Ericsson reports first quarter results in line with revised outlook from March 12

Ericsson reports first quarter results in line with revised outlook from March 12 · Income before taxes of SEK 0.6 b.; slower market growth in telecommunications · GSM and ENGINE sales up more than 30%; overall sales down 4% for comparable units due to drop in mobile phones · Additional efficiency program immediately implemented to improve cash flow and restore profitability · Outlook: Q2 income before taxes will not improve compared with Q1*; unknown duration and magnitude of market slowdown prevents full-year guidance * Excluding restructuring charges and non-operational capital gains Three months (SEK b.) 2001 2000 % Change Orders 75.5 79.5 -5% Sales 55.9 59.1 -5% Operating income 1.1 6.4 -82% Adjusted Operating income 1) -4.4 6.4 Operating margin 1) -8% 11% Income before taxes 0.6 6.1 -90% Adjusted income before taxes 1) -4.9 6.1 EPS (SEK) 0.06 0.54 -89% EPS U.S. GAAP (SEK) -0.29 0.63 Cash flow before financing activities -17.7 -6.2 1) Adjusted for capital gain from sales of 5.5 Juniper shares Operational results Orders for systems grew 8%, driven by 3G and Multi-Service Networks, while developments in mobile phones caused an overall order decline of 5% (4% for comparable units). With sales down 5% (4% for comparable units) and an adjusted income before taxes of SEK -4.9 b., our first quarter financial performance was in line with our revised guidance on March 12. The adjusted operating margin declined to -8% (11%). These results reflect further weakening of the mobile phones business and a reduced operating margin for systems. Negative cash flow was primarily attributable to operating losses in mobile phones and slower customer payments. CEO COMMENTS "A general economic downturn and an abruptly slower telecom sector are affecting our customers as well as us. Many operators are postponing their investments, which has resulted in an overall reduction of sales," said Kurt Hellström, President and CEO of Ericsson. "Even in this slowing business environment we have increased mobile systems sales by 9%. In GSM, sales were up over 30% and continued to outpace the market, while TDMA and PDC sales were affected by declining demand." "With no signs of a short-term turnaround, we are adjusting to these challenging circumstances by reducing our cost base by more than SEK 20 b. Improving cash flow will be given highest priority. We are strengthening the core systems business, delivering on commitments to customers, and ensuring that we remain in the pole position when the market starts growing again." "A weaker market has contributed to the further deterioration of our mobile phone business. As a result, we are limiting the scope of our phone operations to the essential parts that also support our systems business. This will give us a business that is smaller, more manageable, and has lower risk." "While this year will be challenging, we remain confident in our long- term strategy. We are well positioned to provide the technical solutions that will bring the next generation of mobile communications to the world," Kurt Hellström said. "There should be no doubt about the strong demand for 3G. It is driven by the need for increased voice and data capacity, along with the emergence of the Mobile Internet. We anticipate a strong subscriber take-up of GPRS during the second half of this year, followed by a similar take-up of volume 3G services during 2003." SUMMARY Mobile Systems - strong growth in GSM; accelerated progress in 3G In 3G, we have announced 26 WCDMA supply agreements so far, a number of which are now firm commercial contracts. We have been shipping 3G products since the fourth quarter of last year. Regarding GPRS, 68 network upgrades have been ordered from us, with 55 implemented and several already taken into commercial service. TDMA operators in the Americas plan to use GSM/GPRS as the upgrade-path to 3G. Of the 5 operators that have already announced their plans, we have been selected as a supplier by all of them and as the sole supplier in most cases. While this trend, along with the economic slowdown, has led to lower sales of TDMA, we expect to benefit once volume shipments of GSM/GPRS to these operators begin. A similar situation exists in Japan, where the operators have reduced their investments in PDC as they transition to 3G. The substantial demand for customer financing for the build out of 3G networks continues. The capital markets are still fairly cautious about financing operators' investments in 3G. In the present business climate, we will be more prudent than ever regarding customer financing. We maintain our approach to provide customer financing on a highly selective basis, mainly for bridging purposes. During the quarter, our credit exposure to customer financing remained at about the same level as in the fourth quarter. Multi-Service Networks - 37% sales growth fueled by ENGINE Multi-Service Networks continues to develop positively with sales up 37%, spearheaded by increased customer demand for ENGINE. During the quarter, we were awarded 12 new ENGINE contracts, including a ground- breaking agreement with WorldCom for networks in the U.S., Latin America and Europe. ENGINE is our solution for converting telecom networks from circuit-switched narrowband to packet-switched mutli-service broadband, supporting high-speed data, voice and Internet. Since introducing this solution to wireline operators in 1999, we have been awarded a total of 51 commercial contracts. Mobile phones - further streamlining to increase focus and reduce risk Overstocked distribution channels and lower subsidies from operators caused slower growth in the mobile phone industry during the quarter. The continuing oversupply situation has led to significantly lower average sales prices, lower unit volumes, and higher losses in our mobile phones business than we anticipated. Our unit volume shipments are down 41% from 10.5 million to 6.2 million units, with sales down 52% resulting in an operating loss of SEK 5.7 b. A new business strategy for selling mobile platform technology has been established, with a new business unit to provide solutions to the global market. Bluetooth licensing activities were established in a similar way late last year. The Back-to-Profit program announced last year is underway, including the outsourcing of the production of mobile phones. The Flextronics outsourcing contract is in place with transfer of operations in progress. These measures are still expected to reduce our costs in the order of SEK 15 b. annually, starting 2002. In light of the current market situation, we are further streamlining our phone operations, bringing the number of employees to less than 5,000 by the end of this year. This will give us a smaller, more manageable mobile phone business with lower risk. Product design, R&D, marketing and sales of strategic products will be the main focus, with the rest of the operations (e.g. supply, production and distribution) effectively outsourced. These new actions will deliver additional savings of SEK 3 b. over and above the SEK 15 b. savings earmarked for the original back to profits program. Efficiency Program in response to economic slowdown In addition to the ongoing streamlining activities in the Division Consumer Products, we are also streamlining our world-wide operations with the objective of saving more than SEK 20 b. per year, beginning 2002. A task force has been established to oversee the implementation of the following measures by the end of this year: Reduction of selling, general, and administrative (SG&A) expenses across all business divisions and corporate functions. Target savings of SEK 8 b. Substantially reduced activities in selected markets, resulting in fewer offices, consultants, and employees. Target savings of SEK 5 b. Central control over information technology, with company-wide priorities and decreased expenditures. Target savings of SEK 2 b. · Concentration of R&D activities, including related administrative resources, through consolidation of the number of R&D locations. Target savings of SEK 5 b. This efficiency program could affect as many as 10,000 employees, more than half outside of Sweden. The above actions mean a substantial reduction in the number of consultants from today's level of 15,000, in some areas by over 50%. Wherever possible, consultants shall be replaced with employees. Restructuring provisions for the efficiency program and the extended Back to Profits program will be taken as a one-time charge in the second quarter 2001, and are estimated to be approximately SEK 15 b. Our market view - uncertain short-term development; confident in long- term growth The growth in mobile communications continues, but at a slower pace for the time being. We expect the world market for mobile network infrastructure to grow 5% to 15% this year, down from 20% to 25% last year. This lower growth and broader range reflects the uncertainties in the economy, the timing of investments associated with the migration from TDMA to GSM/GPRS in the Americas, and lower spending for PDC in Japan, in anticipation of the 3G roll-out. Our long-term outlook for the industry remains optimistic. We maintain our forecast for mobile subscriber growth of 25% to 35% leading to between 920 and 950 million mobile subscribers by end 2001. Based on this growth rate, the industry remains on track to exceed one billion mobile subscribers during the first half of 2002. In line with the recent estimates of our peers, we now expect the 2001 mobile phone market to reach between 430-480 million units. Our revised 2001 forecast includes 20-25 million GPRS phones. The overall value of the mobile phone market is expected to be about the same as last year, with moderate unit growth and 10%-20% industry-wide price erosion. The market for 3G is just starting, and we expect operator spending on 3G systems, phones, and applications to exceed US$ 50 b. annually from 2003. OUTLOOK For the second quarter 2001, we see a lower growth rate in systems sales and lower phone sales compared with the second quarter of last year. Income before taxes will not improve compared with the first quarter of 2001. The unknown duration and magnitude of the current market situation and its effects on our development prevent us from providing an outlook for the full year. However, our objective is to restore an operating margin of 10% as soon as possible, but not in 2001. This assumes that there is no further deterioration in market conditions. FINANCIAL REVIEW (All amounts in SEK b. unless otherwise noted) Orders, Sales, and Income The 5% decrease in orders was primarily due to a 51% drop in mobile phones, offset somewhat by an 8% increase in systems orders. In Western Europe, the order increase was mainly driven by 3G, while orders in Latin America increased as a result of higher demand for Multi-Service Networks. A sharp decline in Japanese and U.S demand (PDC and TDMA) contributed to the lower order development this year. This compares to an extraordinarily strong order intake in China and Turkey during the first quarter of last year. Adjuste Adjusted d Operating Margin Orders Net Sales Operati % Employees booked ng Income Segment SEK % SEK % SEK b. This Last year b. Chg b. Chg year Systems 62.6 8% 44.1 13% 1.8 4% 14% 75,081 Mobile Phones 7.2 -51% 7.2 -52% -5.7 -80% 4% 14,461 Other 8.2 -27% 7.2 -22% -0.1 -2% 6% 16,289 operations Eliminations/ Unallocated -2.5 -2.6 -0.3 1,428 Total 75.5 -5% 55.9 -5% -4.4 -8% 11% 107,259 Adjustments: Cap gain 5.5 Juniper Non-op. - items Operating 1.1 income Mobile Systems sales were up 9% despite delayed investments for capacity build-out in specific markets. In the Americas, the transition from TDMA to GSM has brought TDMA investments to a virtual halt, while the GSM build-out has not yet started. In Western Europe, some operators have delayed their 2G investments to conserve resources for 3G build-out. Similarly, Japanese operators have reduced their investments in 2G PDC as they transition to 3G. In China we experienced particularly strong growth in systems sales as the economy continues to improve. With the current growth rate, we expect China to become our largest market again. The operating margin in the systems business declined from 14% last year to 4%. This unfavorable development is due to reduced sales growth and resulting excess capacity costs along with investments in 3G. The efficiency program is aimed at restoring a competitive level of profitability. Sales of mobile phones declined to SEK 7.2 b. caused by lower volumes and a decreased average selling price. Operating income for phones was SEK -5.7 b. as a result of lower sales, price pressures, and a decrease in gross margins. No additional restructuring charges were taken in the quarter. Sales and operating margins in Other Operations were also unfavorable, with the exception of Cables, where the market continued to be strong. The effect on income of changed currency exchange rates compared to the same period last year was insignificant in total, but was negative for mobile phones with SEK -0.8 b. Operating income of SEK 1.1 b. includes a net capital gain of SEK 5.5 b. from sales of our remaining holding in Juniper Networks Inc. Non- operational gains were not material. Financial net was negative by SEK - 0.3 b., reflecting a lower cash position. Balance sheet and cash flow Cash flow before financing activities was negative SEK -17.7 b., including the positive effect from the sale of shares in Juniper. Slower customer payments reduced our accounts receivable turnover sharply. Unanticipated lower customer demand also caused an increase in inventory. Even in an uncertain economic environment we are implementing forceful measures to maintain a strong balance sheet. Specifically, we are initiating working capital improvements through more focused management of receivables and payment terms. Continued conservative offering of customer project financing, selective capital spending and continued divestment and outsourcing of non-core activities will also help to improve cash flow. The equity ratio at the end of the period increased to 38.7%, which is sufficient to support additional borrowing. New debt financing of SEK 4.5 b. has been arranged in April. In March, Ericsson entered an agreement with Apax Partners Fund to sell its Enterprise sales and service operations for SEK 4.7 b. We expect to close the transaction in the second quarter. At the Annual General Meeting in March, a stock incentive program for employees was approved. The program includes a stock option plan and a stock purchase plan. The program will be implemented during the year, starting with the stock option plan in the second quarter. Parent Company information The parent company business mainly consists of corporate management and holding company functions but also includes activities performed on a commission basis by Ericsson Treasury Services AB and Ericsson Credit AB regarding internal banking and customer credit management. Net sales for the period was SEK 17 million and income before taxes was SEK 604 million. Current assets increased by SEK 7 billion and short- term and long-term loans to subsidiaries increased by SEK 8 b. Cash and short-term cash investments were reduced by SEK 16 b. No changes in treasury stock holdings were made in the period. The Annual General Meeting approved the dividend proposal from the Board of Directors of SEK 0.50 per share, in total SEK 3.9 b., to be paid out in April, 2001. Accounting principles This interim report has been prepared in accordance with the Swedish Financial Accounting Standards Council's recommendation RR20, Interim reports. The same accounting principles have been used as in our latest annual report. The following recommendations were optional and are not yet implemented: RR1: 00, RR 15, RR 16, RR 17 and RR 19. For US GAAP purposes, FAS 133 "Accounting for derivative instruments and hedging activities" is adopted from January 1, 2001. Stockholm, April 20, 2001 Kurt Hellström President and CEO (Unaudited) Uncertainties in the Future. "Safe Harbor" Statement under the U.S. Private Securities Litigation Reform Act of 1995: Some statements in this interim report are forward looking and actual results may differ materially from those stated. In addition to the factors discussed, among other factors that may affect results are product demand, the effect of economic conditions, exchange-rate and interest-rate movements, capital- and credit market developments, the ability to successfully restructure existing business, the timing of customer orders and manufacturing lead times, the changes in customer order and payment patterns, insufficient, excess or obsolete inventory, and the impact of competing products and their pricing, product development, commercialization and technological difficulties, political risks in the countries in which the Company has operations or sales, supply constraints, and the result of customer financing efforts. Results for interim periods are not necessarily indicative of results for the full fiscal year or any future periods Date for next report: July 20, 2001 FOR FURTHER INFORMATION PLEASE CONTACT Corporate Communications: Roland Klein, Senior Vice President, Corporate Communications Phone: +44 20 745 1660, +44 7776 162 997; E-mail: roland.klein@clo.ericsson.se Investors: Gary Pinkham, Vice President, Investor Relations Phone: +1 212 685 4030; E-mail: investorrelations@ericsson.com Lars Jacobsson, Vice President, Financial Reporting and Analysis Phone: +46 8 719 9489, +46 70 519 9489; E-mail: lars.jacobsson@lme.ericsson.se Maria Bernström, Director, Investor Relations Phone: +46 8 719 5340, +46 70 533 4750; E-mail: maria.bernstrom@lme.ericsson.se Lotta Wiklund, Manager, Investor Relations Phone: +44 0 20 745 15664, +44 7887 628 707; Email: lotta.wiklund@clo.ericsson.se Media: Pia Gideon, Vice President, External Relations Phone: +46 8 719 2864, +46 70 519 2864, E-mail: pia.gideon@lme.ericsson.se Mads Madsen, Director, Media Relations Phone: +46 8 719 0626, +46 70 666 2903, Email: mads.madsen@lme.ericsson.se CONSOLIDATED INCOME STATEMENT (unaudited) Jan-March Jan-March Change Jan-Dec s SEK 2001 2000 in % 2000 milli ons Net 55,932 59,085 -5% 273,569 sales Cost -38,355 -34,674 11% -180,392 of sales Gross 17,577 24,411 -28% 93,177 margi n Gross 31.4% 41.3% 34.1% margi n as perce ntage of net sales Resea -10,571 -7,986 32% -41,921 rch and devel opmen t and other techn ical expen ses Selli -8,398 -7,769 8% -34,706 ng expen ses Admin -3,307 -2,874 15% -13,311 istra tive expen ses Opera -22,276 -18,629 20% -89,938 ting expen ses Opera 39.8% 31.5% 32.9% ting expen ses as perce ntage of net sales Other 5,904 610 27,652 opera ting reven ues Share - 73 - 17 274 in earni ngs of assoc iated compa nies Opera 1,132 6,375 -82% 31,165 ting incom e Opera 2.0% 10.8% 11.4% ting margi n as perce ntage of net sales Finan 1,041 777 34% 2,929 cial incom e Finan -1,372 - 957 43% -4,449 cial expen ses Incom 801 6,195 -87% 29,645 e after finan cial items Minor - 195 - 129 51% - 953 ity inter est in incom e befor e taxes Incom 606 6,066 -90% 28,692 e befor e taxes *) Taxes -182 -1,820 -90% -7,674 Net 424 4,246 -90% 21,018 incom e *) *) Of 5,711 1,396 25,229 which capit al gains /loss es, net of minor ity Earni 0.05 0.54 2.67 ngs per share , basic (SEK) Earni 0.06 0.54 2.65 ngs per share , fully dilut ed (SEK) The avera ge rate for conve rsion from US dolla rs to SEK was 9.791 5 for incom e state ment items CONSOLIDATED BALANCE SHEET March 31 Dec 31 March 31 SEK 2001 2000 2000 mil lio ns Fix ed ass ets Int 13,425 12,833 10,545 ang ibl e ass ets Tan 23,590 22,378 25,056 gib le ass ets Fin anc ial ass ets 2,796 2,790 2,706 Equ ity in ass oci ate d com pan ies 2,893 2,484 1,675 Oth er inv est men ts 4,016 6,364 7,541 Lon g- ter m cus tom er fin anc ing 6,064 3,657 3,520 Oth er lon g- ter m rec eiv abl es Total 52,784 50,506 51,043 fixed assets Cur ren t ass ets Inv 48,521 43,933 34,764 ent ori es Rec eiv abl es 76,108 76,240 66,422 Acc oun ts rec eiv abl e - tra de and sho rt- ter m cus tom er fin anc ing 51,827 44,029 32,778 Oth er rec eiv abl es Sho 20,878 35,606 23,787 rt- ter m cas h inv est men ts, cas h and ban k Total 197,334 199,808 157,751 current assets Tot 250,118 250,314 208,794 al ass ets Sto 93,645 91,686 74,037 ckh old ers ' equ ity Min 3,047 2,764 2,234 ori ty int ere st in equ ity of con sol ida ted sub sid iar ies Pro 26,565 27,650 24,058 vis ion s Lon 20,812 22,294 22,756 g- ter m lia bil iti es Cur 106,049 105,920 85,709 ren t lia bil iti es Tot 250,118 250,314 208,794 al sto ckh old ers ' equ ity , pro vis ion s and lia bil iti es 1) 1) 52,593 46,563 40,514 Of whi ch int ere st- bea rin g pro vis ion s and lia bil iti es The closing rate for conversion from US dollars to SEK was 10.3210 for balance sheet items Ass 234 435 - ets ple dge d as col lat era l Con 12,320 11,184 - tin gen t lia bil iti es CONSOLIDATED STATEMENT OF CASH FLOWS Jan-March Jan-March SEK 2001 2000 mil lio ns Cas -19,978 -5,829 h flo w fro m ope rat ing act ivi tie s Inv 2,255 -332 est men ts Cas -17,723 -6,161 h flo w bef ore fin anc ing act ivi tie s Fin 3,612 1,002 anc ing Eff -617 -62 ect of exc han ge rat e cha nge s on cas h Net -14,728 -5,221 cha nge in cas h Cas 35,606 29,008 h and cas h equ iva len t, beg inn ing of per iod Cas 20,878 23,787 h and cas h equ iva len t, end of per iod CHANGES IN STOCKHOLDERS' EQUITY Jan-March Jan-March SEK millions 2001 2000 Ope 91,686 69,176 nin g bal anc e Con 8 350 ver sio n of deb ent ure s Cap - -20 ita l dis cou nt Gai - 310 ns on sal e of own opt ion s and con ver tib le deb ent ure s Rev 52 - alu ati on of fix ed ass ets Cha 1,475 -25 nge s in cum ula tiv e tra nsl ati on adj ust men ts Net 424 4,246 inc ome Clo 93,645 74,037 sin g bal anc e TREND OF OPERATIONS IN BRIEF Jan-March Jan-March Change s SEK 2001 2000 in % mil lio ns Net 55,932 59,085 -5% sal es Ope 2.0% 10.8% rat ing mar gin as per cen tag e of net sal es Inc 606 6,066 -90% ome bef ore tax es Net 424 4,246 -90% inc ome Number of shares outstanding, end of 7,910 7,844 1% period (millions) Number of treasury shares 1.8 - (millions) Average number of shares 7,908 7,830 (millions) Ave 7,985 8,016 -1% rag e num ber of sha res , ful ly dil ute d (mi lli ons ) Ear 0.05 0.54 -93% nin gs per sha re, bas ic (SE K) Earnings per share, fully 0.06 0.54 -89% diluted (SEK) Ear nin gs per sha re, ful ly dil ute d, in acc ord anc e wit h U.S . GAA P (SE K), before effect of changed accounting -0.29 0.63 principles (SEK) Equ 38.7% 36.5% ity rat io Cas -17,723 -6,161 h flo w bef ore fin anc ing act ivi tie s Res ear ch and dev elo pme nt and oth er tec hni cal exp ens es (in 11,155 8,268 35% clu din g cos ts rel ate d to cus tom er ord ers ) -As 20% 14% per cen tag e of Net Sal es Add 2,797 2,458 14% iti ons to tan gib le fix ed ass ets - 1,023 1,141 -10% Of whi ch in Swe den Tot 2,283 2,011 14% al dep rec iat ion on tan gib le and int ang ibl e ass ets - 226 155 46% Of whi ch goo dwi ll Number of employees, end 107,259 102,323 5% of period Ord 75,499 79,474 -5% ers boo ked Capital turnover 1.5 2.0 (turns per year) Accounts receivable (turns 3.0 3.7 per year) Inventory turnover (turns per 3.3 4.6 year) Calculation of earnings per share, fully diluted Net income 424 4,246 Interest on convertible debentures, net 44 66 after tax Adj 468 4,312 ust ed net inc ome Ave 7,985 8,016 rag e num ber of sha res , ful ly dil ute d (mi lli ons ) Earnings per share, fully 0.06 0.54 diluted (SEK) NET SALES BY SEGMENT BY QUARTER (SEK m.) % Year to date 2000 2001 Change Q1 Q2 Q3 Q4 Q1 Q1 Systems 38,910 85,343 133,430 194,683 44,127 13% of which 32,481 70,339 109,061 158,083 35,336 9% Mobile Systems Multi- 6,429 15,004 24,369 36,600 8,791 37% Service Networks Phones 14,794 28,145 42,483 56,343 7,170 -52% Other operations 9,297 17,801 25,888 35,927 7,249 -22% Less : Intersegment -3,916 -7,171 -10,341 -13,384 -2,614 -33% sales Total 59,085 124,118 191,460 273,569 55,932 -5% Isolated quarters 2000 2001 % Change 0003A 0006A 0009A 0012A 0103A 0103A Systems 38,910 46,433 48,087 61,253 44,127 13% of which Mobile 32,481 37,858 38,722 49,022 35,336 9% Systems Multi-Service 6,429 8,575 9,365 12,231 8,791 37% Networks Phones 14,794 13,351 14,338 13,860 7,170 -52% Other operations 9,297 8,504 8,087 10,039 7,249 -22% Less : Intersegment -3,916 -3,255 -3,170 -3,043 -2,614 -33% sales Total 59,085 65,033 67,342 82,109 55 932 -5% ORDERS BOOKED BY SEGMENT BY QUARTER (SEK m.) % Year to date 2000 2001 Change 0003A 0006A 0009A 0012A 0103A 0103A Systems 57,944 103,503 153,209 213,100 62,583 8% of which Mobile 48,471 85,757 125,738 175,609 52,625 9% Systems Multi-Service 9,473 17,746 27,471 37,491 9,958 5% Networks Phones 14,562 27,988 42,123 57,001 7,178 -51% Other operations 11,266 19,991 27,665 35,751 8,239 -27% Less : Intersegment -4,298 -7,287 -10,131 -13,508 -2,501 -42% sales Total 79,474 144,195 212,866 292,344 75,499 -5% Isolated quarters 2000 2001 % Change Q1 Q2 Q3 Q4 Q1 Q1 Systems 57,944 45,559 49,706 59,891 62 583 8% of which Mobile 48,471 37,286 39,981 49,871 52 625 9% Systems Multi-Service 9,473 8,273 9,725 10,020 9 958 5% Networks Phones 14,562 13,426 14,135 14,878 7 178 -51% Other operations 11,266 8,725 7,674 8,086 8 239 -27% Less : Intersegment -4,298 -2,989 -2,844 -3,377 -2 501 -42% sales Total 79,474 64,721 68,671 79,478 75 499 -5% NET SALES BY MARKET AREA BY QUARTER (SEK m.) % Year to 2000 2001 Change date 0003A 0006A 0009A 0012A 0103A 0103A Western 23,578 47,011 70,090 100,234 18,024 -24% Europe* Central 7,323 16,799 25,850 37,701 8,187 12% and Eastern Europe, Middle East & Africa North 8,549 19,263 27,704 35,193 7,186 -16% America Latin 7,781 17,334 28,953 44,118 8,467 9% America Asia 11,854 23,711 38,863 56,323 14,068 19% Pacific Total 59,085 124,11 191,460 273,569 55,932 -5% 8 * Of 2,380 4,371 6,704 8,732 1,628 -32% which Sweden * Of which EU 22,052 44,031 65,754 94,293 17,046 -23% Isolated % quarters 2000 2001 Change Q1 Q2 Q3 Q4 Q1 Q1 Western 23,578 23,433 23,079 30,144 18,024 -24% Europe* Central- 7,323 9,476 9,051 11,851 8,187 12% and Eastern Europe, Middle East & Africa North 8,549 10,714 8,441 7,489 7,186 -16% America Latin 7,781 9,553 11,619 15,165 8,467 9% America Asia 11,854 11,857 15,152 17,460 14,068 19% Pacific Total 59,085 65,033 67,342 82,109 55,932 -5% * Of 2,380 1,991 2,333 2,028 1,628 -32% which Sweden * Of which EU 22,052 21,980 21,723 28,539 17,046 -23% ORDERS BOOKED BY MARKET AREA BY QUARTER (SEK m.) Year-to- % date 2000 2001 Change 0003A 0006A 0009A 0012A 0103A 0103A Western 25,048 50,870 71,807 105,684 29,042 16% Europe* Central- 17,388 24,503 32,104 40,972 11,273 -35% and Eastern Europe, Middle East & Africa North 9,148 19,082 27,326 37,977 7,320 -20% America Latin 9,695 19,312 33,053 44,959 12,638 30% America Asia 18,195 30,428 48, 576 62,752 15,226 -16% Pacific Total 79,474 144,195 212,866 292,344 75,499 -5% * Of 2,924 6,010 7,983 9,876 1,998 -32% which Sweden * Of which EU 23,261 47,523 67,194 99,951 27,565 19% Isolated % quarters 2000 2001 Change Q1 Q2 Q3 Q4 Q1 Q1 Western 25,048 25,822 20,937 33,877 29,042 16% Europe* Central- 17,388 7,115 7,601 8,868 11,273 -35% and Eastern Europe, Middle East & Africa North 9,148 9,934 8,244 10,651 7,320 -20% America Latin 9,695 9,617 13,741 11,906 12,638 30% America Asia 18,195 12,233 18,148 14,176 15, 226 -16% Pacific Total 79,474 64,721 68,671 79,478 75,499 -5% * Of 2,924 3,086 1,972 1,893 1,998 -32% which Sweden * Of which EU 23,261 24,262 19,671 32,757 27,565 19% 0103A - NET SALES BY MARKET AREA AND SEGMENTS (SEK m.) 0103A EXTERNAL NET SALES - YTD Market % % Area Systems Phones Other Total of Change Total WE 12,616 2,269 3,139 18,024 32% -24% CEEMA 7,244 585 358 8,187 15% 12% North 5,035 1,658 493 7,186 13% -16% America Latin 7,319 761 387 8,467 15% 9% America Asia 11,743 1,771 554 14,068 25% 19% Pacific Total 43,957 7,044 4,931 55,932 100% -5% 0103A % OF MARKET AREA BY SEGMENT NET SALES Market % Area Systems Phones Other of Total WE 70% 13% 17% 100% CEEMA 89% 7% 4% 100% North 70% 23% 7% 100% America Latin 86% 9% 5% 100% America Asia 83% 13% 4% 100% Pacific 0103A % OF SEGMENT NET SALES BY MARKET AREA Market % Area Systems Phones Other of Total WE 29% 32% 64% 32% CEEMA 16% 8% 7% 15% North 11% 24% 10% 13% America Latin 17% 11% 8% 15% America Asia 27% 25% 11% 25% Pacific Total 100% 100% 100% 100% 0103A % CHANGE IN EXTERNAL NET SALES - YTD Market % Area Systems Phones Other of Total WE 2% -69% -18% 32% CEEMA 34% -61% -13% 15% North -12% -30% 1% 13% America Latin 18% -26% -30% 15% America Asia 32% -28% 14% 25% Pacific Total 14% -52% -14% 100% 0103A - ORDERS BOOKED BY MARKET AREA AND SEGMENTS (SEK m.) 0103A ORDERS BOOKED EXTERNAL - YTD Market % % Area Systems Phones Other Total of Chang Total e WE 21,905 2,401 4,736 29,042 38% 16% CEEMA 10,389 585 299 11,273 15% -35% North 5,944 1,129 247 7,320 10% -20% America Latin 11,208 1,057 373 12,638 17% 30% America Asia 12,920 1,836 470 15,226 20% -16% Pacific Total 62,366 7,008 6,125 75,499 100% -5% 0103A % OF MARKET AREA BY SEGMENTS ORDERS BOOKED Market % Area Systems Phones Other of Total WE 76% 8% 16% 100% CEEMA 92% 5% 3% 100% North 81% 16% 3% 100% America Latin 89% 8% 3% 100% America Asia 85% 12% 3% 100% Pacific 0103A % OF SEGMENTS ORDERS BOOKED BY MARKET AREA Market % Area Systems Phones Other of Total WE 35% 34% 77% 38% CEEMA 17% 9% 5% 15% North 9% 16% 4% 10% America Latin 18% 15% 6% 17% America Asia 21% 26% 8% 20% Pacific Total 100% 100% 100% 100% 0103A % CHANGE IN EXTERNAL ORDERS BOOKED - YTD Market % Area Systems Phones Other of Total WE 74% -65% -15% 38% CEEMA -32% -64% -30% 15% North -6% -52% -48% 10% America Latin 38% 2% -31% 17% America Asia -15% -26% -16% 20% Pacific Total 8% -51% -19% 100% TOP 10 Markets in Orders and Sales Top 10 Markets % of Top 10 Markets % of Sales Total Orders Booked Total Sales Orders United States 11% Germany 9% China 11% China 8% Brazil 7% United States 8% United Kingdom 6% Spain 7% Italy 5% Brazil 7% Mexico 4% Turkey 6% Japan 4% Mexico 6% Spain 4% United Kingdom 5% Germany 3% Italy 5% Sweden 3% Japan 4%