STOCKHOLM, April 16, 2024 /PRNewswire/ -- First quarter
highlights – Driving gross margin improvements and cost
efficiencies
- Sales declined organically[1] by -14% YoY, due to a -19%
decline in Networks. Reported sales decreased to SEK 53.3 (62.6)
b.
- Gross income excluding restructuring charges decreased to
SEK 22.8 (24.9) b. as lower sales were partly offset by an
improvement in gross margin. Reported gross income was SEK 22.7 (24.2)
b.
- Gross margin excluding restructuring charges improved to 42.7%
(39.8%) supported by a competitive product portfolio, cost actions,
improved commercial discipline, as well as increased IPR licensing
revenues. Reported gross margin was 42.5% (38.6%).
- EBITA excluding restructuring charges amounted to SEK 5.1 (4.8) b.
with a margin of 9.6% (7.7%), which included a one-time gain of
SEK 1.9 b. Reported EBITA was
SEK 4.9 (3.8)
b.
- Net income was SEK 2.6
(1.6) b. EPS diluted was SEK 0.77 (0.45).
- Free cash flow before M&A was SEK
3.7 (-8.0) b. reflecting
improved management of working capital.
- Net cash on March 31, 2024, was
SEK 10.8 b. compared with
SEK 7.8 b. on December 31, 2023.
SEK b.
|
Q1
2024
|
Q1
2023
|
YoY
change
|
Q4
2023
|
QoQ
change
|
Net sales
|
53.325
|
62.553
|
-15 %
|
71.881
|
-26 %
|
Sales growth adj.
for comparable units and currency[2]
|
-
|
-
|
-14 %
|
-
|
-
|
Gross
margin[2]
|
42.5 %
|
38.6 %
|
-
|
39.8 %
|
-
|
EBIT
|
4.100
|
3.046
|
35 %
|
5.848
|
-30 %
|
EBIT
margin[2]
|
7.7 %
|
4.9 %
|
-
|
8.1 %
|
-
|
EBITA[2]
|
4.893
|
3.848
|
27 %
|
6.694
|
-27 %
|
EBITA
margin[2]
|
9.2 %
|
6.2 %
|
-
|
9.3 %
|
-
|
Net
income
|
2.613
|
1.575
|
66 %
|
3.409
|
-23 %
|
EPS diluted,
SEK
|
0.77
|
0.45
|
71 %
|
1.02
|
-25 %
|
Measures excl.
restructuring charges[2]
|
Gross margin excluding
restructuring charges
|
42.7 %
|
39.8 %
|
-
|
41.1 %
|
-
|
EBIT excluding
restructuring charges
|
4.305
|
4.026
|
7 %
|
7.368
|
-42 %
|
EBIT margin excluding
restructuring charges
|
8.1 %
|
6.4 %
|
-
|
10.3 %
|
-
|
EBITA excluding
restructuring charges
|
5.098
|
4.828
|
6 %
|
8.214
|
-38 %
|
EBITA margin excluding
restructuring charges
|
9.6 %
|
7.7 %
|
-
|
11.4 %
|
-
|
Free cash flow before
M&A
|
3.671
|
-8.016
|
-
|
12.464
|
-71 %
|
Net cash, end of
period
|
10.805
|
13.573
|
-20 %
|
7.832
|
38 %
|
[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.
Comments from Börje Ekholm, President and CEO of Ericsson
(NASDAQ: ERIC)
In Q1, we continued to execute on our strategy to strengthen our
leadership in mobile networks, drive a focused expansion in
enterprise, and pursue cultural transformation. We maintained our
leading market position, but as expected our customers continued to
exercise caution with their investments. Against this tough market
backdrop, we delivered solid expansion in gross margins. This
underscores the competitiveness of our solutions, our commercial
discipline, and our actions on costs.
We will continue to proactively optimize the business, including
through strategic cost-saving measures, to ensure Ericsson is best
positioned to increase shareholder value.
Q1 – Market headwinds and execution focus
While organic sales[1] declined by -14%, we reached a gross
margin[2] of 42.7%, generated EBITA[3] of SEK 5.1 billion and a 9.6% EBITA margin[3].
Networks sales[1] decreased organically by -19% YoY as our
customers continued to be cautious with their investments. Despite
this, we generated a strong gross margin[2] of 44.3% – a testament
to our technology leadership, our competitive product portfolio,
and the strategic actions we are taking, including on costs.
In Cloud Software and Services, we continued to execute on our
strategy to strengthen delivery performance and commercial
discipline. We delivered a gross margin[2] of 37.4% and our EBITA
margin[2] improved year-on-year for a fifth consecutive quarter.
The rolling four quarter EBITA margin[2] was 3.0%.
In Enterprise, sales grew organically overall but declined in
Global Communications Platform, impacted by a low-margin customer
contract loss in Q4 and our decision to reduce our operations in
some countries, with the impact expected to continue throughout the
year. We continue to focus on leveraging the current business to
support the build-out of our Global Network Platform for network
APIs.
Our IPR revenues continued to grow, with a new 5G patent license
agreement with a handset manufacturer. We are confident of
delivering further growth in IPR revenues, benefiting from
additional 5G agreements and an expansion into additional licensing
areas. The timing of contracts will fluctuate, as we seek to
optimize the value of new agreements.
We delivered SEK 3.7 billion of
free cash flow[4] in Q1, benefiting from our operational
improvements, and lower working capital as we concluded an intense
5G roll-out phase in India.
We announced further measures in the quarter to improve our cost
efficiency and streamline operations, including headcount
reductions. This is a necessary action to position the Company for
longer-term success.
In March, our independent Monitor certified our compliance
program. This is an important step to conclude our plea agreement.
Our focus on culture and integrity will continue.
Executing on our strategy
Our strategy is aimed at building a stronger and more profitable
Ericsson in the long term, with a vision to capture the next major
wave of networks innovation with a substantial platform
business.
At Mobile World Congress in Barcelona, we showcased industry-leading
hardware and software solutions required in order to build the
high-performance and programmable networks necessary to digitalize
society. Our industry is shifting from a vertically integrated
architecture to a horizontal and cloud-based network architecture –
and Ericsson is leading this development.
We also took critical steps in our strategy to build a Global
Network Platform for network APIs, and announced three key
partnerships with Verizon, AT&T and Amazon Web Services, as
well as a communications API agreement with KDDI. Exposing network
features through APIs will support the creation of new
differentiated services and will be crucial in the next step of
digitalization of enterprise and society.
Looking ahead
We expect a further decline in the RAN market, at least through
the end of this year, as customers remain cautious with their
investments and the pace of investment in India continues to normalize. Dell'Oro
estimates the global RAN equipment market will decline by -4% in
2024, which may prove optimistic.
If current trends persist, we expect our sales to stabilize
during the second half of the year, benefiting from recent contract
wins and the normalization of customer inventory levels in
North America. In Q2, we expect
Networks gross margin excluding restructuring charges to be in the
range of 42-44%. In the second half, our margins should benefit
from improved business mix. We also remain highly focused on
delivering stronger cash flow, based on our operating
discipline.
Our enterprise strategy aims to leverage network capabilities to
increase telecoms industry revenue growth above the level that
traffic growth alone could deliver. We are creating new,
differentiated, products and services, supporting our customers in
this transformation. In turn, this will support industry investment
levels in the longer term.
While near-term dynamics are challenging, we remain fully
committed to our long-term targets, and we continue to be focused
on increasing shareholder value.
Börje Ekholm
President and CEO
[1] Sales adjusted for comparable units and currency.
[2] Excluding restructuring charges.
[3] Excluding restructuring charges. Includes a one-time gain of
SEK 1.9 b., reported in segment
Other.
[4] Before M&A.
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or
on www.ericsson.com/investors
Video webcast for analysts, investors and journalists
President and CEO Börje Ekholm and CFO Lars Sandström will comment on the report and
take questions at a video webcast at 9:00 AM
CEST (8:00 AM GMT London,
3:00 AM EST New York).
Join the webcast or please go
to www.ericsson.com/investors
To ask a question: Access dial-in information here
The webcast will be available on-demand after the event and can
be viewed at www.ericsson.com/investors.
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Daniel
Morris, Head of Investor Relations
Phone: +44 7386657217
E-mail: investor.relations@ericsson.com
Additional contacts
Stella
Medlicott, Senior Vice President, Marketing and Corporate
Relations
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com
Investors
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: ralf.bagner@ericsson.com
Media relations
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
This is information that Telefonaktiebolaget LM Ericsson is
obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication, through the agency
of the contact person set out above, at 07:00 CEST on April 16,
2024.
This information was brought to you by Cision
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|
Ericsson reports first
quarter results 2024
|
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