be identified and evaluated during the ongoing investigation, we expect that we will continue our cooperation with the DOJ and the SEC and that we will be unable to make conclusive determinations on the outcome of any such investigation until all pertinent information has been identified. The scope and duration of the remaining process are currently uncertain.
As part of its defense to a now settled patent infringement lawsuit filed by Ericsson in 2013 in the Delhi High Court against Indian handset company Micromax, Micromax filed a complaint against Ericsson with the Competition Commission of India (CCI). The CCI decided to refer the case to the Director General’s Office for an in-depth investigation. The CCI opened similar investigations against Ericsson in January 2014 based on claims made by Intex Technologies (India) Limited and, in 2015, based on a now settled claim from iBall. Ericsson has challenged CCI’s jurisdiction in these cases before the Delhi High Court. On July 13, 2023, the Division Bench of the Delhi High Court found that in this instance the CCI has no power to conduct the pending investigations against Ericsson. This order may be further appealed to Supreme Court of India by the CCI.
PRESS RELEASES
Nov 30, 2023 | Changes to Ericsson’s nomination committee
Effective November 30, 2023, Bengt Kjell, AB Industrivärden, will replace Karl Åberg, AB Industrivärden, in Ericsson’s (NASDAQ:ERIC) Nomination Committee.
The Nomination Committee now consists of:
• | Johan Forssell, Investor AB |
• | Bengt Kjell, AB Industrivärden |
• | Anders Oscarsson, AMF Tjänstepension & AMF Fonder |
• | Christer Gardell, Cevian Capital Partners Limited |
• | Jan Carlson, the Chair of the Board of Directors. |
Johan Forssell is the Chair of the Nomination Committee.
https://www.ericsson.com/en/press-releases/
2023/11/changes-to-ericssons-nomination-committee
17 Ericsson | Fourth quarter and full-year report 2023 | 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 material group risks are regularly assessed and reviewed by executives as required by Ericsson’s Material Group Risk Protocol 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 and strategic direction as well as to short-term objectives. Risk factors and uncertainties of relevance to Ericsson are described in the Annual Report 2022 and in the Annual Report on Form 20-F 2022 (in the following, the “Annual Report 2022”), as well as in Ericsson’s quarterly reports in 2023. 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 risks described below. See also the risks set out in the section titled “Forward-Looking Statements.”
Ericsson’s business depends upon the continued growth of mobile communications and the success of Ericsson’s existing and targeted customer base. If growth slows or if the Company’s customers do not maintain or grow in relevance in the digital value chain, or if Ericsson’s products and/or services are not successful, Ericsson’s customers’ investment in networks may slow or stop, harming the Company’s business and operating results.
As described in the Annual Report 2022, including in the risk factor 1.3, a substantial portion of Ericsson’s business depends on the continued growth of mobile communications in terms of both the number of subscriptions and usage per subscriber, which in turn drives the continued deployment and expansion of network systems by Ericsson’s customers. If communications service providers fail to increase the number of subscribers and/or usage does not increase, or if they fail to utilize opportunities from technological evolution, Ericsson’s business and operating results could be materially adversely affected. Also, if communications service providers fail to monetize services, fail to adapt their business models or experience a decline in their revenues or profitability, their willingness to further invest in their existing and new networks may decrease, which will reduce their demand for Ericsson’s products and services and have an adverse effect on the Company’s business, operating results, and financial condition.
During 2023, macroeconomic conditions, including inflationary pressures, were more challenging than expected, which has led to reduced volumes and pace of investment by many of Ericsson’s customers, and the timing and magnitude of market recovery, particularly in North America, has been slower than expected. There can be no assurance as to when levels of market investment will recover. Traffic development on cellular networks could be further affected if more traffic is offloaded to WI-FI networks, which would have profound effects on operator voice/broadband/SMS revenues with possible reduced capital expenses consequences. Ericsson’s strategy depends on the development and success of global standards. This could be adversely affected in the future by industry forces more interested in de-facto standards or geopolitical forces leading to standards fragmentation and increased difficulties of creating economies of scale.
Fixed and mobile networks converge, and new technologies, such as IP and broadband, enable communications service providers to deliver services in both fixed and mobile networks. Ericsson is dependent on the uptake of such services and the outcome of regulatory and standardization activities such as spectrum allocation. If delays in uptake, standardization or regulation occur, this could adversely affect Ericsson’s business, operating results, and financial condition.
Ericsson’s future growth is partly dependent on Enterprises in several industries digitalizing and increasingly utilizing cellular wireless solutions (including Private Cellular Networks), as well as increasingly utilizing and offering automated services, which are growth drivers for the Ericsson Global Network Platform (“GNP”). Ericsson can provide no assurance regarding the timing or magnitude of growth of its GNP. Competing technologies such as Wi-Fi, macroeconomic headwinds, and customers’ unwillingness to pay for services might slow down this development. Legal and regulatory restrictions such as Net neutrality can slow down or restrict global expansion of this business. Furthermore, access to devices, sensors, and spectrum might also impact the pace and ability for enterprises to adopt cellular wireless technology.
Ericsson engages in acquisitions and divestments that may be disruptive and require the Company to incur significant expenses. Ericsson may not be successful in consummating such transactions, protecting the value of acquisitions during integration or following consummation, creating or maintaining the value anticipated with the acquisition, or succeeding in execution of the strategic objectives for the acquisition.
As described in the Annual Report 2022, including in the risk factor 1.7, Ericsson makes acquisitions to obtain various benefits, such as reduced time-to-market, access to technology and competence, increased scale or a broadened product portfolio or customer base. Recent examples are the acquisitions of Vonage and Cradlepoint. Acquisitions could result in the incurrence of material contingent liabilities, an increase in amortization expenses related to intangible assets or an impairment of goodwill, which could have a material adverse effect upon Ericsson’s business, operating results, financial condition and liquidity. Additionally, Ericsson has recorded impairment charges related to acquisitions, such as the non-cash impairment charge of SEK -31.9 billion in the third quarter of 2023 related to goodwill and other intangible assets attributed to Vonage and may record additional impairment charges in future. Risks Ericsson could face with respect to acquisitions include:
• | Inability to consummate acquisitions that it considers important to the future of its business |
• | Underperformance of the acquired company, failure to realize expected benefits and synergies and/or inability to deliver on anticipated business plans to the extent or in the timeframe anticipated |
• | Insufficiencies of technologies and products acquired, such as unexpected quality problems |
• | Difficulties in the full or partial integration of the operations, technologies, products and personnel of the acquired company to materialize expected synergies or to maintain independent operations in these companies at a risk appropriate level |
• | Risks of entering markets in which the Company has no or limited prior experience, or in creating such market or eco-system as envisioned in e.g. the Vonage and Cradlepoint examples |
• | Potential loss or changes of key employees |
• | Diversion of management’s attention away from other business concerns |
18 Ericsson | Fourth quarter and full-year report 2023 | Risk factors |
Table of Contents
• | Risks and expenses of any disclosed, undisclosed or potential legal liabilities of or other adverse financial impacts on the acquired company, including failure to comply with laws or regulations or other requirements or conditions, e.g. from foreign direct investment reviews and decisions such as the Committee on Foreign Investment in the United States (CFIUS) review process. See also the risk factor entitled “Ericsson is subject to certain US and other anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations and other regulatory requirements or conditions imposed as a result of foreign direct investment reviews and decisions. Ericsson may be subject to further adverse consequences under the Plea Agreement with the United States Department of Justice (DOJ) and the injunction issued in connection with the 2019 settlement with the U.S. Securities and Exchange Commission (SEC), as well as other investigations by governmental authorities” for additional information and risks related to CFIUS. |
From time-to-time Ericsson also divests parts of Ericsson’s business to optimize the Company’s product portfolio or operations. Any decision to dispose of or otherwise exit businesses may result in the recording of special charges, such as workforce reduction costs and industry- and technology-related write-downs. Risks Ericsson could face with respect to divestments include:
• | Difficulties in the separation of the operations, technologies, products and personnel of the business divested |
• | Potential loss of key employees |
• | Impairment losses or write-downs of the carrying value of the relevant assets |
• | Expenses of any undisclosed or potential legal liabilities of the business divested. |
The risks associated with acquisitions and divestments could have a material adverse effect upon Ericsson’s business, operating results, financial condition and liquidity.
Ericsson is subject to certain US and other anti-corruption (including anti-bribery, anti-money-laundering, sanctions, terror finance and anti-terrorism) laws, rules and regulations and other regulatory requirements or conditions imposed as a result of foreign direct investment reviews and decisions. Ericsson may be subject to further adverse consequences under the Plea Agreement with the United States Department of Justice (DOJ) and the injunction issued in connection with the 2019 settlement with the U.S. Securities and Exchange Commission (SEC), as well as other investigations by governmental authorities.
As described in the Annual Report 2022, including in the risk factor 3.3, Ericsson is, from time to time, involved in legal proceedings and regulatory investigations, and is subject to certain other regulatory requirements, conditions and agreements. If any of these lawsuits or legal proceedings are determined unfavorably against the Company or it is determined that the Company is not in compliance with any of these regulatory requirements, conditions or agreements, this could result in the Company being required to pay substantial damages, fines and/or penalties, lead to public scrutiny, negative reputational consequences, or becoming subject to additional enforcement actions, regulatory review and/or adverse decisions. Ericsson could face potential debarment from government contracting in the United States and elsewhere, reputational risk, as well as potential counterparty reluctance to continue business relationships. In addition, these ongoing matters and investigations require significant resources and costs for investigation, compliance and remediation that could lead to adverse financial and reputational consequences.
For example, in connection with the acquisition of Vonage by Ericsson, and as a condition to CFIUS’s approval of the acquisition, Vonage, Ericsson and the DOJ and the US Department of the Treasury, in their capacity as CFIUS monitoring agencies (CMAs) entered into a National Security Agreement (NSA) in July 2022 which imposes restrictions on access to certain types of sensitive data, equipment and systems.
Vonage and Ericsson are engaged and cooperating with the CMAs in relation to ongoing compliance with the NSA restrictions, related remediation efforts to address concerns raised by the CMAs regarding such access, and with the CMAs’ requests for information. The ongoing compliance efforts and related remediation may adversely affect the Vonage business, including changes required to business structure and additional compliance costs. In addition, violations of a CFIUS mitigation agreement, such as the NSA, can result in an enforcement action imposing monetary penalties or other remedies.
In addition, as previously reported, the Company reached a resolution (Plea Agreement) in March 2023 with the DOJ regarding the non-criminal breaches of its DPA. Under the Plea Agreement, Ericsson pleaded guilty to previously deferred charges relating to conduct prior to 2017. In addition, Ericsson agreed to pay a fine of USD 206,728,848. The entry of the Plea Agreement brought the DPA to an end. As set forth in the Plea Agreement, Ericsson has certain continuing obligations through June 2024, including cooperation, reporting evidence or allegations of potential Foreign Corrupt Practices Act (FCPA) violations, continuing to engage an independent compliance monitor and continuing to improve its compliance program and internal controls.
The Company’s internal investigation and its cooperation with authorities in relation to the matters discussed in the 2019 internal Iraq investigation report remain open and ongoing and are not covered by the Plea Agreement. With respect to the matters described in the 2019 internal Iraq investigation report, the Company continues to thoroughly investigate the matters in full cooperation with the DOJ and the SEC.
As previously disclosed, the Company’s 2019 internal Iraq investigation did not conclude that Ericsson made or was responsible for any payments to any terrorist organization and significant further investigation by the Company over the course of 2022 and 2023 has not altered this conclusion. If Ericsson fails to meet its continuing obligations and is found to have breached the Plea Agreement, the Company could face further adverse consequences, including additional costs and liability resulting from ongoing compliance liabilities with the Plea Agreement and extended monitorship, including prosecution for additional federal criminal violations, as well as other investigations by governmental authorities.
Also, in April 2019, Ericsson was informed by China’s State Administration for Market Regulations (SAMR) Anti-monopoly bureau that SAMR has initiated an investigation into Ericsson’s patent licensing practices in China. Ericsson is cooperating with the investigation, which is still in a fact-finding phase. The next steps include continued fact-finding and meetings with SAMR in order to facilitate the authority’s assessment and conclusions. In case of adverse findings, SAMR has the power to impose behavioral and financial remedies, which may have material adverse effects on Ericsson’s business, financial condition and operating results.
For additional information regarding certain of the legal proceedings and inquiries in which Ericsson is involved, see “Legal proceedings” in the Board of Directors’ Report in the 2022 Annual Report.
Ericsson may be found non-compliant with privacy, security and data localization regulations as well as corresponding contractual obligations and may be subject to regulatory penalties and/or breach of contract claims.
As described in the Annual Report 2022, including in the risk factor 3.5, we and certain of our third-party providers receive, store, handle, transmit, use and otherwise process proprietary information belonging to the Company’s business and information about actual and prospective customers, end users, employees and service providers, including personal information (collectively, “Confidential Information”). More stringent privacy, security and data localization
19 Ericsson | Fourth quarter and full-year report 2023 | Risk factors |
Table of Contents
regulations are developing at a rapid pace in many countries and markets in which Ericsson operates, including the General Data Protection Regulation (EU/UK), and national privacy regimes in India, China and some states of the United States (such as the California Consumer Privacy Act and similar laws in other states). These regulations require us to, among other things, notify individuals about how personal information is used and provide individuals certain rights with respect to such information, including rights to access, correct and delete such information and to opt-out of certain uses and disclosures of such information.
We are also subject to contractual obligations to our customers and third parties relating to privacy, security and our use of data generally, which, amongst other things, requires us to ensure appropriate security and limit our use of customer data, including personal information. While we strive to comply with applicable privacy, security and data localization regulations and our contractual obligations, the complexity, uncertainty, pace of implementation of new laws and contradictions in local and regional privacy, security and data localization regulations may mean that Ericsson is found to be non-compliant with these requirements or our contractual obligations, and subject to penalties and breach of contract claims, along with potential damage to Ericsson’s brand and reputation. We continue to periodically review our privacy and cybersecurity compliance across our global operations to comply with these varied global and ever-changing requirements, which may require significant investments and resources. For example, as part of this review cycle, we are reviewing data management in connection with our customer support function and are in the process of identifying and
implementing certain changes, for example, changes to data access and amendments to customer contracts and policies and procedures. Due to the diverse nature worldwide of privacy, security and data localization regulations, any single incidence of non-compliance, or serious breach of confidentiality or disruption of secure operations, by Ericsson may lead to regulatory agencies in various jurisdictions levelling separate penalties or judgments against Ericsson. Due to the nature of Ericsson’s business as often involving telecommunications and critical infrastructure, and the amount of personal information of which Ericsson is the controller or processor, such an event could have far-ranging consequences, such as orders to change our operations or cease processing personal information, even if it was accidental or caused by a third party outside of the control of Ericsson. This could include large fines, as well as significant damage claims and losing trust from customers, end users and employees, which may have material adverse effects on Ericsson’s business, reputation, financial condition and operating results and may require us to change our business practices and potentially the services, features, integrations and other capabilities of our offerings.
Stockholm, January 23, 2024
Telefonaktiebolaget LM Ericsson (publ)
The Board of Directors
Corporate Reg. No. 556016-0680
Date for next report: April 16, 2024
20 Ericsson | Fourth quarter and full-year report 2023 | Risk factors |
Table of Contents
Editor’s note
Press briefing and live webcast
Ericsson invites media, investors and analysts to a conference call on January 23, 2024, starting at 9:00 am CET.
Live audio webcast of the conference call as well as supporting slides will be available at:
www.ericsson.com/investors and
www.ericsson.com/press
Replay of the conference call will be available approximately one hour after the call has ended and will remain available for seven days.
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
Alan Ganson, Director,
Investor Relations
Phone: +46 70 267 27 30
E-mail: alan.ganson@ericsson.com
Media
Ralf Bagner, Head of Media Relations
Phone: +46 76 128 47 89
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
21 Ericsson | Fourth quarter and full-year report 2023 | Editor’s note |
Table of Contents
Forward-looking statements
This report includes forward-looking statements. All statements other than statements of historical fact are forward-looking statements. The words “believe”, “expect”, “anticipate”, “intend”, “likely”, “may”, “could”, “plan”, “estimate”, “forecast”, “will”, “should”, “would”, “predict”, “aim”, “seek”, “potential”, “target”, “might”, “continue”, and similar words or expressions are used to identify forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking statements, including, in particular the following:
• | Potential material additional costs and liability resulting from our ongoing compliance with the terms of the Plea Agreement with the DOJ and extended monitorship |
• | Potential to become a target for public scrutiny as a result of entering into the Plea Agreement with the DOJ, which could damage our reputation and materially and adversely affect our business and prospects |
• | Risks resulting from entering into the Plea Agreement, including potential debarment from government contracting in the United States and elsewhere, reputational risk, as well as potential counterparty reluctance to continue business relationships |
• | Potential material additional liability resulting from past conduct, including allegations of past conduct that remains unresolved or unknown in multiple jurisdictions including Iraq, which remains the subject of ongoing investigations by Ericsson and US governmental authorities |
• | Risks related to internal controls and governance, including the potential to incur material liability in connection with internal controls surrounding payments made to third parties in connection with past conduct in multiple jurisdictions including Iraq which remains the subject of ongoing investigations by Ericsson and US governmental authorities |
• | The risk that the ongoing investigations by Ericsson and US governmental authorities result in a conclusion by Ericsson or US governmental authorities that the Company’s past conduct included making or having responsibility for making payments to a terrorist organization or other improper payments, which could lead to material additional liability |
• | Our goals, strategies, planning assumptions and operational or financial performance expectations |
• | Macroeconomic conditions, including inflationary pressures and effects on customer investments, market recovery and growth |
• | Ongoing geopolitical and trade uncertainty, including challenging global economic conditions, market trends and pandemics such as COVID-19 |
• | Industry trends, future characteristics and development of the markets in which we operate |
• | Our ability to comply with legal and regulatory requirements internationally |
• | Risks related to cybersecurity and privacy |
• | 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 |
• | Our ability to deliver on future plans and achieve future growth |
• | The expected operational or financial performance of strategic cooperation activities and joint ventures |
• | Risks related to acquisitions and divestments, including our ability to successfully consummate such transactions, protect the value of acquisitions during integration, or achieve the value anticipated with an acquisition |
• | Trends related to our industry, including our regulatory environment, competition and customer structure |
• | Other factors included in our filings with the U.S. Securities and Exchange Commission (the “SEC”), including the factors described throughout this report, included in the section Risk Factors, and in “Risk Factors” in the Annual Report 2022, as updated by subsequent reports filed with the SEC. |
These forward-looking statements also represent our estimates, assumptions and expectations only as of the date that they were made, and to the extent they represent third-party data, we have not undertaken to independently verify such third-party data and do not intend to do so. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements and are urged to carefully review and consider the various disclosures made in this report and in other documents we file from time to time with our regulators that disclose risks and uncertainties that may affect our business. 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, except as required by applicable law or stock exchange regulations.
.
22 Ericsson | Fourth quarter and full-year report 2023 | Forward-looking statements |
Table of Contents
Auditors’ Review Report
Introduction
We have reviewed the condensed interim financial information (year-end report) of Telefonaktiebolaget LM Ericsson (publ.) as of December 31, 2023, and the twelve months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of the year-end report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this year-end report based on our review.
Scope of review
We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity.
A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the year-end report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, January 23, 2024
Deloitte AB
Thomas Strömberg
Authorized Public Accountant
23 Ericsson | Fourth quarter and full-year report 2023 | Auditors’ Review Report |
Table of Contents
Financial statements and other information
24 Ericsson | Fourth quarter and full-year report 2023 | Financial statements and other information |
Table of Contents
Financial statements (unaudited)
Condensed consolidated income statement
Q4 | Jan-Dec | |||||||||||||||||||||||
SEK million | Note | 2023 | 2022 | Change | 2023 | 2022 | ||||||||||||||||||
Net sales | 2 | 71,881 | 85,980 | -16 | % | 263,351 | 271,546 | |||||||||||||||||
Cost of sales | -43,276 | -50,411 | -14 | % | -161,749 | -158,251 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Gross income | 2 | 28,605 | 35,569 | -20 | % | 101,602 | 113,295 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Research and development expenses | -13,018 | -13,217 | -2 | % | -50,664 | -47,298 | ||||||||||||||||||
Selling and administrative expenses | -9,877 | -11,791 | -16 | % | -39,255 | -35,692 | ||||||||||||||||||
Impairment losses on trade receivables | 209 | 99 | 111 | % | -268 | -40 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Operating expenses | -22,686 | -24,909 | -9 | % | -90,187 | -83,030 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other operating income and expenses 1) | -125 | -2,824 | -96 | % | -31,865 | -3,262 | ||||||||||||||||||
Share of earnings of JV and associated companies | 54 | 17 | 218 | % | 124 | 17 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Earnings before financial items and income tax (EBIT) | 2 | 5,848 | 7,853 | -26 | % | -20,326 | 27,020 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Financial income and expenses, net | 3 | -938 | -474 | 98 | % | -2,993 | -2,411 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Income after financial items | 4,910 | 7,379 | -33 | % | -23,319 | 24,609 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Income tax | -1,501 | -1,189 | 26 | % | -2,785 | -5,497 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) | 3,409 | 6,190 | -45 | % | -26,104 | 19,112 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Net income (loss) attributable to: | ||||||||||||||||||||||||
Owners of the Parent Company | 3,394 | 6,066 | -26,446 | 18,724 | ||||||||||||||||||||
Non-controlling interests | 15 | 124 | 342 | 388 | ||||||||||||||||||||
Other information | ||||||||||||||||||||||||
Average number of shares, basic (million) | 8 | 3,330 | 3,330 | 3,330 | 3,330 | |||||||||||||||||||
Earnings (loss) per share, basic (SEK) 2) | 8 | 1.02 | 1.82 | -7.94 | 5.62 | |||||||||||||||||||
Earnings (loss) per share, diluted (SEK) 3) | 8 | 1.02 | 1.82 | -7.94 | 5.62 |
1) | Jan-Dec 2023 includes write-down of goodwill of SEK -31.9 billion. Jan-Dec 2022 includes a provision of SEK -2.3 billion in relation to a potential DPA breach resolution with DOJ, including estimated expenses for extended monitorship. |
2) | Based on net income attributable to owners of the Parent Company. |
3) | Potential ordinary shares are not considered when their conversion to ordinary shares would improve earnings per share. |
Condensed statement of comprehensive income (loss)
Q4 | Jan-Dec | |||||||||||||||
SEK million | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income (loss) | 3,409 | 6,190 | -26,104 | 19,112 | ||||||||||||
Other comprehensive income | ||||||||||||||||
Items that will not be reclassified to profit or loss | ||||||||||||||||
Remeasurements of defined benefits pension plans incl. asset ceiling | -8,460 | -3,596 | 905 | 10,669 | ||||||||||||
Revaluation of borrowings due to change in credit risk | -225 | -661 | -667 | 1,030 | ||||||||||||
Cash flow hedge reserve | ||||||||||||||||
Gains/losses arising during the period | — | — | — | 3,703 | ||||||||||||
Transfer to goodwill | — | — | — | -3,677 | ||||||||||||
Tax on items that will not be reclassified to profit or loss | 1,505 | 57 | -114 | -3,067 | ||||||||||||
Items that have been or may be reclassified to profit or loss | ||||||||||||||||
Cash flow hedge reserve | ||||||||||||||||
Gains/losses arising during the period | 3,258 | 2,189 | 754 | -701 | ||||||||||||
Reclassification adjustments on gains/losses included in profit or loss | 400 | 153 | 1,090 | 280 | ||||||||||||
Translation reserves | ||||||||||||||||
Changes in translation reserves | -7,126 | -7,301 | -2,375 | 7,130 | ||||||||||||
Reclassification to profit or loss | -2 | -55 | 59 | -85 | ||||||||||||
Share of other comprehensive income of JV and associated companies | -39 | -24 | -10 | 49 | ||||||||||||
Tax on items that have been or may be reclassified to profit or loss | -754 | -482 | -380 | 87 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total other comprehensive income, net of tax | -11,443 | -9,720 | -738 | 15,418 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total comprehensive income (loss) | -8,034 | -3,530 | -26,842 | 34,530 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total comprehensive income (loss) attributable to: | ||||||||||||||||
Owners of the Parent Company | -8,134 | -3,816 | -27,233 | 34,274 | ||||||||||||
Non-controlling interests | 100 | 286 | 391 | 256 |
25 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed consolidated balance sheet
Dec 31 | Dec 31 | |||||||||||
SEK million | Note | 2023 | 2022 | |||||||||
Assets | ||||||||||||
Non-current assets | ||||||||||||
Intangible assets | ||||||||||||
Capitalized development expenses | 4,678 | 3,705 | ||||||||||
Goodwill | 52,944 | 84,570 | ||||||||||
Customer relationships, IPR and other intangible assets | 22,667 | 26,340 | ||||||||||
Property, plant and equipment | 12,195 | 14,236 | ||||||||||
Right-of-use assets | 6,320 | 7,870 | ||||||||||
Financial assets | ||||||||||||
Equity in JV and associated companies | 1,150 | 1,127 | ||||||||||
Other investments in shares and participations | 5 | 2,091 | 2,074 | |||||||||
Customer finance, non-current | 5 | 1,347 | 415 | |||||||||
Interest-bearing securities, non-current | 5 | 9,931 | 9,164 | |||||||||
Other financial assets, non-current | 5 | 6,350 | 6,839 | |||||||||
Deferred tax assets | 22,375 | 19,394 | ||||||||||
|
|
|
| |||||||||
142,048 | 175,734 | |||||||||||
|
|
|
| |||||||||
Current assets | ||||||||||||
Inventories | 36,073 | 45,846 | ||||||||||
Contract assets | 7,999 | 9,843 | ||||||||||
Trade receivables | 5 | 42,215 | 48,413 | |||||||||
Customer finance, current | 5 | 5,570 | 4,955 | |||||||||
Current tax assets | 6,395 | 7,973 | ||||||||||
Other current receivables | 5 | 11,962 | 9,688 | |||||||||
Interest-bearing securities, current | 5 | 9,584 | 8,736 | |||||||||
Cash and cash equivalents | 5 | 35,190 | 38,349 | |||||||||
|
|
|
| |||||||||
154,988 | 173,803 | |||||||||||
|
|
|
| |||||||||
Total assets | 297,036 | 349,537 | ||||||||||
|
|
|
| |||||||||
Equity and liabilities | ||||||||||||
Equity | ||||||||||||
Stockholders’ equity | 98,673 | 134,814 | ||||||||||
Non-controlling interest in equity of subsidiaries | -1,265 | -1,510 | ||||||||||
|
|
|
| |||||||||
97,408 | 133,304 | |||||||||||
|
|
|
| |||||||||
Non-current liabilities | ||||||||||||
Post-employment benefits | 26,229 | 27,361 | ||||||||||
Provisions, non-current | 4 | 4,927 | 3,959 | |||||||||
Deferred tax liabilities | 3,880 | 4,784 | ||||||||||
Borrowings, non-current | 5 | 29,218 | 26,946 | |||||||||
Lease liabilities, non-current | 5,220 | 6,818 | ||||||||||
Other non-current liabilities | 755 | 745 | ||||||||||
|
|
|
| |||||||||
70,229 | 70,613 | |||||||||||
|
|
|
| |||||||||
Current liabilities | ||||||||||||
Provisions, current | 4 | 6,779 | 7,629 | |||||||||
Borrowings, current | 5 | 17,655 | 5,984 | |||||||||
Lease liabilities, current | 2,235 | 2,486 | ||||||||||
Contract liabilities | 34,416 | 42,251 | ||||||||||
Trade payables | 5 | 27,768 | 38,437 | |||||||||
Current tax liabilities | 3,561 | 2,640 | ||||||||||
Other current liabilities | 5 | 36,985 | 46,193 | |||||||||
|
|
|
| |||||||||
129,399 | 145,620 | |||||||||||
|
|
|
| |||||||||
Total equity and liabilities | 297,036 | 349,537 | ||||||||||
|
|
|
|
26 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed consolidated statement of cash flows
Q4 | Jan-Dec | |||||||||||||||||||
SEK million | Note | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
Operating activities | ||||||||||||||||||||
Net income (loss) | 3,409 | 6,190 | -26,104 | 19,112 | ||||||||||||||||
Adjustments for | ||||||||||||||||||||
Taxes | 1,302 | 1,304 | 3,189 | 5,383 | ||||||||||||||||
Earnings/ dividends in JV and associated companies | -46 | -24 | -58 | 55 | ||||||||||||||||
Depreciation, amortization and impairment losses | 6 | 3,083 | 3,535 | 43,889 | 10,543 | |||||||||||||||
Other | 1,417 | 432 | 4,690 | 1,657 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
9,165 | 11,437 | 25,606 | 36,750 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Changes in operating net assets | ||||||||||||||||||||
Inventories | 6,884 | 5,898 | 9,304 | -7,740 | ||||||||||||||||
Customer finance, current and non-current | 5,720 | -871 | -1,708 | -1,732 | ||||||||||||||||
Trade receivables and contract assets | -2,089 | -4,080 | 6,333 | 4,766 | ||||||||||||||||
Trade payables | -966 | -131 | -10,037 | -1,995 | ||||||||||||||||
Provisions and post-employment benefits | 1,051 | 1,749 | 1,308 | 2,339 | ||||||||||||||||
Contract liabilities | -4,821 | 2,878 | -7,088 | 5,794 | ||||||||||||||||
Other operating assets and liabilities, net | 801 | 5,235 | -10,111 | -813 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
6,580 | 10,678 | -11,999 | 619 | |||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Interest received | 256 | 127 | 1,218 | 344 | ||||||||||||||||
Interest paid | -543 | -406 | -2,280 | -1,250 | ||||||||||||||||
Taxes paid | -976 | -1,941 | -5,368 | -5,600 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Cash flow from operating activities | 14,482 | 19,895 | 7,177 | 30,863 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Investing activities | ||||||||||||||||||||
Investments in property, plant and equipment | 6 | -720 | -1,502 | -3,297 | -4,477 | |||||||||||||||
Sales of property, plant and equipment | 37 | 76 | 163 | 249 | ||||||||||||||||
Acquisitions/divestments of subsidiaries and other operations, net | -225 | -445 | -2,140 | -51,688 | ||||||||||||||||
Product development | 6 | -551 | -717 | -2,173 | -1,720 | |||||||||||||||
Purchase of interest-bearing securities | -11,318 | -12,108 | -15,304 | -13,582 | ||||||||||||||||
Sales of interest-bearing securities | 1,116 | 789 | 11,739 | 40,541 | ||||||||||||||||
Other investing activities | 6 | 4,854 | 2,012 | 2,299 | -3,720 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Cash flow from investing activities | -6,807 | -11,895 | -8,713 | -34,397 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Financing activities | ||||||||||||||||||||
Proceeds from issuance of borrowings | 11,578 | 1,301 | 19,728 | 10,755 | ||||||||||||||||
Repayment of borrowings | -1,666 | -121 | -7,884 | -16,029 | ||||||||||||||||
Dividends paid | -4,504 | -4,172 | -9,104 | -8,415 | ||||||||||||||||
Repayment of lease liabilities | -783 | -765 | -2,857 | -2,593 | ||||||||||||||||
Other financing activities | -899 | -183 | 1,124 | 352 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Cash flow from financing activities | 3,726 | -3,940 | 1,007 | -15,930 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Effect of exchange rate changes on cash | -3,111 | -2,460 | -2,630 | 3,763 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Net change in cash and cash equivalents | 8,290 | 1,600 | -3,159 | -15,701 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Cash and cash equivalents, beginning of period | 26,900 | 36,749 | 38,349 | 54,050 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Cash and cash equivalents, end of period | 35,190 | 38,349 | 35,190 | 38,349 | ||||||||||||||||
|
|
|
|
|
|
|
|
27 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed consolidated statement of changes in equity
Jan-Dec | ||||||||
SEK million | 2023 | 2022 | ||||||
Opening balance | 133,304 | 107,099 | ||||||
Total comprehensive income (loss) | -26,842 | 34,530 | ||||||
Sale/repurchase of own shares | -50 | — | ||||||
Share issue, net | 50 | — | ||||||
Long-term variable compensation plans | 82 | 89 | ||||||
Dividends to shareholders | -9,104 | -8,415 | ||||||
Transactions with non-controling interests | -32 | 1 | ||||||
|
|
|
| |||||
Closing balance | 97,408 | 133,304 | ||||||
|
|
|
|
Condensed consolidated income statement – isolated quarters
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Cost of sales | -43,276 | -39,745 | -40,343 | -38,385 | -50,411 | -39,905 | -36,163 | -31,772 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Gross income | 28,605 | 24,728 | 24,101 | 24,168 | 35,569 | 28,135 | 26,302 | 23,289 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Research and development expenses | -13,018 | -11,897 | -13,777 | -11,972 | -13,217 | -11,880 | -11,496 | -10,705 | ||||||||||||||||||||||||
Selling and administrative expenses | -9,877 | -9,617 | -10,643 | -9,118 | -11,791 | -9,441 | -7,872 | -6,588 | ||||||||||||||||||||||||
Impairment losses on trade receivables | 209 | -115 | -313 | -49 | 99 | 38 | 3 | -180 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Operating expenses | -22,686 | -21,629 | -24,733 | -21,139 | -24,909 | -21,283 | -19,365 | -17,473 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Other operating income and expenses 1) | -125 | -32,031 | 264 | 27 | -2,824 | 234 | 393 | -1,065 | ||||||||||||||||||||||||
Share of earnings of JV and associated companies | 54 | 24 | 56 | -10 | 17 | 29 | -22 | -7 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Earnings before financial items and income tax (EBIT) | 5,848 | -28,908 | -312 | 3,046 | 7,853 | 7,115 | 7,308 | 4,744 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Financial income and expenses, net | -938 | -719 | -419 | -917 | -474 | -535 | -759 | -643 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income after financial items | 4,910 | -29,627 | -731 | 2,129 | 7,379 | 6,580 | 6,549 | 4,101 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Income tax | -1,501 | -864 | 134 | -554 | -1,189 | -1,220 | -1,899 | -1,189 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income (loss) | 3,409 | -30,491 | -597 | 1,575 | 6,190 | 5,360 | 4,650 | 2,912 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net income (loss) attributable to: | ||||||||||||||||||||||||||||||||
Owners of the Parent Company | 3,394 | -30,670 | -686 | 1,516 | 6,066 | 5,214 | 4,504 | 2,940 | ||||||||||||||||||||||||
Non-controlling interests | 15 | 179 | 89 | 59 | 124 | 146 | 146 | -28 | ||||||||||||||||||||||||
Other information | ||||||||||||||||||||||||||||||||
Average number of shares, basic (million) | 3,330 | 3,330 | 3,330 | 3,330 | 3,330 | 3,330 | 3,330 | 3,330 | ||||||||||||||||||||||||
Earnings (loss) per share, basic (SEK) 2) | 1.02 | -9.21 | -0.21 | 0.46 | 1.82 | 1.56 | 1.36 | 0.88 | ||||||||||||||||||||||||
Earnings (loss) per share, diluted (SEK) 3) | 1.02 | -9.21 | -0.21 | 0.45 | 1.82 | 1.56 | 1.35 | 0.88 |
1) | Q3 2023 includes write-down of goodwill of SEK -31.9 billion. Q4 2022 includes a provision of SEK -2.3 billion in relation to a potential resolution with the United States Department of Justice regarding previously announced, non-criminal, alleged breaches under the deferred prosecution agreement (DPA), including estimated expenses for the extended compliance monitorship, noting that the Company, on March 2, 2023, entered into the DOJ Plea Agreement with the DOJ and agreed to pay a fine of approximately SEK 2.2 billion. Q3 2022 includes revaluation of Ericsson Ventures investments of SEK 0.2 billion. Q2 2022 includes revaluation/disposals of Ericsson Ventures investments of SEK 0.1 billion. Q1 2022 includes a provision of SEK -0.9 billion for impairment of assets and other one-time costs due to the suspension of the affected business in Russia, and revaluation of Ericsson Venture investments of SEK -0.3 billion. |
2) | Based on net income attributable to owners of the Parent Company. |
3) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share. |
28 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed consolidated statement of cash flows – isolated quarters
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Operating activities | ||||||||||||||||||||||||||||||||
Net income (loss) | 3,409 | -30,491 | -597 | 1,575 | 6,190 | 5,360 | 4,650 | 2,912 | ||||||||||||||||||||||||
Adjustments for | ||||||||||||||||||||||||||||||||
Taxes | 1,302 | 1,033 | -215 | 1,069 | 1,304 | 1,307 | 1,751 | 1,021 | ||||||||||||||||||||||||
Earnings/dividends in JV and associated companies | -46 | 27 | -48 | 9 | -24 | -17 | 88 | 8 | ||||||||||||||||||||||||
Depreciation, amortization and impairment losses | 3,083 | 34,901 | 2,813 | 3,092 | 3,535 | 2,638 | 2,224 | 2,146 | ||||||||||||||||||||||||
Other | 1,417 | 1,021 | 606 | 1,646 | 432 | -19 | 345 | 899 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
9,165 | 6,491 | 2,559 | 7,391 | 11,437 | 9,269 | 9,058 | 6,986 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Changes in operating net assets | ||||||||||||||||||||||||||||||||
Inventories | 6,884 | 2,098 | 382 | -60 | 5,898 | -3,564 | -4,728 | -5,346 | ||||||||||||||||||||||||
Customer finance, current and non-current | 5,720 | -4,702 | 558 | -3,284 | -871 | -872 | 134 | -123 | ||||||||||||||||||||||||
Trade receivables and contract assets | -2,089 | 6,469 | 1,753 | 200 | -4,080 | 4,595 | 3,350 | 901 | ||||||||||||||||||||||||
Trade payables | -966 | -4,367 | -597 | -4,107 | -131 | -1,817 | 1,324 | -1,371 | ||||||||||||||||||||||||
Provisions and post-employment benefits | 1,051 | 379 | 841 | -963 | 1,749 | -58 | -321 | 969 | ||||||||||||||||||||||||
Contract liabilities | -4,821 | -2,616 | -5,204 | 5,553 | 2,878 | -2,623 | -721 | 6,260 | ||||||||||||||||||||||||
Other operating assets and liabilities, net | 801 | -350 | -1,457 | -9,105 | 5,235 | 1,052 | -333 | -6,767 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
6,580 | -3,089 | -3,724 | -11,766 | 10,678 | -3,287 | -1,295 | -5,477 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Interest received | 256 | 284 | 283 | 395 | 127 | 156 | -17 | 78 | ||||||||||||||||||||||||
Interest paid | -543 | -599 | -549 | -589 | -406 | -196 | -437 | -211 | ||||||||||||||||||||||||
Taxes paid | -976 | -1,685 | -1,451 | -1,256 | -1,941 | -1,291 | -1,022 | -1,346 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flow from operating activities | 14,482 | 1,402 | -2,882 | -5,825 | 19,895 | 4,651 | 6,287 | 30 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Investing activities | ||||||||||||||||||||||||||||||||
Investments in property, plant and equipment | -720 | -817 | -806 | -954 | -1,502 | -1,104 | -1,053 | -818 | ||||||||||||||||||||||||
Sales of property, plant and equipment | 37 | 51 | 42 | 33 | 76 | 74 | 61 | 38 | ||||||||||||||||||||||||
Acquisitions/divestments of subs. and other operations, net | -225 | -160 | -911 | -844 | -445 | -51,412 | 123 | 46 | ||||||||||||||||||||||||
Product development | -551 | -485 | -562 | -575 | -717 | -414 | -301 | -288 | ||||||||||||||||||||||||
Purchase of interest-bearing securities | -11,318 | -1,854 | -2,132 | — | -12,108 | -437 | -1,037 | — | ||||||||||||||||||||||||
Sales of interest-bearing securities | 1,116 | 2,847 | 4,072 | 3,704 | 789 | 978 | 22,747 | 16,027 | ||||||||||||||||||||||||
Other investing activities | 4,854 | -1,445 | -2,116 | 1,006 | 2,012 | -6,537 | 1,384 | -579 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flow from investing activities | -6,807 | -1,863 | -2,413 | 2,370 | -11,895 | -58,852 | 21,924 | 14,426 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Financing activities | ||||||||||||||||||||||||||||||||
Proceeds from issuance of borrowings | 11,578 | 6,097 | 1,026 | 1,027 | 1,301 | 1,666 | — | 7,788 | ||||||||||||||||||||||||
Repayment of borrowings | -1,666 | -2,306 | -2,832 | -1,080 | -121 | -5,915 | -9,993 | — | ||||||||||||||||||||||||
Dividends paid | -4,504 | -9 | -4,591 | — | -4,172 | -79 | -4,164 | — | ||||||||||||||||||||||||
Repayment of lease liabilities | -783 | -691 | -690 | -693 | -765 | -658 | -577 | -593 | ||||||||||||||||||||||||
Other financing activities | -899 | 2,029 | 18 | -24 | -183 | -277 | 243 | 569 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash flow from financing activities | 3,726 | 5,120 | -7,069 | -770 | -3,940 | -5,263 | -14,491 | 7,764 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Effect of exchange rate changes on cash | -3,111 | -90 | 562 | 9 | -2,460 | 2,595 | 3,042 | 586 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Net change in cash and cash equivalents | 8,290 | 4,569 | -11,802 | -4,216 | 1,600 | -56,869 | 16,762 | 22,806 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash and cash equivalents, beginning of period | 26,900 | 22,331 | 34,133 | 38,349 | 36,749 | 93,618 | 76,856 | 54,050 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Cash and cash equivalents, end of period | 35,190 | 26,900 | 22,331 | 34,133 | 38,349 | 36,749 | 93,618 | 76,856 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed Parent Company income statement
Q4 | Jan-Dec | |||||||||||||||
SEK million | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net sales | — | — | — | — | ||||||||||||
Cost of sales | — | — | — | — | ||||||||||||
Gross income | — | — | — | — | ||||||||||||
Operating expenses | -442 | -537 | -1,818 | -1,492 | ||||||||||||
Other operating income and expenses | 703 | -1,234 | 3,606 | 691 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
EBIT | 261 | -1,771 | 1,788 | -801 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Financial net | 13,683 | -1,689 | -2,496 | 19,213 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Income (loss) after financial items | 13,944 | -3,460 | -708 | 18,412 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Transfers to (-) / from untaxed reserves | -81 | -7,272 | -81 | -7,272 | ||||||||||||
Income tax | -269 | 1,495 | -382 | 631 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net income (loss) | 13,594 | -9,237 | -1,171 | 11,771 | ||||||||||||
|
|
|
|
|
|
|
|
Condensed Parent Company statement of comprehensive income (loss)
Q4 | Jan-Dec | |||||||||||||||
SEK million | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Net income (loss) | 13,594 | -9,237 | -1,171 | 11,771 | ||||||||||||
Cash flow hedge reserve | ||||||||||||||||
Gains/losses arising during the period | — | — | — | 3,703 | ||||||||||||
Transfer to investments | — | — | — | -3,677 | ||||||||||||
Tax on items that will not be reclassified to profit or loss | — | -758 | — | -758 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Other comprehensive income (loss), net of tax | — | -758 | — | -732 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total comprehensive income (loss) | 13,594 | -9,995 | -1,171 | 11,039 | ||||||||||||
|
|
|
|
|
|
|
|
30 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Condensed Parent Company balance sheet
Dec 31 | Dec 31 | |||||||
SEK million | 2023 | 2022 | ||||||
Assets | ||||||||
Fixed assets | ||||||||
Intangible assets | — | 4 | ||||||
Tangible assets | 344 | 380 | ||||||
Financial assets 1) | 126,523 | 156,720 | ||||||
|
|
|
| |||||
126,867 | 157,104 | |||||||
|
|
|
| |||||
Current assets | ||||||||
Receivables | 22,433 | 27,664 | ||||||
Short-term investments | 9,355 | 8,540 | ||||||
Cash and cash equivalents | 15,640 | 23,731 | ||||||
|
|
|
| |||||
47,428 | 59,935 | |||||||
|
|
|
| |||||
Total assets | 174,295 | 217,039 | ||||||
|
|
|
| |||||
Stockholders’ equity, provisions and liabilities | ||||||||
Equity | ||||||||
Restricted equity | 48,214 | 48,164 | ||||||
Non-restricted equity | 27,584 | 37,753 | ||||||
|
|
|
| |||||
75,798 | 85,917 | |||||||
|
|
|
| |||||
Provisions | 275 | 2,435 | ||||||
Non-current liabilities | 29,150 | 26,835 | ||||||
Current liabilities | 69,072 | 101,852 | ||||||
|
|
|
| |||||
Total stockholders’ equity, provisions and liabilities | 174,295 | 217,039 | ||||||
|
|
|
| |||||
1) Of which interest-bearing securities, non-current | 9,930 | 9,157 |
31 Ericsson | Fourth quarter and full-year report 2023 | Financial statements |
Table of Contents
Accounting policies and Explanatory notes (unaudited)
The group
This condensed consolidated interim financial report for the reporting period ended December 31, 2023, 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, 2022, and should be read in conjunction with that annual report. Amendments to IFRS standards that became effective during 2023 do not have a material impact on the result and financial position of the Company.
Changes applied in 2023
- IoT business reported in segment Other
The IoT business was divested in Q1 2023. As previously announced in Q4 2022 the IoT business has been transferred from segment Enterprise to segment Other in Q1 2023. In order to reflect the change all prior quarters in 2022 have been restated where applicable.
- Sensitivity disclosure related to Vonage CGU
The impairment charge in the Vonage CGU booked in Q3 2023 was a result of a higher post-tax discount rate compared to last year and lower revenue forecast in line with the lower market growth outlook. Consequently, the sensitivity of a reasonably possible change in the key assumptions has changed compared to the disclosure in the annual report. A change in the EBITA assumptions is most sensitive to a possible change.
32 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Note 2 – Segment information*)
Net sales by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 44,998 | 41,537 | 42,440 | 42,467 | 58,626 | 48,147 | 45,983 | 40,712 | ||||||||||||||||||||||||
Of which Products | 34,704 | 31,740 | 32,774 | 32,175 | 45,804 | 35,763 | 35,299 | 31,131 | ||||||||||||||||||||||||
Of which Services | 10,294 | 9,797 | 9,666 | 10,292 | 12,822 | 12,384 | 10,684 | 9,581 | ||||||||||||||||||||||||
Cloud Software and Services | 19,558 | 15,564 | 15,108 | 13,400 | 20,210 | 14,213 | 14,014 | 12,087 | ||||||||||||||||||||||||
Of which Products | 7,046 | 5,010 | 5,161 | 4,455 | 8,047 | 4,752 | 4,675 | 3,631 | ||||||||||||||||||||||||
Of which Services | 12,512 | 10,554 | 9,947 | 8,945 | 12,163 | 9,461 | 9,339 | 8,456 | ||||||||||||||||||||||||
Enterprise | 6,698 | 6,673 | 6,379 | 5,995 | 6,314 | 4,981 | 1,703 | 1,599 | ||||||||||||||||||||||||
Other | 627 | 699 | 517 | 691 | 830 | 699 | 765 | 663 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Sequential change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 8 | % | -2 | % | 0 | % | -28 | % | 22 | % | 5 | % | 13 | % | -20 | % | ||||||||||||||||
Of which Products | 9 | % | -3 | % | 2 | % | -30 | % | 28 | % | 1 | % | 13 | % | -22 | % | ||||||||||||||||
Of which Services | 5 | % | 1 | % | -6 | % | -20 | % | 4 | % | 16 | % | 12 | % | -14 | % | ||||||||||||||||
Cloud Software and Services | 26 | % | 3 | % | 13 | % | -34 | % | 42 | % | 1 | % | 16 | % | -33 | % | ||||||||||||||||
Of which Products | 41 | % | -3 | % | 16 | % | -45 | % | 69 | % | 2 | % | 29 | % | -49 | % | ||||||||||||||||
Of which Services | 19 | % | 6 | % | 11 | % | -26 | % | 29 | % | 1 | % | 10 | % | -22 | % | ||||||||||||||||
Enterprise | 0 | % | 5 | % | 6 | % | -5 | % | 27 | % | 192 | % | 7 | % | 0 | % | ||||||||||||||||
Other | -10 | % | 35 | % | -25 | % | -17 | % | 19 | % | -9 | % | 15 | % | -3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 11 | % | 0 | % | 3 | % | -27 | % | 26 | % | 9 | % | 13 | % | -23 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year over year change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | -23 | % | -14 | % | -8 | % | 4 | % | 15 | % | 19 | % | 15 | % | 12 | % | ||||||||||||||||
Of which Products | -24 | % | -11 | % | -7 | % | 3 | % | 15 | % | 15 | % | 16 | % | 13 | % | ||||||||||||||||
Of which Services | -20 | % | -21 | % | -10 | % | 7 | % | 15 | % | 30 | % | 13 | % | 9 | % | ||||||||||||||||
Cloud Software and Services | -3 | % | 10 | % | 8 | % | 11 | % | 13 | % | 4 | % | 8 | % | 3 | % | ||||||||||||||||
Of which Products | -12 | % | 5 | % | 10 | % | 23 | % | 13 | % | 4 | % | 18 | % | 2 | % | ||||||||||||||||
Of which Services | 3 | % | 12 | % | 7 | % | 6 | % | 12 | % | 5 | % | 4 | % | 4 | % | ||||||||||||||||
Enterprise | 6 | % | 34 | % | 275 | % | 275 | % | 295 | % | 256 | % | 20 | % | 47 | % | ||||||||||||||||
Other | -24 | % | 0 | % | -32 | % | 4 | % | 22 | % | 5 | % | 11 | % | -6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -16 | % | -5 | % | 3 | % | 14 | % | 21 | % | 21 | % | 14 | % | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 171,442 | 126,444 | 84,907 | 42,467 | 193,468 | 134,842 | 86,695 | 40,712 | ||||||||||||||||||||||||
Of which Products | 131,393 | 96,689 | 64,949 | 32,175 | 147,997 | 102,193 | 66,430 | 31,131 | ||||||||||||||||||||||||
Of which Services | 40,049 | 29,755 | 19,958 | 10,292 | 45,471 | 32,649 | 20,265 | 9,581 | ||||||||||||||||||||||||
Cloud Software and Services | 63,630 | 44,072 | 28,508 | 13,400 | 60,524 | 40,314 | 26,101 | 12,087 | ||||||||||||||||||||||||
Of which Products | 21,672 | 14,626 | 9,616 | 4,455 | 21,105 | 13,058 | 8,306 | 3,631 | ||||||||||||||||||||||||
Of which Services | 41,958 | 29,446 | 18,892 | 8,945 | 39,419 | 27,256 | 17,795 | 8,456 | ||||||||||||||||||||||||
Enterprise | 25,745 | 19,047 | 12,374 | 5,995 | 14,597 | 8,283 | 3,302 | 1,599 | ||||||||||||||||||||||||
Other | 2,534 | 1,907 | 1,208 | 691 | 2,957 | 2,127 | 1,428 | 663 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year over year change, percent | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | -11 | % | -6 | % | -2 | % | 4 | % | 15 | % | 16 | % | 14 | % | 12 | % | ||||||||||||||||
Of which Products | -11 | % | -5 | % | -2 | % | 3 | % | 15 | % | 15 | % | 15 | % | 13 | % | ||||||||||||||||
Of which Services | -12 | % | -9 | % | -2 | % | 7 | % | 17 | % | 18 | % | 11 | % | 9 | % | ||||||||||||||||
Cloud Software and Services | 5 | % | 9 | % | 9 | % | 11 | % | 8 | % | 5 | % | 6 | % | 3 | % | ||||||||||||||||
Of which Products | 3 | % | 12 | % | 16 | % | 23 | % | 10 | % | 8 | % | 10 | % | 2 | % | ||||||||||||||||
Of which Services | 6 | % | 8 | % | 6 | % | 6 | % | 7 | % | 4 | % | 4 | % | 4 | % | ||||||||||||||||
Enterprise | 76 | % | 130 | % | 275 | % | 275 | % | 165 | % | 112 | % | 31 | % | 47 | % | ||||||||||||||||
Other | -14 | % | -10 | % | -15 | % | 4 | % | 8 | % | 3 | % | 2 | % | -6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -3 | % | 3 | % | 8 | % | 14 | % | 17 | % | 15 | % | 12 | % | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Financial information by segment has been restated for the quarters 2022, where the divested IoT business in Q1 2023 has moved from segment Enterprise to segment Other. |
33 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Gross income by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 18,626 | 16,146 | 16,318 | 16,869 | 26,056 | 21,366 | 20,735 | 18,211 | ||||||||||||||||||||||||
Cloud Software and Services | 7,174 | 5,494 | 4,944 | 4,476 | 6,664 | 4,516 | 4,692 | 4,234 | ||||||||||||||||||||||||
Enterprise | 2,968 | 3,253 | 2,954 | 2,841 | 2,885 | 2,429 | 900 | 882 | ||||||||||||||||||||||||
Other | -163 | -165 | -115 | -18 | -36 | -176 | -25 | -38 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 28,605 | 24,728 | 24,101 | 24,168 | 35,569 | 28,135 | 26,302 | 23,289 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 67,959 | 49,333 | 33,187 | 16,869 | 86,368 | 60,312 | 38,946 | 18,211 | ||||||||||||||||||||||||
Cloud Software and Services | 22,088 | 14,914 | 9,420 | 4,476 | 20,106 | 13,442 | 8,926 | 4,234 | ||||||||||||||||||||||||
Enterprise | 12,016 | 9,048 | 5,795 | 2,841 | 7,096 | 4,211 | 1,782 | 882 | ||||||||||||||||||||||||
Other | -461 | -298 | -133 | -18 | -275 | -239 | -63 | -38 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 101,602 | 72,997 | 48,269 | 24,168 | 113,295 | 77,726 | 49,591 | 23,289 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT (loss) by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 6,112 | 4,627 | 2,623 | 6,020 | 12,453 | 9,597 | 8,861 | 7,601 | ||||||||||||||||||||||||
Cloud Software and Services | 1,836 | 86 | -1,200 | -942 | 673 | -792 | -733 | -837 | ||||||||||||||||||||||||
Enterprise | -1,643 | -33,302 | -1,679 | -1,712 | -1,893 | -1,456 | -593 | -531 | ||||||||||||||||||||||||
Other | -457 | -319 | -56 | -320 | -3,380 | -234 | -227 | -1,489 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 5,848 | -28,908 | -312 | 3,046 | 7,853 | 7,115 | 7,308 | 4,744 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 19,382 | 13,270 | 8,643 | 6,020 | 38,512 | 26,059 | 16,462 | 7,601 | ||||||||||||||||||||||||
Cloud Software and Services | -220 | -2,056 | -2,142 | -942 | -1,689 | -2,362 | -1,570 | -837 | ||||||||||||||||||||||||
Enterprise | -38,336 | -36,693 | -3,391 | -1,712 | -4,473 | -2,580 | -1,124 | -531 | ||||||||||||||||||||||||
Other | -1,152 | -695 | -376 | -320 | -5,330 | -1,950 | -1,716 | -1,489 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -20,326 | -26,174 | 2,734 | 3,046 | 27,020 | 19,167 | 12,052 | 4,744 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Financial information by segment has been restated for the quarters 2022, where the divested IoT business in Q1 2023 has moved from segment Enterprise to segment Other. |
34 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Net sales by market area by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
South East Asia, Oceania and India | 11,804 | 13,764 | 13,839 | 13,911 | 11,239 | 7,914 | 7,962 | 5,836 | ||||||||||||||||||||||||
North East Asia | 9,129 | 5,378 | 5,062 | 4,363 | 8,396 | 5,597 | 7,319 | 5,421 | ||||||||||||||||||||||||
North America | 14,404 | 13,456 | 14,443 | 16,927 | 25,301 | 26,517 | 22,849 | 20,727 | ||||||||||||||||||||||||
Europe and Latin America 1) 2) | 19,218 | 15,475 | 15,972 | 14,219 | 20,877 | 15,298 | 15,325 | 15,290 | ||||||||||||||||||||||||
Middle East and Africa | 7,750 | 6,455 | 5,348 | 4,186 | 7,379 | 5,668 | 5,223 | 4,301 | ||||||||||||||||||||||||
Other 1) 2) | 9,576 | 9,945 | 9,780 | 8,947 | 12,788 | 7,046 | 3,787 | 3,486 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | �� | 339 | 454 | 370 | 611 | 778 | 833 | 950 | 678 | |||||||||||||||||||||||
2) Of which in EU | 10,148 | 7,850 | 8,054 | 8,205 | 10,495 | 8,242 | 8,511 | 8,611 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Sequential change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
South East Asia, Oceania and India | -14 | % | -1 | % | -1 | % | 24 | % | 42 | % | -1 | % | 36 | % | -32 | % | ||||||||||||||||
North East Asia | 70 | % | 6 | % | 16 | % | -48 | % | 50 | % | -24 | % | 35 | % | -45 | % | ||||||||||||||||
North America | 7 | % | -7 | % | -15 | % | -33 | % | -5 | % | 16 | % | 10 | % | -7 | % | ||||||||||||||||
Europe and Latin America 1) 2) | 24 | % | -3 | % | 12 | % | -32 | % | 36 | % | 0 | % | 0 | % | -21 | % | ||||||||||||||||
Middle East and Africa | 20 | % | 21 | % | 28 | % | -43 | % | 30 | % | 9 | % | 21 | % | -38 | % | ||||||||||||||||
Other 1) 2) | -4 | % | 2 | % | 9 | % | -30 | % | 81 | % | 86 | % | 9 | % | -22 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 11 | % | 0 | % | 3 | % | -27 | % | 26 | % | 9 | % | 13 | % | -23 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | -25 | % | 23 | % | -39 | % | -21 | % | -7 | % | -12 | % | 40 | % | -37 | % | ||||||||||||||||
2) Of which in EU | 29 | % | -3 | % | -2 | % | -22 | % | 27 | % | -3 | % | -1 | % | -15 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year over year change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
South East Asia, Oceania and India | 5 | % | 74 | % | 74 | % | 138 | % | 31 | % | 23 | % | 12 | % | -13 | % | ||||||||||||||||
North East Asia | 9 | % | -4 | % | -31 | % | -20 | % | -14 | % | -2 | % | 3 | % | -16 | % | ||||||||||||||||
North America | -43 | % | -49 | % | -37 | % | -18 | % | 14 | % | 32 | % | 27 | % | 21 | % | ||||||||||||||||
Europe and Latin America 1) 2) | -8 | % | 1 | % | 4 | % | -7 | % | 9 | % | 6 | % | 9 | % | 21 | % | ||||||||||||||||
Middle East and Africa | 5 | % | 14 | % | 2 | % | -3 | % | 6 | % | 14 | % | 17 | % | -2 | % | ||||||||||||||||
Other 1) 2) | -25 | % | 41 | % | 158 | % | 157 | % | 186 | % | 53 | % | -12 | % | 40 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -16 | % | -5 | % | 3 | % | 14 | % | 21 | % | 21 | % | 14 | % | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | -56 | % | -45 | % | -61 | % | -10 | % | -28 | % | 74 | % | 135 | % | 74 | % | ||||||||||||||||
2) Of which in EU | -3 | % | -5 | % | -5 | % | -5 | % | 3 | % | 17 | % | 17 | % | 27 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
South East Asia, Oceania and India | 53,318 | 41,514 | 27,750 | 13,911 | 32,951 | 21,712 | 13,798 | 5,836 | ||||||||||||||||||||||||
North East Asia | 23,932 | 14,803 | 9,425 | 4,363 | 26,733 | 18,337 | 12,740 | 5,421 | ||||||||||||||||||||||||
North America | 59,230 | 44,826 | 31,370 | 16,927 | 95,394 | 70,093 | 43,576 | 20,727 | ||||||||||||||||||||||||
Europe and Latin America 1) 2) | 64,884 | 45,666 | 30,191 | 14,219 | 66,790 | 45,913 | 30,615 | 15,290 | ||||||||||||||||||||||||
Middle East and Africa | 23,739 | 15,989 | 9,534 | 4,186 | 22,571 | 15,192 | 9,524 | 4,301 | ||||||||||||||||||||||||
Other 1) 2) | 38,248 | 28,672 | 18,727 | 8,947 | 27,107 | 14,319 | 7,273 | 3,486 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | 1,774 | 1,435 | 981 | 611 | 3,239 | 2,461 | 1,628 | 678 | ||||||||||||||||||||||||
2) Of which in EU | 34,257 | 24,109 | 16,259 | 8,205 | 35,859 | 25,364 | 17,122 | 8,611 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, year over year change, percent | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
South East Asia, Oceania and India | 62 | % | 91 | % | 101 | % | 138 | % | 14 | % | 7 | % | 0 | % | -13 | % | ||||||||||||||||
North East Asia | -10 | % | -19 | % | -26 | % | -20 | % | -8 | % | -5 | % | -6 | % | -16 | % | ||||||||||||||||
North America | -38 | % | -36 | % | -28 | % | -18 | % | 23 | % | 27 | % | 24 | % | 21 | % | ||||||||||||||||
Europe and Latin America 1) 2) | -3 | % | -1 | % | -1 | % | -7 | % | 11 | % | 12 | % | 15 | % | 21 | % | ||||||||||||||||
Middle East and Africa | 5 | % | 5 | % | 0 | % | -3 | % | 9 | % | 10 | % | 8 | % | -2 | % | ||||||||||||||||
Other 1) 2) | 41 | % | 100 | % | 157 | % | 157 | % | 71 | % | 26 | % | 7 | % | 40 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -3 | % | 3 | % | 8 | % | 14 | % | 17 | % | 15 | % | 12 | % | 11 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | -45 | % | -42 | % | -40 | % | -10 | % | 38 | % | 94 | % | 105 | % | 74 | % | ||||||||||||||||
2) Of which in EU | -4 | % | -5 | % | -5 | % | -5 | % | 15 | % | 20 | % | 22 | % | 27 | % |
35 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Net sales by market area by segment
Q4 2023 | Jan-Dec 2023 | |||||||||||||||||||||||||||||||||||||||
SEK million | Networks | Cloud Software and Services | Enterprise | Other | Total | Networks | Cloud Software and Services | Enterprise | Other | Total | ||||||||||||||||||||||||||||||
South East Asia, Oceania and India | 8,889 | 2,907 | 8 | 0 | 11,804 | 43,235 | 10,038 | 36 | 9 | 53,318 | ||||||||||||||||||||||||||||||
North East Asia | 7,316 | 1,756 | 8 | 49 | 9,129 | 18,986 | 4,720 | 37 | 189 | 23,932 | ||||||||||||||||||||||||||||||
North America | 10,201 | 4,074 | 83 | 46 | 14,404 | 44,640 | 14,199 | 266 | 125 | 59,230 | ||||||||||||||||||||||||||||||
Europe and Latin America | 12,149 | 6,994 | 74 | 1 | 19,218 | 42,298 | 22,270 | 245 | 71 | 64,884 | ||||||||||||||||||||||||||||||
Middle East and Africa | 4,254 | 3,379 | 116 | 1 | 7,750 | 12,902 | 10,457 | 378 | 2 | 23,739 | ||||||||||||||||||||||||||||||
Other 1) | 2,189 | 448 | 6,409 | 530 | 9,576 | 9,381 | 1,946 | 24,783 | 2,138 | 38,248 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | 44,998 | 19,558 | 6,698 | 627 | 71,881 | 171,442 | 63,630 | 25,745 | 2,534 | 263,351 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Share of total | 63 | % | 27 | % | 9 | % | 1 | % | 100 | % | 65 | % | 24 | % | 10 | % | 1 | % | 100 | % |
1) | Includes primarily IPR licensing revenues and a major part of segment Enterprise. |
Q4 2023 | ||||||||||||||||||||
Sequential change, percent | Networks | Cloud Software and Services | Enterprise | Other | Total | |||||||||||||||
South East Asia, Oceania and India | -20 | % | 11 | % | -27 | % | — | -14 | % | |||||||||||
North East Asia | 66 | % | 104 | % | -50 | % | -42 | % | 70 | % | ||||||||||
North America | 6 | % | 10 | % | -15 | % | -33 | % | 7 | % | ||||||||||
Europe and Latin America | 18 | % | 38 | % | -4 | % | — | 24 | % | |||||||||||
Middle East and Africa | 15 | % | 26 | % | 57 | % | -200 | % | 20 | % | ||||||||||
Other | -8 | % | -28 | % | 0 | % | -3 | % | -4 | % | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | 8 | % | 26 | % | 0 | % | -10 | % | 11 | % | ||||||||||
|
|
|
|
|
|
|
|
|
|
Q4 2023 | Jan-Dec2023 | |||||||||||||||||||||||||||||||||||||||
Year over year change, percent | Networks | Cloud Software and Services | Enterprise | Other | Total | Networks | Cloud Software and Services | Enterprise | Other | Total | ||||||||||||||||||||||||||||||
South East Asia, Oceania and India | 5 | % | 8 | % | 14 | % | -100 | % | 5 | % | 82 | % | 9 | % | 112 | % | -85 | % | 62 | % | ||||||||||||||||||||
North East Asia | 5 | % | 31 | % | 167 | % | -26 | % | 9 | % | -16 | % | 18 | % | 363 | % | -15 | % | -10 | % | ||||||||||||||||||||
North America | -51 | % | -11 | % | 277 | % | 77 | % | -43 | % | -46 | % | 6 | % | 466 | % | 84 | % | -38 | % | ||||||||||||||||||||
Europe and Latin America | -11 | % | -1 | % | 95 | % | -99 | % | -8 | % | -5 | % | 3 | % | 147 | % | -83 | % | -3 | % | ||||||||||||||||||||
Middle East and Africa | 14 | % | -4 | % | -12 | % | -92 | % | 5 | % | 10 | % | 0 | % | 3 | % | -92 | % | 5 | % | ||||||||||||||||||||
Other | -57 | % | -58 | % | 5 | % | -6 | % | -25 | % | 4 | % | 5 | % | 76 | % | -2 | % | 41 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Total | -23 | % | -3 | % | 6 | % | -24 | % | -16 | % | -11 | % | 5 | % | 76 | % | -14 | % | -3 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
36 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Top 5 countries in sales
Q4 | Jan-Dec | |||||||||||||||
Country, percentage of net sales1) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
United States | 29 | % | 41 | % | 32 | % | 40 | % | ||||||||
India | 8 | % | 6 | % | 12 | % | 4 | % | ||||||||
China | 5 | % | 3 | % | 4 | % | 4 | % | ||||||||
Japan | 6 | % | 4 | % | 4 | % | 4 | % | ||||||||
United Kingdom | 4 | % | 3 | % | 4 | % | 3 | % |
1) | Countries included based on Jan-Dec 2023. Includes IPR licensing revenues. |
IPR licensing revenues by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 2,176 | 2,283 | 2,603 | 2,041 | 4,917 | 1,282 | 1,186 | 1,142 | ||||||||||||||||||||||||
Cloud Software and Services | 478 | 500 | 572 | 448 | 1,080 | 281 | 261 | 250 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 2,654 | 2,783 | 3,175 | 2,489 | 5,997 | 1,563 | 1,447 | 1,392 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 9,103 | 6,927 | 4,644 | 2,041 | 8,527 | 3,610 | 2,328 | 1,142 | ||||||||||||||||||||||||
Cloud Software and Services | 1,998 | 1,520 | 1,020 | 448 | 1,872 | 792 | 511 | 250 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 11,101 | 8,447 | 5,664 | 2,489 | 10,399 | 4,402 | 2,839 | 1,392 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 3 – Financial income and expenses, net
Financial income and expenses, net
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Financial income | 518 | 471 | 639 | 517 | 283 | 319 | 117 | 59 | ||||||||||||||||||||||||
Financial expenses | -1,287 | -1,024 | -942 | -865 | -757 | -428 | -452 | -293 | ||||||||||||||||||||||||
Net foreign exchange gains/losses | -169 | -166 | -116 | -569 | — | -426 | -424 | -409 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -938 | -719 | -419 | -917 | -474 | -535 | -759 | -643 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Financial income | 2,145 | 1,627 | 1,156 | 517 | 778 | 495 | 176 | 59 | ||||||||||||||||||||||||
Financial expenses | -4,118 | -2,831 | -1,807 | -865 | -1,930 | -1,173 | -745 | -293 | ||||||||||||||||||||||||
Net foreign exchange gains/losses | -1,020 | -851 | -685 | -569 | -1,259 | -1,259 | -833 | -409 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -2,993 | -2,055 | -1,336 | -917 | -2,411 | -1,937 | -1,402 | -643 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Provisions
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Opening balance | 11,535 | 12,005 | 10,541 | 11,588 | 10,562 | 9,668 | 10,197 | 9,504 | ||||||||||||||||||||||||
Additions1) | 2,556 | 1,462 | 4,760 | 1,699 | 4,304 | 351 | 547 | 1,583 | ||||||||||||||||||||||||
Utilization | -1,728 | -1,422 | -2,953 | -2,463 | -1,974 | -533 | -893 | -1,173 | ||||||||||||||||||||||||
Of which restructuring | -1,175 | -994 | -423 | -274 | -150 | -70 | -51 | -67 | ||||||||||||||||||||||||
Reversal of excess amounts | -368 | -384 | -564 | -224 | -1,034 | -236 | -316 | -452 | ||||||||||||||||||||||||
Reclassification, translation difference and other | -289 | -126 | 221 | -59 | -270 | 1,312 | 133 | 735 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Closing balance | 11,706 | 11,535 | 12,005 | 10,541 | 11,588 | 10,562 | 9,668 | 10,197 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Of which restructuring | 3,720 | 4,235 | 4,413 | 1,096 | 668 | 595 | 579 | 604 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Opening balance | 11,588 | 11,588 | 11,588 | 11,588 | 9,504 | 9,504 | 9,504 | 9,504 | ||||||||||||||||||||||||
Additions1) | 10,477 | 7,921 | 6,459 | 1,699 | 6,785 | 2,481 | 2,130 | 1,583 | ||||||||||||||||||||||||
Utilization | -8,566 | -6,838 | -5,416 | -2,463 | -4,573 | -2,599 | -2,066 | -1,173 | ||||||||||||||||||||||||
Of which restructuring | -2,866 | -1,691 | -697 | -274 | -338 | -188 | -118 | -67 | ||||||||||||||||||||||||
Reversal of excess amounts | -1,540 | -1,172 | -788 | -224 | -2,038 | -1,004 | -768 | -452 | ||||||||||||||||||||||||
Reclassification, translation difference and other | -253 | 36 | 162 | -59 | 1,910 | 2,180 | 868 | 735 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Closing balance | 11,706 | 11,535 | 12,005 | 10,541 | 11,588 | 10,562 | 9,668 | 10,197 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Of which restructuring | 3,720 | 4,235 | 4,413 | 1,096 | 668 | 595 | 579 | 604 |
1) | Q1-Q4 2023 mainly relates to restructuring provisions for the cost-reduction activities. Q4 2022 includes a provision of SEK -2.3 billion in relation to a potential resolution with the United States Department of Justice regarding previously announced, non-criminal, alleged breaches under the deferred prosecution agreement (DPA), including estimated expenses for the extended compliance monitorship, noting that the Company, on March 2, 2023, entered into the DOJ Plea Agreement with the DOJ and the provision was utilized in Q2 2023. |
38 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Note 5 – Financial risk management
Since Q1 2023, liquidity portfolios in some subsidiaries have been managed globally on a fair value basis, therefore deposits (cash equivalents) held in these portfolios are classified as fair value through P&L (previously classified as amortized costs). During the year, the Company issued Commercial Papers and drew down its revolving credit facilities for short term liquidity purposes, both borrowings are classified as amortized costs liabilities.
There have been no changes to the 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 | Dec 31 2023 | Dec 31 2022 | ||||||||||||||||||||||||||||||
Fair value hierarchy level | Fair value hierarchy level | |||||||||||||||||||||||||||||||
Carrying value | Level 1 | Level 2 | Level 3 | Carrying value | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||
Assets at fair value through profit or loss | ||||||||||||||||||||||||||||||||
Customer finance 1) | 6.9 | — | — | 6.9 | 5.4 | — | — | 5.4 | ||||||||||||||||||||||||
Interest-bearing securities | 19.1 | 18.6 | 0.5 | — | 17.5 | 17.5 | — | — | ||||||||||||||||||||||||
Cash equivalents 2) | 17.5 | 0.8 | 16.7 | — | 15.7 | — | 15.7 | — | ||||||||||||||||||||||||
Other financial assets | 2.1 | 0.1 | — | 2.0 | 2.1 | 0.1 | — | 2.0 | ||||||||||||||||||||||||
Other current assets | 1.9 | — | 1.9 | — | 1.1 | — | 1.1 | — | ||||||||||||||||||||||||
Assets at fair value through OCI | ||||||||||||||||||||||||||||||||
Trade receivables | 42.2 | — | — | 42.2 | 48.4 | — | — | 48.4 | ||||||||||||||||||||||||
Assets at amortized costs | ||||||||||||||||||||||||||||||||
Interest-bearing securities | 0.4 | — | — | — | 0.4 | — | — | — | ||||||||||||||||||||||||
Cash equivalents 2) | — | — | — | — | 2.9 | — | — | — | ||||||||||||||||||||||||
Other financial assets | 0.6 | — | — | — | 0.6 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total financial assets | 90.7 | 94.1 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Financial liabilities at designated FVTPL | ||||||||||||||||||||||||||||||||
Parent company borrowings | -38.0 | -23.7 | -14.3 | — | -29.6 | -16.7 | -12.9 | — | ||||||||||||||||||||||||
Financial liabilities at FVTPL | ||||||||||||||||||||||||||||||||
Other current liabilities | -1.8 | — | -1.8 | — | -2.6 | — | -2.6 | — | ||||||||||||||||||||||||
Liabilities at amortized cost | ||||||||||||||||||||||||||||||||
Trade payables | -27.8 | — | — | — | -38.4 | — | — | — | ||||||||||||||||||||||||
Borrowings | -8.9 | — | — | — | -3.3 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total financial liabilities | -76.4 | -73.9 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1) | Year to date movements of customer finance receivables are as follows: additions of SEK 49.6 billion, disposals and repayments of SEK 47.4 billion and revaluation loss of SEK 0.6 billion. |
2) | Total Cash and cash equivalent is SEK 35.2 (38.3 on Dec 31, 2022) billion, of which SEK 17.5 (18.6 on Dec 31, 2022) billion relating to Cash equivalents are presented in the table above. |
Exchange rates used in the consolidation
Jan-Dec | ||||||||
2023 | 2022 | |||||||
SEK/EUR - closing rate | 11.09 | 11.08 | ||||||
SEK/USD - closing rate | 10.01 | 10.38 |
39 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Information on investments
Investments in assets subject to depreciation, amortization, impairment and write-downs
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 720 | 817 | 806 | 954 | 1,502 | 1,104 | 1,053 | 818 | ||||||||||||||||||||||||
Capitalized development expenses | 551 | 485 | 562 | 575 | 717 | 414 | 301 | 288 | ||||||||||||||||||||||||
IPR, brands and other intangible assets | 1 | — | 94 | 2 | 120 | 2 | 2 | 2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 1,272 | 1,302 | 1,462 | 1,531 | 2,339 | 1,520 | 1,356 | 1,108 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Depreciation, amortization and impairment losses | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 1,354 | 1,331 | 1,066 | 1,183 | 1,250 | 1,100 | 1,074 | 964 | ||||||||||||||||||||||||
Capitalized development expenses | 274 | 222 | 244 | 397 | 395 | 387 | 403 | 401 | ||||||||||||||||||||||||
Goodwill, IPR, brands and other intangible assets | 846 | 32,735 | 853 | 803 | 1,196 | 499 | 159 | 198 | ||||||||||||||||||||||||
Right-of-use assets | 609 | 613 | 650 | 709 | 694 | 652 | 588 | 583 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 3,083 | 34,901 | 2,813 | 3,092 | 3,535 | 2,638 | 2,224 | 2,146 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Additions | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 3,297 | 2,577 | 1,760 | 954 | 4,477 | 2,975 | 1,871 | 818 | ||||||||||||||||||||||||
Capitalized development expenses | 2,173 | 1,622 | 1,137 | 575 | 1,720 | 1,003 | 589 | 288 | ||||||||||||||||||||||||
IPR, brands and other intangible assets | 97 | 96 | 96 | 2 | 126 | 6 | 4 | 2 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 5,567 | 4,295 | 2,993 | 1,531 | 6,323 | 3,984 | 2,464 | 1,108 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Depreciation, amortization and impairment losses | ||||||||||||||||||||||||||||||||
Property, plant and equipment | 4,934 | 3,580 | 2,249 | 1,183 | 4,388 | 3,138 | 2,038 | 964 | ||||||||||||||||||||||||
Capitalized development expenses | 1,137 | 863 | 641 | 397 | 1,586 | 1,191 | 804 | 401 | ||||||||||||||||||||||||
Goodwill, IPR, brands and other intangible assets | 35,237 | 34,391 | 1,656 | 803 | 2,052 | 856 | 357 | 198 | ||||||||||||||||||||||||
Right-of-use assets | 2,581 | 1,972 | 1,359 | 709 | 2,517 | 1,823 | 1,171 | 583 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 43,889 | 40,806 | 5,905 | 3,092 | 10,543 | 7,008 | 4,370 | 2,146 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 7 – Contingent liabilities and Assets pledged as collateral
Contingent liabilities and Assets pledged as collateral
SEK million | Dec 31 2023 | Dec 31 2022 | ||||||
Contingent liabilities | 3,037 | 3,322 | ||||||
Assets pledged as collateral | 8,501 | 7,226 |
40 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
Table of Contents
Number of shares and earnings per share
Q4 | Jan-Dec | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Number of shares, end of period (million) | 3,344 | 3,334 | 3,344 | 3,334 | ||||||||||||
Of which class A-shares (million) | 262 | 262 | 262 | 262 | ||||||||||||
Of which class B-shares (million) | 3,082 | 3,072 | 3,082 | 3,072 | ||||||||||||
Number of treasury shares, end of period (million) | 14 | 4 | 14 | 4 | ||||||||||||
Number of shares outstanding, basic, end of period (million) | 3,330 | 3,330 | 3,330 | 3,330 | ||||||||||||
Numbers of shares outstanding, diluted, end of period (million) | 3,330 | 3,334 | 3,330 | 3,334 | ||||||||||||
Average number of treasury shares (million) | 14 | 4 | 11 | 4 | ||||||||||||
Average number of shares outstanding, basic (million) | 3,330 | 3,330 | 3,330 | 3,330 | ||||||||||||
Average number of shares outstanding, diluted (million) 1) | 3,330 | 3,334 | 3,330 | 3,334 | ||||||||||||
Earnings(loss)per share, basic (SEK) 2) | 1.02 | 1.82 | -7.94 | 5.62 | ||||||||||||
Earnings(loss)per share, diluted (SEK) 1) | 1.02 | 1.82 | -7.94 | 5.62 |
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. |
The proposed dividend of SEK 2.70 per share was approved by the AGM on March 29, 2023. The dividend was paid out in two equal installments; SEK 1.35 per share in Q2 and in Q4 2023.
Number of employees
2023 | 2022 | |||||||||||||||||||||||||||||||
End of period | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | ||||||||||||||||||||||||
South East Asia, Oceania and India | 27,016 | 27,648 | 27,726 | 27,981 | 27,761 | 26,844 | 26,127 | 26,255 | ||||||||||||||||||||||||
North East Asia | 12,331 | 12,535 | 12,602 | 13,136 | 13,207 | 13,219 | 13,077 | 12,999 | ||||||||||||||||||||||||
North America | 10,744 | 10,860 | 11,518 | 11,765 | 11,993 | 11,706 | 10,501 | 10,327 | ||||||||||||||||||||||||
Europe and Latin America 1) | 45,380 | 45,821 | 47,521 | 47,500 | 48,023 | 48,144 | 47,240 | 46,994 | ||||||||||||||||||||||||
Middle East and Africa | 4,481 | 4,487 | 4,523 | 4,549 | 4,545 | 4,577 | 4,514 | 4,492 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 99,952 | 101,351 | 103,890 | 104,931 | 105,529 | 104,490 | 101,459 | 101,067 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
1) Of which in Sweden | 13,977 | 14,109 | 14,713 | 14,384 | 14,481 | 14,444 | 14,564 | 14,195 |
Note 10 – Business combinations
On April 3, 2023, Cradlepoint, a wholly owned subsidiary of Ericsson, made a small acquisition and acquired 100% of the shares in Israel-based Ericom Software Limited in an all cash transaction. Ericom, with their advanced enterprise cloud security platform, will solidify Cradlepoint’s SASE (secure access service edge) and zero trust offerings for hybrid 5G and wireline environments. Goodwill in this transaction represents future technology and technology synergies and is not expected to be deductible for tax purposes. Balances to facilitate the purchase price allocation are final.
41 Ericsson | Fourth quarter and full-year report 2023 | Accounting policies and Explanatory notes |
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. APMs should not be viewed as substitutes for income statement or cash flow items computed in accordance with IFRS.
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 2022.
42 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
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 sales.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, year over year change | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Reported net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Acquired business | — | -1,000 | -4,154 | -3,894 | -4,090 | -2,925 | — | — | ||||||||||||||||||||||||
Net FX impact | -111 | -2,052 | -3,662 | -3,596 | -9,489 | -7,437 | -5,034 | -4,008 | ||||||||||||||||||||||||
Comparable net sales, excluding FX impact | 71,770 | 61,421 | 56,628 | 55,063 | 72,401 | 57,678 | 57,431 | 51,053 | ||||||||||||||||||||||||
Com parable quarter net sales adj. for acq/div business | 85,980 | 68,040 | 62,292 | 55,061 | 71,332 | 56,263 | 54,941 | 49,778 | ||||||||||||||||||||||||
Sales growth adjusted for comparable units and currency (% ) | -17 | % | -10 | % | -9 | % | 0 | % | 1 | % | 3 | % | 5 | % | 3 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, year over year change | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Reported net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
Acquired business | -9,048 | -9,048 | -8,048 | -3,894 | -7,015 | -2,925 | — | — | ||||||||||||||||||||||||
Net FX impact | -9,421 | -9,310 | -7,258 | -3,596 | -25,968 | -16,479 | -9,042 | -4,008 | ||||||||||||||||||||||||
Com parable net sales, excluding FX impact | 244,882 | 173,112 | 111,691 | 55,063 | 238,563 | 166,162 | 108,484 | 51,053 | ||||||||||||||||||||||||
Com parable quarter net sales adj for acq/div business | 271,373 | 185,393 | 117,353 | 55,061 | 232,314 | 160,982 | 104,719 | 49,778 | ||||||||||||||||||||||||
Sales growth adjusted for comparable units and currency (% ) | -10 | % | -7 | % | -5 | % | 0 | % | 3 | % | 3 | % | 4 | % | 3 | % |
43 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Items excluding restructuring charges and goodwill impairments
Gross income, operating expenses, and EBIT are presented excluding restructuring charges and goodwill impairments and, for certain measures, as a percentage of net sales.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Gross income | 28,605 | 24,728 | 24,101 | 24,168 | 35,569 | 28,135 | 26,302 | 23,289 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Gross margin (%) | 39.8 | % | 38.4 | % | 37.4 | % | 38.6 | % | 41.4 | % | 41.4 | % | 42.1 | % | 42.3 | % | ||||||||||||||||
Gross income | 28,605 | 24,728 | 24,101 | 24,168 | 35,569 | 28,135 | 26,302 | 23,289 | ||||||||||||||||||||||||
Restructuring charges included in cost of sales | 956 | 548 | 552 | 746 | 96 | 55 | 42 | 2 | ||||||||||||||||||||||||
Gross income excluding restructuring charges | 29,561 | 25,276 | 24,653 | 24,914 | 35,665 | 28,190 | 26,344 | 23,291 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Gross margin excluding restructuring charges (%) | 41.1 | % | 39.2 | % | 38.3 | % | 39.8 | % | 41.5 | % | 41.4 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
Operating expenses | -22,686 | -21,629 | -24,733 | -21,139 | -24,909 | -21,283 | -19,365 | -17,473 | ||||||||||||||||||||||||
Restructuring charges included in R&D expenses | 484 | 197 | 1,659 | 91 | 10 | 7 | 4 | 33 | ||||||||||||||||||||||||
Restructuring charges included in selling and administrative expenses | 80 | 143 | 922 | 143 | 122 | 19 | 3 | 6 | ||||||||||||||||||||||||
Operating expenses excluding restructuring charges | -22,122 | -21,289 | -22,152 | -20,905 | -24,777 | -21,257 | -19,358 | -17,434 | ||||||||||||||||||||||||
EBIT (loss) | 5,848 | -28,908 | -312 | 3,046 | 7,853 | 7,115 | 7,308 | 4,744 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
EBIT margin (%) | 8.1 | % | -44.8 | % | -0.5 | % | 4.9 | % | 9.1 | % | 10.5 | % | 11.7 | % | 8.6 | % | ||||||||||||||||
EBIT (loss) | 5,848 | -28,908 | -312 | 3,046 | 7,853 | 7,115 | 7,308 | 4,744 | ||||||||||||||||||||||||
Total restructuring charges | 1,520 | 888 | 3,133 | 980 | 228 | 81 | 49 | 41 | ||||||||||||||||||||||||
EBIT (loss) excluding restructuring charges | 7,368 | -28,020 | 2,821 | 4,026 | 8,081 | 7,196 | 7,357 | 4,785 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges (%) | 10.3 | % | -43.5 | % | 4.4 | % | 6.4 | % | 9.4 | % | 10.6 | % | 11.8 | % | 8.7 | % | ||||||||||||||||
EBIT (loss) excluding restructuring charges | 7,368 | -28,020 | 2,821 | 4,026 | 8,081 | 7,196 | 7,357 | 4,785 | ||||||||||||||||||||||||
Impairment of goodwill | — | 31,897 | — | — | — | — | — | — | ||||||||||||||||||||||||
EBIT excluding restructuring charges and goodwill impairments | 7,368 | 3,877 | 2,821 | 4,026 | 8,081 | 7,196 | 7,357 | 4,785 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges and goodwill impairments (%) | 10.3 | % | 6.0 | % | 4.4 | % | 6.4 | % | 9.4 | % | 10.6 | % | 11.8 | % | 8.7 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Gross income | 101,602 | 72,997 | 48,269 | 24,168 | 113,295 | 77,726 | 49,591 | 23,289 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
Gross margin (%) | 38.6 | % | 38.1 | % | 38.0 | % | 38.6 | % | 41.7 | % | 41.9 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
Gross income | 101,602 | 72,997 | 48,269 | 24,168 | 113,295 | 77,726 | 49,591 | 23,289 | ||||||||||||||||||||||||
Restructuring charges included in cost of sales | 2,802 | 1,846 | 1,298 | 746 | 195 | 99 | 44 | 2 | ||||||||||||||||||||||||
Gross income excluding restructuring charges | 104,404 | 74,843 | 49,567 | 24,914 | 113,490 | 77,825 | 49,635 | 23,291 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
Gross margin excluding restructuring charges (%) | 39.6 | % | 39.1 | % | 39.0 | % | 39.8 | % | 41.8 | % | 41.9 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
Operating expenses | -90,187 | -67,501 | -45,872 | -21,139 | -83,030 | -58,121 | -36,838 | -17,473 | ||||||||||||||||||||||||
Restructuring charges included in R&D expenses | 2,431 | 1,947 | 1,750 | 91 | 54 | 44 | 37 | 33 | ||||||||||||||||||||||||
Restructuring charges included in selling and administrative expenses | 1,288 | 1,208 | 1,065 | 143 | 150 | 28 | 9 | 6 | ||||||||||||||||||||||||
Operating expenses excluding restructuring charges | -86,468 | -64,346 | -43,057 | -20,905 | -82,826 | -58,049 | -36,792 | -17,434 | ||||||||||||||||||||||||
EBIT (loss) | -20,326 | -26,174 | 2,734 | 3,046 | 27,020 | 19,167 | 12,052 | 4,744 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
EBIT margin (%) | -7.7 | % | -13.7 | % | 2.2 | % | 4.9 | % | 10.0 | % | 10.3 | % | 10.3 | % | 8.6 | % | ||||||||||||||||
EBIT (loss) | -20,326 | -26,174 | 2,734 | 3,046 | 27,020 | 19,167 | 12,052 | 4,744 | ||||||||||||||||||||||||
Total restructuring charges | 6,521 | 5,001 | 4,113 | 980 | 399 | 171 | 90 | 41 | ||||||||||||||||||||||||
EBIT (loss) excluding restructuring charges | -13,805 | -21,173 | 6,847 | 4,026 | 27,419 | 19,338 | 12,142 | 4,785 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges (%) | -5.2 | % | -11.1 | % | 5.4 | % | 6.4 | % | 10.1 | % | 10.4 | % | 10.3 | % | 8.7 | % | ||||||||||||||||
EBIT (loss) excluding restructuring charges | -13,805 | -21,173 | 6,847 | 4,026 | 27,419 | 19,338 | 12,142 | 4,785 | ||||||||||||||||||||||||
Impairment of goodwill | 31,897 | 31,897 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
EBIT excluding restructuring charges and goodwill impairments | 18,092 | 10,724 | 6,847 | 4,026 | 27,419 | 19,338 | 12,142 | 4,785 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
EBIT margin excluding restructuring charges and good will impairments (%) | 6.9 | % | 5.6 | % | 5.4 | % | 6.4 | % | 10.1 | % | 10.4 | % | 10.3 | % | 8.7 | % |
44 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin / EBITA and EBITA margin excluding restructuring charges
Earnings before interest, taxes, amortizations and write-downs of acquired intangibles (including goodwill) also expressed as a percentage of net sales.
EBITA excluding restructuring charges also expressed as a percentage of net sales.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Net income (loss) | 3,409 | -30,491 | -597 | 1,575 | 6,190 | 5,360 | 4,650 | 2,912 | ||||||||||||||||||||||||
Income tax | 1,501 | 864 | -134 | 554 | 1,189 | 1,220 | 1,899 | 1,189 | ||||||||||||||||||||||||
Financial income and expenses, net | 938 | 719 | 419 | 917 | 474 | 535 | 759 | 643 | ||||||||||||||||||||||||
Amortizations and w rite-downs of acquired intangibles1) | 846 | 32,736 | 854 | 802 | 1,196 | 498 | 158 | 199 | ||||||||||||||||||||||||
EBITA | 6,694 | 3,828 | 542 | 3,848 | 9,049 | 7,613 | 7,466 | 4,943 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
EBITA margin (%) | 9.3 | % | 5.9 | % | 0.8 | % | 6.2 | % | 10.5 | % | 11.2 | % | 12.0 | % | 9.0 | % | ||||||||||||||||
Restructuring charges | 1,520 | 888 | 3,133 | 980 | 228 | 81 | 49 | 41 | ||||||||||||||||||||||||
EBITA excluding restructuring charges | 8,214 | 4,716 | 3,675 | 4,828 | 9,277 | 7,694 | 7,515 | 4,984 | ||||||||||||||||||||||||
EBITA margin excluding restructuring charges (%) | 11.4 | % | 7.3 | % | 5.7 | % | 7.7 | % | 10.8 | % | 11.3 | % | 12.0 | % | 9.1 | % |
1) | Of which segment Enterprise 813 in Q4 2023, 32,702 in Q3 2023 ,788 in Q2 2023, 767 in Q1 2023, 1,062 in Q4 2022, 447 in Q3 2022, 107 in Q2 2022 and 117 in Q1 2022. |
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Net income (loss) | -26,104 | -29,513 | 978 | 1,575 | 19,112 | 12,922 | 7,562 | 2,912 | ||||||||||||||||||||||||
Income tax | 2,785 | 1,284 | 420 | 554 | 5,497 | 4,308 | 3,088 | 1,189 | ||||||||||||||||||||||||
Financial income and expenses, net | 2,993 | 2,055 | 1,336 | 917 | 2,411 | 1,937 | 1,402 | 643 | ||||||||||||||||||||||||
Amortizations and write-downs of acquired intangibles1) | 35,238 | 34,392 | 1,656 | 802 | 2,051 | 855 | 357 | 199 | ||||||||||||||||||||||||
EBITA | 14,912 | 8,218 | 4,390 | 3,848 | 29,071 | 20,022 | 12,409 | 4,943 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
EBITA margin (%) | 5.7 | % | 4.3 | % | 3.5 | % | 6.2 | % | 10.7 | % | 10.8 | % | 10.6 | % | 9.0 | % | ||||||||||||||||
Restructuring charges | 6,521 | 5,001 | 4,113 | 980 | 399 | 171 | 90 | 41 | ||||||||||||||||||||||||
EBITA excluding restructuring charges | 21,433 | 13,219 | 8,503 | 4,828 | 29,470 | 20,193 | 12,499 | 4,984 | ||||||||||||||||||||||||
EBITA margin excluding restructuring charges (%) | 8.1 | % | 6.9 | % | 6.7 | % | 7.7 | % | 10.9 | % | 10.9 | % | 10.6 | % | 9.1 | % |
1) | Of which segment Enterprise 35,070 in Jan-Dec 2023, 34,257 in Jan-Sep 2023, 1,555 in Jan-Jun 2023, 767 in Jan-Mar 2023, 1,733 in Jan-Dec 2022, 671 in Jan-Sep 2022, 224 in Jan-Jun 2022 and 117 in Jan-Mar 2022. |
Additionally, Ericsson provides forward-looking targets for EBITA margin excluding restructuring charges and free cash flow before M&A, which are non-IFRS financial measures. Ericsson has not provided quantitative reconciliation of these targets to the most directly comparable IFRS measures because certain information needed to reconcile these non-IFRS financial measures to the most comparable IFRS financial measures are dependent on specific items or impacts that are not yet determined, are subject to incarcerating and variability in timing and amount due to their nature, are outside of Ericsson’s control or cannot be predicted, including items and impacts such as currency exchange rate changes, acquisitions and disposals, and charges such as impairments or acquisition related charges. Accordingly, reconciliation of these non-IFRS forward-looking financial measures to the most directly comparable IFRS financial measures are not available without unreasonable efforts. Such unavailable reconciling items could significantly impact our results of operations and financial condition.
Rolling four quarters of net sales and EBIT margin excluding restructuring charges (%)
Net sales, EBIT margin and restructuring charges as a sum of last four quarters.
2023 | 2022 | |||||||||||||||||||||||||||||||
Rolling four quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Net sales | 263,351 | 277,450 | 281,017 | 279,038 | 271,546 | 256,898 | 245,121 | 237,597 | ||||||||||||||||||||||||
EBIT (loss) | -20,326 | -18,321 | 17,702 | 25,322 | 27,020 | 31,028 | 32,748 | 31,263 | ||||||||||||||||||||||||
Restructuring charges | 6,521 | 5,229 | 4,422 | 1,338 | 399 | 634 | 558 | 513 | ||||||||||||||||||||||||
EBIT (loss) excl. restr. charges | -13,805 | -13,092 | 22,124 | 26,660 | 27,419 | 31,662 | 33,306 | 31,776 | ||||||||||||||||||||||||
EBIT margin excl. restr. charges (% ) | -5.2 | % | -4.7 | % | 7.9 | % | 9.6 | % | 10.1 | % | 12.3 | % | 13.6 | % | 13.4 | % |
45 Ericsson | Fourth quarter and full-year report 2023 | 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).
2023 | 2022 | |||||||||||||||||||||||||||||||
SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Cash and cash equivalents | 35,190 | 26,900 | 22,331 | 34,133 | 38,349 | 36,749 | 93,618 | 76,856 | ||||||||||||||||||||||||
+ Interest-bearing securities, current | 9,584 | 9,553 | 8,513 | 9,259 | 8,736 | 6,640 | 3,715 | 12,292 | ||||||||||||||||||||||||
+ Interest-bearing securities, non-current | 9,931 | 4,032 | 4,878 | 3,925 | 9,164 | 2,423 | 3,061 | 15,022 | ||||||||||||||||||||||||
Gross cash, end of period | 54,705 | 40,485 | 35,722 | 47,317 | 56,249 | 45,812 | 100,394 | 104,170 | ||||||||||||||||||||||||
- Borrowings, current | 17,655 | 18,772 | 10,354 | 11,577 | 5,984 | 5,437 | 3,686 | 10,403 | ||||||||||||||||||||||||
- Borrowings, non-current | 29,218 | 20,103 | 23,476 | 22,167 | 26,946 | 26,994 | 26,363 | 28,599 | ||||||||||||||||||||||||
Net cash, end of period | 7,832 | 1,610 | 1,892 | 13,573 | 23,319 | 13,381 | 70,345 | 65,168 |
Total assets less non-interest-bearing provisions and liabilities (which includes non-current provisions, deferred tax liabilities, contract liabilities, other non-current liabilities, current provisions, trade payables, current tax liabilities and other current liabilities).
2023 | 2022 | |||||||||||||||||||||||||||||||
SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Total assets | 297,036 | 306,349 | 343,358 | 345,658 | 349,537 | 361,166 | 332,453 | 323,935 | ||||||||||||||||||||||||
Non-interest-bearing provisions and liabilities | ||||||||||||||||||||||||||||||||
Provisions, non-current | 4,927 | 5,190 | 5,263 | 4,119 | 3,959 | 4,511 | 4,020 | 4,498 | ||||||||||||||||||||||||
Deferred tax liabilities | 3,880 | 4,343 | 4,887 | 4,986 | 4,784 | 8,025 | 1,250 | 1,012 | ||||||||||||||||||||||||
Other non-current liabilities | 755 | 812 | 788 | 716 | 745 | 791 | 762 | 1,070 | ||||||||||||||||||||||||
Provisions, current | 6,779 | 6,345 | 6,742 | 6,422 | 7,629 | 6,051 | 5,648 | 5,699 | ||||||||||||||||||||||||
Contract liabilities | 34,416 | 41,234 | 44,237 | 47,916 | 42,251 | 41,105 | 41,547 | 39,875 | ||||||||||||||||||||||||
Trade payables | 27,768 | 30,629 | 35,463 | 34,554 | 38,437 | 40,864 | 39,539 | 35,316 | ||||||||||||||||||||||||
Current tax liabilities | 3,561 | 3,029 | 2,665 | 2,478 | 2,640 | 5,008 | 6,703 | 5,701 | ||||||||||||||||||||||||
Other current liabilities | 36,985 | 43,841 | 45,637 | 49,064 | 46,193 | 50,554 | 40,346 | 41,919 | ||||||||||||||||||||||||
Capital employed | 177,965 | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 |
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.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Annualized net sales | 287,524 | 257,892 | 257,776 | 250,212 | 343,920 | 272,160 | 249,860 | 220,244 | ||||||||||||||||||||||||
Average capital employed | ||||||||||||||||||||||||||||||||
Capital employed at beginning of period | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | 184,283 | ||||||||||||||||||||||||
Capital employed at end of period | 177,965 | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | ||||||||||||||||||||||||
Average capital employed | 174,446 | 184,301 | 196,540 | 199,151 | 203,578 | 198,448 | 190,742 | 186,564 | ||||||||||||||||||||||||
Capital turnover (times) | 1.6 | 1.4 | 1.3 | 1.3 | 1.7 | 1.4 | 1.3 | 1.2 | ||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
Annualized net sales | 263,351 | 255,293 | 253,994 | 250,212 | 271,546 | 247,421 | 235,052 | 220,244 | ||||||||||||||||||||||||
Average capital employed | ||||||||||||||||||||||||||||||||
Capital employed at beginning of period | 202,899 | 202,899 | 202,899 | 202,899 | 184,283 | 184,283 | 184,283 | 184,283 | ||||||||||||||||||||||||
Capital employed at end of period | 177,965 | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | ||||||||||||||||||||||||
Average capital employed | 190,432 | 186,913 | 200,288 | 199,151 | 193,591 | 194,270 | 188,461 | 186,564 | ||||||||||||||||||||||||
Capital turn over (times) | 1.4 | 1.4 | 1.3 | 1.3 | 1.4 | 1.3 | 1.2 | 1.2 |
46 Ericsson | Fourth quarter and full-year report 2023 | 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.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
EBIT (loss) | 5,848 | -28,908 | -312 | 3,046 | 7,853 | 7,115 | 7,308 | 4,744 | ||||||||||||||||||||||||
Annualized EBIT (loss) | 23,392 | -115,632 | -1,248 | 12,184 | 31,412 | 28,460 | 29,232 | 18,976 | ||||||||||||||||||||||||
Average capital employed | ||||||||||||||||||||||||||||||||
Capital employed at beginning of period | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | 184,283 | ||||||||||||||||||||||||
Capital employed at end of period | 177,965 | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | ||||||||||||||||||||||||
Average capital employed | 174,446 | 184,301 | 196,540 | 199,151 | 203,578 | 198,448 | 190,742 | 186,564 | ||||||||||||||||||||||||
Return on capital employed (%) | 13.4 | % | -62.7 | % | -0.6 | % | 6.1 | % | 15.4 | % | 14.3 | % | 15.3 | % | 10.2 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
EBIT (loss) | -20,326 | -26,174 | 2,734 | 3,046 | 27,020 | 19,167 | 12,052 | 4,744 | ||||||||||||||||||||||||
Annualized EBIT (loss) | -20,326 | -34,899 | 5,468 | 12,184 | 27,020 | 25,556 | 24,104 | 18,976 | ||||||||||||||||||||||||
Average capital employed | ||||||||||||||||||||||||||||||||
Capital employed at beginning of period | 202,899 | 202,899 | 202,899 | 202,899 | 184,283 | 184,283 | 184,283 | 184,283 | ||||||||||||||||||||||||
Capital employed at end of period | 177,965 | 170,926 | 197,676 | 195,403 | 202,899 | 204,257 | 192,638 | 188,845 | ||||||||||||||||||||||||
Average capital employed | 190,432 | 186,913 | 200,288 | 199,151 | 193,591 | 194,270 | 188,461 | 186,564 | ||||||||||||||||||||||||
Return on capital employed (%) | -10.7 | % | -18.7 | % | 2.7 | % | 6.1 | % | 14.0 | % | 13.2 | % | 12.8 | % | 10.2 | % |
Equity expressed as a percentage of total assets.
2023 | 2022 | |||||||||||||||||||||||||||||||
SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Total equity | 97,408 | 105,435 | 132,355 | 125,832 | 133,304 | 136,820 | 127,799 | 109,879 | ||||||||||||||||||||||||
Total assets | 297,036 | 306,349 | 343,358 | 345,658 | 349,537 | 361,166 | 332,453 | 323,935 | ||||||||||||||||||||||||
Equity ratio (%) | 32.8 | % | 34.4 | % | 38.5 | % | 36.4 | % | 38.1 | % | 37.9 | % | 38.4 | % | 33.9 | % |
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.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Net income (loss) attributable to owners of the Parent Company | 3,394 | -30,670 | -686 | 1,516 | 6,066 | 5,214 | 4,504 | 2,940 | ||||||||||||||||||||||||
Annualized | 13,576 | -122,680 | -2,744 | 6,064 | 24,264 | 20,856 | 18,016 | 11,760 | ||||||||||||||||||||||||
Average stockholders’ equity | ||||||||||||||||||||||||||||||||
Stockholders’ equity, beginning of period | 106,791 | 133,869 | 127,396 | 134,814 | 138,607 | 129,620 | 111,701 | 108,775 | ||||||||||||||||||||||||
Stockholders’ equity, end of period | 98,673 | 106,791 | 133,869 | 127,396 | 134,814 | 138,607 | 129,620 | 111,701 | ||||||||||||||||||||||||
Average stockholders’ equity | 102,732 | 120,330 | 130,633 | 131,105 | 136,711 | 134,114 | 120,661 | 110,238 | ||||||||||||||||||||||||
Return on equity (%) | 13.2 | % | -102.0 | % | -2.1 | % | 4.6 | % | 17.7 | % | 15.6 | % | 14.9 | % | 10.7 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Net income (loss) attributable to owners of the Parent Company | -26,446 | -29,840 | 830 | 1,516 | 18,724 | 12,658 | 7,444 | 2,940 | ||||||||||||||||||||||||
Annualized | -26,446 | -39,787 | 1,660 | 6,064 | 18,724 | 16,877 | 14,888 | 11,760 | ||||||||||||||||||||||||
Average stockholders’ equity | ||||||||||||||||||||||||||||||||
Stockholders’ equity, beginning of period | 134,814 | 134,814 | 134,814 | 134,814 | 108,775 | 108,775 | 108,775 | 108,775 | ||||||||||||||||||||||||
Stockholders’ equity, end of period | 98,673 | 106,791 | 133,869 | 127,396 | 134,814 | 138,607 | 129,620 | 111,701 | ||||||||||||||||||||||||
Average stockholders’ equity | 116,744 | 120,803 | 134,342 | 131,105 | 121,795 | 123,691 | 119,198 | 110,238 | ||||||||||||||||||||||||
Return on equity (%) | -22.7 | % | -32.9 | % | 1.2 | % | 4.6 | % | 15.4 | % | 13.6 | % | 12.5 | % | 10.7 | % |
47 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Free cash flow before M&A / Free cash flow after M&A/ Free cash flow after M&A (% of net sales)
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.
Free cash flow after M&A (% of net sales): Free cash flow after M&A as a percentage of net sales.
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Cash flow from operating activities | 14,482 | 1,402 | -2,882 | -5,825 | 19,895 | 4,651 | 6,287 | 30 | ||||||||||||||||||||||||
Net capital expenditures and other investments (excl M&A) | ||||||||||||||||||||||||||||||||
Investments in property, plant and equipment | -720 | -817 | -806 | -954 | -1,502 | -1,104 | -1,053 | -818 | ||||||||||||||||||||||||
Sales of property, plant and equipment | 37 | 51 | 42 | 33 | 76 | 74 | 61 | 38 | ||||||||||||||||||||||||
Product development | -551 | -485 | -562 | -575 | -717 | -414 | -301 | -288 | ||||||||||||||||||||||||
Other investments ¹) | -1 | 0 | -94 | -2 | -121 | -1 | 23 | -27 | ||||||||||||||||||||||||
Repayment of lease liabilities | -783 | -691 | -690 | -693 | -765 | -658 | -577 | -593 | ||||||||||||||||||||||||
Free cash flow before M&A | 12,464 | -540 | -4,992 | -8,016 | 16,866 | 2,548 | 4,440 | -1,658 | ||||||||||||||||||||||||
Acquisitions/ divestments of subs and other operations, net | -225 | -160 | -911 | -844 | -445 | -51,412 | 123 | 46 | ||||||||||||||||||||||||
Free cash flow after M&A | 12,239 | -700 | -5,903 | -8,860 | 16,421 | -48,864 | 4,563 | -1,612 | ||||||||||||||||||||||||
Net sales | 71,881 | 64,473 | 64,444 | 62,553 | 85,980 | 68,040 | 62,465 | 55,061 | ||||||||||||||||||||||||
Free cash flow after M&A (% of net sales) | 17.0 | % | -1.1 | % | -9.2 | % | -14.2 | % | 19.1 | % | -71.8 | % | 7.3 | % | -2.9 | % | ||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Cash flow from operating activities | 7,177 | -7,305 | -8,707 | -5,825 | 30,863 | 10,968 | 6,317 | 30 | ||||||||||||||||||||||||
Net capital expenditures and other investments (excl M&A) | ||||||||||||||||||||||||||||||||
Investments in property, plant and equipment | -3,297 | -2,577 | -1,760 | -954 | -4,477 | -2,975 | -1,871 | -818 | ||||||||||||||||||||||||
Sales of property, plant and equipment | 163 | 126 | 75 | 33 | 249 | 173 | 99 | 38 | ||||||||||||||||||||||||
Product development | -2,173 | -1,622 | -1,137 | -575 | -1,720 | -1,003 | -589 | -288 | ||||||||||||||||||||||||
Other investments ¹) | -97 | -96 | -96 | -2 | -126 | -5 | -4 | -27 | ||||||||||||||||||||||||
Repayment of lease liabilities | -2,857 | -2,074 | -1,383 | -693 | -2,593 | -1,828 | -1,170 | -593 | ||||||||||||||||||||||||
Free cash flow before M&A | -1,084 | -13,548 | -13,008 | -8,016 | 22,196 | 5,330 | 2,782 | -1,658 | ||||||||||||||||||||||||
Acquisitions/ divestments of subs and other operations, net | -2,140 | -1,915 | -1,755 | -844 | -51,688 | -51,243 | 169 | 46 | ||||||||||||||||||||||||
Free cash flow after M&A | -3,224 | -15,463 | -14,763 | -8,860 | -29,492 | -45,913 | 2,951 | -1,612 | ||||||||||||||||||||||||
Net sales | 263,351 | 191,470 | 126,997 | 62,553 | 271,546 | 185,566 | 117,526 | 55,061 | ||||||||||||||||||||||||
Free cash flow after M&A (% of net sales) | -1.2 | % | -8.1 | % | -11.6 | % | -14.2 | % | -10.9 | % | -24.7 | % | 2.5 | % | -2.9 | % |
1) | Other investments is part of the line item Other investing activities in the Consolidated cash flow statement. The differences are movements in other interest-bearing assets and the cash flow hedge reserve gain, which are not to be part of the definition of Free cash flow. |
48 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Sales growth by segment adjusted for comparable units and currency*)
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarter, year over year change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | -23 | % | -16 | % | -13 | % | -2 | % | 1 | % | 4 | % | — | — | ||||||||||||||||||
Cloud Software and Services | -4 | % | 5 | % | 1 | % | 5 | % | 2 | % | -5 | % | — | — | ||||||||||||||||||
Enterprise | 7 | % | 11 | % | 20 | % | 19 | % | 15 | % | 21 | % | — | — | ||||||||||||||||||
Other | -27 | % | -8 | % | -18 | % | 0 | % | 10 | % | -1 | % | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -17 | % | -10 | % | -9 | % | 0 | % | 1 | % | 3 | % | 5 | % | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, year over year change, percent | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | -15 | % | -11 | % | -8 | % | -2 | % | 4 | % | 5 | % | — | — | ||||||||||||||||||
Cloud Software and Services | 1 | % | 4 | % | 3 | % | 5 | % | -1 | % | -3 | % | — | — | ||||||||||||||||||
Enterprise | 11 | % | 14 | % | 20 | % | 19 | % | 16 | % | 17 | % | — | — | ||||||||||||||||||
Other | -14 | % | -8 | % | -8 | % | 0 | % | 3 | % | 0 | % | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -10 | % | -7 | % | -5 | % | 0 | % | 3 | % | 3 | % | 4 | % | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Sales growth by segment adjusted for comparable units and currency has not been restated by segment for the first two quarters of 2022 due to the re-organization in 2022. |
Sales growth by market area adjusted for comparable units and currency
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarter, year over year change, percent | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
South East Asia, Oceania and India | 7 | % | 74 | % | 71 | % | 132 | % | 21 | % | 13 | % | 6 | % | -17 | % | ||||||||||||||||
North East Asia | 11 | % | -2 | % | -32 | % | -19 | % | -16 | % | -6 | % | -1 | % | -20 | % | ||||||||||||||||
North America | -43 | % | -51 | % | -42 | % | -26 | % | -7 | % | 9 | % | 12 | % | 9 | % | ||||||||||||||||
Europe and Latin America | -12 | % | -6 | % | -3 | % | -12 | % | 0 | % | 0 | % | 4 | % | 15 | % | ||||||||||||||||
Middle East and Africa | 4 | % | 10 | % | -4 | % | -8 | % | -4 | % | 3 | % | 8 | % | -9 | % | ||||||||||||||||
Other | -24 | % | 21 | % | 38 | % | 28 | % | 60 | % | -21 | % | -24 | % | 31 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -17 | % | -10 | % | -9 | % | 0 | % | 1 | % | 3 | % | 5 | % | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, year over year change, percent | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
South East Asia, Oceania and India | 61 | % | 88 | % | 97 | % | 132 | % | 7 | % | 1 | % | -5 | % | -17 | % | ||||||||||||||||
North East Asia | -9 | % | -19 | % | -26 | % | -19 | % | -11 | % | -9 | % | -10 | % | -20 | % | ||||||||||||||||
North America | -41 | % | -41 | % | -35 | % | -26 | % | 5 | % | 10 | % | 10 | % | 9 | % | ||||||||||||||||
Europe and Latin America | -9 | % | -7 | % | -8 | % | -12 | % | 4 | % | 6 | % | 9 | % | 15 | % | ||||||||||||||||
Middle East and Africa | 1 | % | 0 | % | -6 | % | -8 | % | -1 | % | 1 | % | 0 | % | -9 | % | ||||||||||||||||
Other | 3 | % | 27 | % | 33 | % | 28 | % | 9 | % | -11 | % | -4 | % | 31 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -10 | % | -7 | % | -5 | % | 0 | % | 3 | % | 3 | % | 4 | % | 3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Gross margin by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 41.4 | % | 38.9 | % | 38.4 | % | 39.7 | % | 44.4 | % | 44.4 | % | 45.1 | % | 44.7 | % | ||||||||||||||||
Cloud Software and Services | 36.7 | % | 35.3 | % | 32.7 | % | 33.4 | % | 33.0 | % | 31.8 | % | 33.5 | % | 35.0 | % | ||||||||||||||||
Enterprise | 44.3 | % | 48.7 | % | 46.3 | % | 47.4 | % | 45.7 | % | 48.8 | % | 52.8 | % | 55.2 | % | ||||||||||||||||
Other | -26.0 | % | -23.6 | % | -22.2 | % | -2.6 | % | -4.3 | % | -25.2 | % | -3.3 | % | -5.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 39.8 | % | 38.4 | % | 37.4 | % | 38.6 | % | 41.4 | % | 41.4 | % | 42.1 | % | 42.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 39.6 | % | 39.0 | % | 39.1 | % | 39.7 | % | 44.6 | % | 44.7 | % | 44.9 | % | 44.7 | % | ||||||||||||||||
Cloud Software and Services | 34.7 | % | 33.8 | % | 33.0 | % | 33.4 | % | 33.2 | % | 33.3 | % | 34.2 | % | 35.0 | % | ||||||||||||||||
Enterprise | 46.7 | % | 47.5 | % | 46.8 | % | 47.4 | % | 48.6 | % | 50.8 | % | 54.0 | % | 55.2 | % | ||||||||||||||||
Other | -18.2 | % | -15.6 | % | -11.0 | % | -2.6 | % | -9.3 | % | -11.2 | % | -4.4 | % | -5.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 38.6 | % | 38.1 | % | 38.0 | % | 38.6 | % | 41.7 | % | 41.9 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT margin by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 13.6 | % | 11.1 | % | 6.2 | % | 14.2 | % | 21.2 | % | 19.9 | % | 19.3 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | 9.4 | % | 0.6 | % | -7.9 | % | -7.0 | % | 3.3 | % | -5.6 | % | -5.2 | % | -6.9 | % | ||||||||||||||||
Enterprise | -24.5 | % | -499.1 | % | -26.3 | % | -28.6 | % | -30.0 | % | -29.2 | % | -34.8 | % | -33.2 | % | ||||||||||||||||
Other | -72.9 | % | -45.6 | % | -10.8 | % | -46.3 | % | -407.2 | % | -33.5 | % | -29.7 | % | -224.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 8.1 | % | -44.8 | % | -0.5 | % | 4.9 | % | 9.1 | % | 10.5 | % | 11.7 | % | 8.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 11.3 | % | 10.5 | % | 10.2 | % | 14.2 | % | 19.9 | % | 19.3 | % | 19.0 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | -0.3 | % | -4.7 | % | -7.5 | % | -7.0 | % | -2.8 | % | -5.9 | % | -6.0 | % | -6.9 | % | ||||||||||||||||
Enterprise | -148.9 | % | -192.6 | % | -27.4 | % | -28.6 | % | -30.6 | % | -31.1 | % | -34.0 | % | -33.2 | % | ||||||||||||||||
Other | -45.5 | % | -36.4 | % | -31.1 | % | -46.3 | % | -180.3 | % | -91.7 | % | -120.2 | % | -224.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -7.7 | % | -13.7 | % | 2.2 | % | 4.9 | % | 10.0 | % | 10.3 | % | 10.3 | % | 8.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Restructuring charges by function
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Cost of sales | -956 | -548 | -552 | -746 | -96 | -55 | -42 | -2 | ||||||||||||||||||||||||
Research and development expenses | -484 | -197 | -1,659 | -91 | -10 | -7 | -4 | -33 | ||||||||||||||||||||||||
Selling and administrative expenses | -80 | -143 | -922 | -143 | -122 | -19 | -3 | -6 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -1,520 | -888 | -3,133 | -980 | -228 | -81 | -49 | -41 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Cost of sales | -2,802 | -1,846 | -1,298 | -746 | -195 | -99 | -44 | -2 | ||||||||||||||||||||||||
Research and development expenses | -2,431 | -1,947 | -1,750 | -91 | -54 | -44 | -37 | -33 | ||||||||||||||||||||||||
Selling and administrative expenses | -1,288 | -1,208 | -1,065 | -143 | -150 | -28 | -9 | -6 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -6,521 | -5,001 | -4,113 | -980 | -399 | -171 | -90 | -41 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges by segment
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | -1,292 | -564 | -2,177 | -404 | -65 | -26 | -45 | -10 | ||||||||||||||||||||||||
of which cost of sales | -816 | -408 | -376 | -367 | -69 | -3 | -44 | -10 | ||||||||||||||||||||||||
of which operating expenses | -476 | -156 | -1,801 | -37 | 4 | -23 | -1 | 0 | ||||||||||||||||||||||||
Cloud Software and Services | -183 | -335 | -906 | -500 | -16 | -55 | 0 | -25 | ||||||||||||||||||||||||
of which cost of sales | -119 | -143 | -177 | -367 | 1 | -52 | 2 | 8 | ||||||||||||||||||||||||
of which operating expenses | -64 | -192 | -729 | -133 | -17 | -3 | -2 | -33 | ||||||||||||||||||||||||
Enterprise | -27 | -5 | -52 | -89 | -60 | 0 | -4 | -1 | ||||||||||||||||||||||||
of which cost of sales | 0 | -3 | -1 | -12 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
of which operating expenses | -27 | -2 | -51 | -77 | -60 | 0 | -4 | -1 | ||||||||||||||||||||||||
Other | -18 | 16 | 2 | 13 | -87 | 0 | 0 | -5 | ||||||||||||||||||||||||
of which cost of sales | -21 | 6 | 2 | 0 | -28 | 0 | 0 | 0 | ||||||||||||||||||||||||
of which operating expenses | 3 | 10 | 0 | 13 | -59 | 0 | 0 | -5 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -1,520 | -888 | -3,133 | -980 | -228 | -81 | -49 | -41 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | -4,437 | -3,145 | -2,581 | -404 | -146 | -81 | -55 | -10 | ||||||||||||||||||||||||
of which cost of sales | -1,967 | -1,151 | -743 | -367 | -126 | -57 | -54 | -10 | ||||||||||||||||||||||||
of which operating expenses | -2,470 | -1,994 | -1,838 | -37 | -20 | -24 | -1 | 0 | ||||||||||||||||||||||||
Cloud Software and Services | -1,924 | -1,741 | -1,406 | -500 | -96 | -80 | -25 | -25 | ||||||||||||||||||||||||
of which cost of sales | -806 | -687 | -544 | -367 | -41 | -42 | 10 | 8 | ||||||||||||||||||||||||
of which operating expenses | -1,118 | -1,054 | -862 | -133 | -55 | -38 | -35 | -33 | ||||||||||||||||||||||||
Enterprise | -173 | -146 | -141 | -89 | -65 | -5 | -5 | -1 | ||||||||||||||||||||||||
of which cost of sales | -16 | -16 | -13 | -12 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||
of which operating expenses | -157 | -130 | -128 | -77 | -65 | -5 | -5 | -1 | ||||||||||||||||||||||||
Other | 13 | 31 | 15 | 13 | -92 | -5 | -5 | -5 | ||||||||||||||||||||||||
of which cost of sales | -13 | 8 | 2 | 0 | -28 | 0 | 0 | 0 | ||||||||||||||||||||||||
of which operating expenses | 26 | 23 | 13 | 13 | -64 | -5 | -5 | -5 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -6,521 | -5,001 | -4,113 | -980 | -399 | -171 | -90 | -41 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
51 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
Gross income and gross margin excluding restructuring charges by segment
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 19,443 | 16,554 | 16,694 | 17,236 | 26,125 | 21,369 | 20,779 | 18,221 | ||||||||||||||||||||||||
Cloud Software and Services | 7,293 | 5,637 | 5,121 | 4,843 | 6,663 | 4,568 | 4,690 | 4,226 | ||||||||||||||||||||||||
Enterprise | 2,968 | 3,256 | 2,955 | 2,853 | 2,885 | 2,429 | 900 | 882 | ||||||||||||||||||||||||
Other | -143 | -171 | -117 | -18 | -8 | -176 | -25 | -38 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 29,561 | 25,276 | 24,653 | 24,914 | 35,665 | 28,190 | 26,344 | 23,291 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 43.2 | % | 39.9 | % | 39.3 | % | 40.6 | % | 44.6 | % | 44.4 | % | 45.2 | % | 44.8 | % | ||||||||||||||||
Cloud Software and Services | 37.3 | % | 36.2 | % | 33.9 | % | 36.1 | % | 33.0 | % | 32.1 | % | 33.5 | % | 35.0 | % | ||||||||||||||||
Enterprise | 44.3 | % | 48.8 | % | 46.3 | % | 47.6 | % | 45.7 | % | 48.8 | % | 52.8 | % | 55.2 | % | ||||||||||||||||
Other | -22.8 | % | -24.5 | % | -22.6 | % | -2.6 | % | -1.0 | % | -25.2 | % | -3.3 | % | -5.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 41.1 | % | 39.2 | % | 38.3 | % | 39.8 | % | 41.5 | % | 41.4 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 69,927 | 50,484 | 33,930 | 17,236 | 86,494 | 60,369 | 39,000 | 18,221 | ||||||||||||||||||||||||
Cloud Software and Services | 22,894 | 15,601 | 9,964 | 4,843 | 20,147 | 13,484 | 8,916 | 4,226 | ||||||||||||||||||||||||
Enterprise | 12,032 | 9,064 | 5,808 | 2,853 | 7,096 | 4,211 | 1,782 | 882 | ||||||||||||||||||||||||
Other | -449 | -306 | -135 | -18 | -247 | -239 | -63 | -38 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 104,404 | 74,843 | 49,567 | 24,914 | 113,490 | 77,825 | 49,635 | 23,291 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 40.8 | % | 39.9 | % | 40.0 | % | 40.6 | % | 44.7 | % | 44.8 | % | 45.0 | % | 44.8 | % | ||||||||||||||||
Cloud Software and Services | 36.0 | % | 35.4 | % | 35.0 | % | 36.1 | % | 33.3 | % | 33.4 | % | 34.2 | % | 35.0 | % | ||||||||||||||||
Enterprise | 46.7 | % | 47.6 | % | 46.9 | % | 47.6 | % | 48.6 | % | 50.8 | % | 54.0 | % | 55.2 | % | ||||||||||||||||
Other | -17.7 | % | -16.0 | % | -11.2 | % | -2.6 | % | -8.4 | % | -11.2 | % | -4.4 | % | -5.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 39.6 | % | 39.1 | % | 39.0 | % | 39.8 | % | 41.8 | % | 41.9 | % | 42.2 | % | 42.3 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
52 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
EBIT and EBIT margin excluding restructuring charges by segment
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 7,404 | 5,191 | 4,800 | 6,424 | 12,518 | 9,623 | 8,906 | 7,611 | ||||||||||||||||||||||||
Cloud Software and Services | 2,019 | 421 | -294 | -442 | 689 | -737 | -733 | -812 | ||||||||||||||||||||||||
Enterprise | -1,616 | -33,297 | -1,627 | -1,623 | -1,833 | -1,456 | -589 | -530 | ||||||||||||||||||||||||
Other | -439 | -335 | -58 | -333 | -3,293 | -234 | -227 | -1,484 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 7,368 | -28,020 | 2,821 | 4,026 | 8,081 | 7,196 | 7,357 | 4,785 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 16.5 | % | 12.5 | % | 11.3 | % | 15.1 | % | 21.4 | % | 20.0 | % | 19.4 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | 10.3 | % | 2.7 | % | -1.9 | % | -3.3 | % | 3.4 | % | -5.2 | % | -5.2 | % | -6.7 | % | ||||||||||||||||
Enterprise | -24.1 | % | -499.0 | % | -25.5 | % | -27.1 | % | -29.0 | % | -29.2 | % | -34.6 | % | -33.1 | % | ||||||||||||||||
Other | -70.0 | % | -47.9 | % | -11.2 | % | -48.2 | % | -396.7 | % | -33.5 | % | -29.7 | % | -223.8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 10.3 | % | -43.5 | % | 4.4 | % | 6.4 | % | 9.4 | % | 10.6 | % | 11.8 | % | 8.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 23,819 | 16,415 | 11,224 | 6,424 | 38,658 | 26,140 | 16,517 | 7,611 | ||||||||||||||||||||||||
Cloud Software and Services | 1,704 | -315 | -736 | -442 | -1,593 | -2,282 | -1,545 | -812 | ||||||||||||||||||||||||
Enterprise | -38,163 | -36,547 | -3,250 | -1,623 | -4,408 | -2,575 | -1,119 | -530 | ||||||||||||||||||||||||
Other | -1,165 | -726 | -391 | -333 | -5,238 | -1,945 | -1,711 | -1,484 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -13,805 | -21,173 | 6,847 | 4,026 | 27,419 | 19,338 | 12,142 | 4,785 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 13.9 | % | 13.0 | % | 13.2 | % | 15.1 | % | 20.0 | % | 19.4 | % | 19.1 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | 2.7 | % | -0.7 | % | -2.6 | % | -3.3 | % | -2.6 | % | -5.7 | % | -5.9 | % | -6.7 | % | ||||||||||||||||
Enterprise | -148.2 | % | -191.9 | % | -26.3 | % | -27.1 | % | -30.2 | % | -31.1 | % | -33.9 | % | -33.1 | % | ||||||||||||||||
Other | -46.0 | % | -38.1 | % | -32.4 | % | -48.2 | % | -177.1 | % | -91.4 | % | -119.8 | % | -223.8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -5.2 | % | -11.1 | % | 5.4 | % | 6.4 | % | 10.1 | % | 10.4 | % | 10.3 | % | 8.7 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rolling four quarters of net sales by segment *)
2023 | 2022 | |||||||||||||||||||||||||||||||
Rolling four quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 171,442 | 185,070 | 191,680 | 195,223 | 193,468 | 185,939 | 178,383 | 172,276 | ||||||||||||||||||||||||
Cloud Software and Services | 63,630 | 64,282 | 62,931 | 61,837 | 60,524 | 58,269 | 57,666 | 56,601 | ||||||||||||||||||||||||
Enterprise * | 25,745 | 25,361 | 23,669 | 18,993 | 14,597 | — | — | — | ||||||||||||||||||||||||
Other* | 2,534 | 2,737 | 2,737 | 2,985 | 2,957 | — | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 263,351 | 277,450 | 281,017 | 279,038 | 271,546 | 256,898 | 245,121 | 237,597 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Rolling four quarters of net sales by segment for segments Enterprise and Other have not been restated for the first three quarters of 2022. |
Rolling four quarters of EBIT margin excluding restructuring charges by segment (%) *)
2023 | 2022 | |||||||||||||||||||||||||||||||
Rolling four quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 13.9 | % | 15.6 | % | 17.4 | % | 19.2 | % | 20.0 | % | 20.5 | % | 21.4 | % | 22.0 | % | ||||||||||||||||
Cloud Software and Services | 2.7 | % | 0.6 | % | -1.2 | % | -2.0 | % | -2.6 | % | -2.6 | % | -2.2 | % | -2.9 | % | ||||||||||||||||
Enterprise * | -148.2 | % | -151.3 | % | -27.6 | % | -29.0 | % | -30.2 | % | — | — | — | |||||||||||||||||||
Other* | -46.0 | % | -146.8 | % | -143.1 | % | -136.9 | % | -177.1 | % | — | — | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | -5.2 | % | -4.7 | % | 7.9 | % | 9.6 | % | 10.1 | % | 12.3 | % | 13.6 | % | 13.4 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*) | Rolling four quarters of EBIT margin excluding restructuring charges by segment for segment Enterprise and segment Other have not been restated for the first three quarters of 2022. |
53 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin by segment by quarter
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 6,135 | 4,651 | 2,678 | 6,042 | 12,555 | 9,624 | 8,889 | 7,629 | ||||||||||||||||||||||||
Cloud Software and Services | 1,846 | 96 | -1,190 | -929 | 695 | -769 | -710 | -783 | ||||||||||||||||||||||||
Enterprise | -830 | -600 | -891 | -945 | -831 | -1,009 | -486 | -414 | ||||||||||||||||||||||||
Other | -457 | -319 | -55 | -320 | -3,370 | -233 | -227 | -1,489 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 6,694 | 3,828 | 542 | 3,848 | 9,049 | 7,613 | 7,466 | 4,943 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 13.6 | % | 11.2 | % | 6.3 | % | 14.2 | % | 21.4 | % | 20.0 | % | 19.3 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | 9.4 | % | 0.6 | % | -7.9 | % | -6.9 | % | 3.4 | % | -5.4 | % | -5.1 | % | -6.5 | % | ||||||||||||||||
Enterprise | -12.4 | % | -9.0 | % | -14.0 | % | -15.8 | % | -13.2 | % | -20.3 | % | -28.5 | % | -25.9 | % | ||||||||||||||||
Other | -72.9 | % | -45.6 | % | -10.6 | % | -46.3 | % | -406.0 | % | -33.3 | % | -29.7 | % | -224.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 9.3 | % | 5.9 | % | 0.8 | % | 6.2 | % | 10.5 | % | 11.2 | % | 12.0 | % | 9.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 19,506 | 13,371 | 8,720 | 6,042 | 38,697 | 26,142 | 16,518 | 7,629 | ||||||||||||||||||||||||
Cloud Software and Services | -177 | -2,023 | -2,119 | -929 | -1,567 | -2,262 | -1,493 | -783 | ||||||||||||||||||||||||
Enterprise | -3,266 | -2,436 | -1,836 | -945 | -2,740 | -1,909 | -900 | -414 | ||||||||||||||||||||||||
Other | -1,151 | -694 | -375 | -320 | -5,319 | -1,949 | -1,716 | -1,489 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 14,912 | 8,218 | 4,390 | 3,848 | 29,071 | 20,022 | 12,409 | 4,943 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 11.4 | % | 10.6 | % | 10.3 | % | 14.2 | % | 20.0 | % | 19.4 | % | 19.1 | % | 18.7 | % | ||||||||||||||||
Cloud Software and Services | -0.3 | % | -4.6 | % | -7.4 | % | -6.9 | % | -2.6 | % | -5.6 | % | -5.7 | % | -6.5 | % | ||||||||||||||||
Enterprise | -12.7 | % | -12.8 | % | -14.8 | % | -15.8 | % | -18.8 | % | -23.0 | % | -27.3 | % | -25.9 | % | ||||||||||||||||
Other | -45.4 | % | -36.4 | % | -31.0 | % | -46.3 | % | -179.9 | % | -91.6 | % | -120.2 | % | -224.6 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 5.7 | % | 4.3 | % | 3.5 | % | 6.2 | % | 10.7 | % | 10.8 | % | 10.6 | % | 9.0 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
EBITA and EBITA margin excluding restructuring charges by segment
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, SEK million | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 7,427 | 5,215 | 4,855 | 6,446 | 12,620 | 9,650 | 8,934 | 7,639 | ||||||||||||||||||||||||
Cloud Software and Services | 2,029 | 431 | -284 | -429 | 711 | -714 | -710 | -758 | ||||||||||||||||||||||||
Enterprise | -803 | -595 | -839 | -856 | -771 | -1,009 | -482 | -413 | ||||||||||||||||||||||||
Other | -439 | -335 | -57 | -333 | -3,283 | -233 | -227 | -1,484 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 8,214 | 4,716 | 3,675 | 4,828 | 9,277 | 7,694 | 7,515 | 4,984 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Isolated quarters, as percentage of net sales | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | ||||||||||||||||||||||||
Networks | 16.5 | % | 12.6 | % | 11.4 | % | 15.2 | % | 21.5 | % | 20.0 | % | 19.4 | % | 18.8 | % | ||||||||||||||||
Cloud Software and Services | 10.4 | % | 2.8 | % | -1.9 | % | -3.2 | % | 3.5 | % | -5.0 | % | -5.1 | % | -6.3 | % | ||||||||||||||||
Enterprise | -12.0 | % | -8.9 | % | -13.2 | % | -14.3 | % | -12.2 | % | -20.3 | % | -28.3 | % | -25.8 | % | ||||||||||||||||
Other | -70.0 | % | -47.9 | % | -11.0 | % | -48.2 | % | -395.5 | % | -33.3 | % | -29.7 | % | -223.8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 11.4 | % | 7.3 | % | 5.7 | % | 7.7 | % | 10.8 | % | 11.3 | % | 12.0 | % | 9.1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, SEK million | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 23,943 | 16,516 | 11,301 | 6,446 | 38,843 | 26,223 | 16,573 | 7,639 | ||||||||||||||||||||||||
Cloud Software and Services | 1,747 | -282 | -713 | -429 | -1,471 | -2,182 | -1,468 | -758 | ||||||||||||||||||||||||
Enterprise | -3,093 | -2,290 | -1,695 | -856 | -2,675 | -1,904 | -895 | -413 | ||||||||||||||||||||||||
Other | -1,164 | -725 | -390 | -333 | -5,227 | -1,944 | -1,711 | -1,484 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 21,433 | 13,219 | 8,503 | 4,828 | 29,470 | 20,193 | 12,499 | 4,984 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 | 2022 | |||||||||||||||||||||||||||||||
Year to date, as percentage of net sales | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | Jan-Dec | Jan-Sep | Jan-Jun | Jan-Mar | ||||||||||||||||||||||||
Networks | 14.0 | % | 13.1 | % | 13.3 | % | 15.2 | % | 20.1 | % | 19.4 | % | 19.1 | % | 18.8 | % | ||||||||||||||||
Cloud Software and Services | 2.7 | % | -0.6 | % | -2.5 | % | -3.2 | % | -2.4 | % | -5.4 | % | -5.6 | % | -6.3 | % | ||||||||||||||||
Enterprise | -12.0 | % | -12.0 | % | -13.7 | % | -14.3 | % | -18.3 | % | -23.0 | % | -27.1 | % | -25.8 | % | ||||||||||||||||
Other | -45.9 | % | -38.0 | % | -32.3 | % | -48.2 | % | -176.8 | % | -91.4 | % | -119.8 | % | -223.8 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
Total | 8.1 | % | 6.9 | % | 6.7 | % | 7.7 | % | 10.9 | % | 10.9 | % | 10.6 | % | 9.1 | % | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 | Jan-Dec | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Days sales outstanding | — | — | 63 | 61 | ||||||||||||
Inventory turnover days | 85 | 89 | 92 | 93 | ||||||||||||
Payable days | 62 | 72 | 75 | 85 |
55 Ericsson | Fourth quarter and full-year report 2023 | Alternative performance measures |
Table of Contents
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/STELLAMEDLICOTT | |
Stella Medlicott | ||
Senior Vice President, | ||
Chief Marketing and Communications Officer | ||
By: | /s/CARLMELLANDER | |
Carl Mellander | ||
Senior Vice President, Chief Financial Officer |
Date: January 23, 2024