Ericsson reports third quarter results 2013
Third quarter highlights
- Sales amounted to SEK 53.0 b, down -3% YoY.
- For comparable units and adjusted for FX, sales increased 3% YoY.
- Operating income incl. JV was SEK 4.2 (3.1) b. with an operating margin of 8.0% (5.7%).
- Net income was SEK 3.0 (2.2) b.
- EPS diluted was SEK 0.90 (0.67). EPS Non-IFRS was SEK 1.31 (1.04).
- Cash flow from operating activities was SEK 1.5 (7.0) b.
| SEK b. | Q3 2013 | Q3 2012 | YoY Change | Q2 2013 | QoQ Change | 9 months 2013 | 9 months 20122) |
| Net sales | 53.0 | 54.6 | -3% | 55.3 | -4% | 160.3 | 160.8 |
| Of which Networks | 26.7 | 26.9 | -1% | 28.1 | -5% | 82.9 | 82.0 |
| Of which Global Services | 24.0 | 24.3 | -1% | 24.9 | -4% | 70.3 | 69.0 |
| Of which Support Solutions | 2.4 | 3.3 | -29% | 2.3 | 1% | 7.1 | 9.8 |
| Gross margin | 32.0% | 30.4% | - | 32.4% | - | 32.1% | 31.9% |
| Operating income excl JV | 4.3 | 3.7 | 17% | 2.5 | 71% | 8.9 | 17.4 |
| Operating margin excl JV | 8.1% | 6.7% | - | 4.5% | - | 5.6% | 10.8% |
| Networks | 10% | 5% | - | 5% | - | 7% | 5% |
| Global Services | 8% | 8% | - | 6% | - | 6% | 6% |
| Support Solutions | -5% | 14% | - | -12% | - | -6% | 9% |
| Operating income incl JV | 4.2 | 3.1 | 36% | 2.5 | 71% | 8.8 | 14.3 |
| Operating margin incl JV | 8.0% | 5.7% | - | 4.5% | - | 5.5% | 8.9% |
| Net income | 3.0 | 2.2 | 38% | 1.5 | 99% | 5.7 | 12.2 |
| EPS diluted, SEK | 0.90 | 0.67 | 34% | 0.45 | 100% | 1.72 | 3.77 |
| EPS (Non-IFRS), SEK1) | 1.31 | 1.04 | 26% | 0.88 | 49% | 3.19 | 4.96 |
| Cash flow from operating activities | 1.5 | 7.0 | -79% | 4.3 | -66% | 2.8 | 6.3 |
| Net cash, end of period | 24.7 | 29.0 | -15% | 27.4 | -10% | 24.7 | 29.0 |
| 1) EPS, diluted, excl. restructuring, amortizations and write-downs of acquired intangible assets 2) Including gain from divestment of Sony Ericsson of SEK 7.7 b | |||||||
Comments from Hans Vestberg, President and CEO
"Sales for comparable units, adjusted for FX, grew 3%. Reported sales were slightly down YoY, primarily due to continued currency headwind," said Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).
"We are currently seeing sales coming under some pressure. In addition to FX, the major drivers for this development are the two large mobile broadband coverage projects, which peaked in North America in the first half of 2013. We also saw impact from reduced activity in Japan where we are getting closer to completion of a major project.
The 4G/LTE tenders in China continue and so far two of the major operators have made their choices. Despite having insignificant market share for 3G, Ericsson has been named technology partner for both these operators and we will now build on this initial footprint.
The pace is picking up in the European market with continued WCDMA/LTE investments and a major investment announcement by one of the large operators. Ericsson now sees growth in several European markets and margins are also improving as the network modernization projects gradually come to an end and we engage more in new capacity and LTE business.
The momentum for Professional Services continued with stable earnings and 59 signed managed services contracts year to date. As a result of our continuous work to implement global processes, methods and tools to increase efficiency, Global Services margins improved during the quarter.
Profitability for the group continued to improve YoY, partly offset by currency headwind. The improvement was driven by higher gross margin due to less dilutive impact from European network modernization and somewhat improved business mix.
During the quarter Ericsson has continued to strengthen its market leadership. In September we launched a small-cell product, the Ericsson Radio Dot System, for indoor coverage. The new product opens up new revenue opportunities for operators and initial customer response has been very positive. In addition, we closed the acquisition of Mediaroom which places Ericsson as the world's largest IPTV player, by market share.
The macroeconomic climate has stabilized in many OECD markets. However, uncertainty still remains in certain parts of the world. The long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market," concludes Vestberg.
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or by following this link:
www.ericsson.com/res/investors/docs/q-reports/2013/09month13-en.pdf or go to: http://www.ericsson.com/investors/
Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), October 24, 2013. An analysts, investors and media conference call will begin at 14.00 (CET).
Live webcast of the press conference and conference call details, as well as supporting slides, will be available at www.ericsson.com/press and www.ericsson.com/investors
Video material will be published during the day on www.ericsson.com/broadcast_room
FOR FURTHER INFORMATION, PLEASE CONTACT
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Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on October 24, 2013.