Telefonaktiebolaget LM Ericsson Class A · OMXSTO:ERIC_A
Telefonaktiebolaget LM Ericsson Class A — Ericsson — Q4 2010 Earnings Presentation
31 slides from Telefonaktiebolaget LM Ericsson Class A's earnings presentation, Jan 25, 2011
Slide 1: Fourth Quarter 2010
FOURTH QUARTER 2010 25 january 2011
Slide 2: Henry Sténson, Senior Vice President Communications
HENRY STÉNSON SENIOR VICE PRESIDENT COMMUNICATIONS
Slide 3: Forward-looking statements
FOURTH QUARTER 2010 THIS PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE BASED ON OUR CURRENT EXPECTATIONS AND ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD NEGATIVELY AFFECT OUR BUSINESS. PLEASE READ OUR EARNINGS REPORTS AND OUR MOST RECENT ANNUAL REPORT FOR A BETT
Slide 4: Hans Vestberg, President and CEO
HANS VESTBERG PRESIDENT AND CEO
Slide 5: Q4 in Summary
Q4 in Summary Sales SEK 62.8 (58.3) b - Driven by demand for mobile broadband Net income SEK 4.4 (0.7) b - Improved Sony Ericsson earnings, less restructuring Adjusted cash flow SEK 16.2 (13.6) b - Good collections - Cash conversion of 112% © Telefonaktiebolaget LM Ericsson 2010 | FOURTH QUARTER REP
Slide 6: Net Sales
NET SALES › Sales +8% YoY › Organic growth FX adjusted +7% YoY – Increased demand for mobile › Multimedia sales recovered broadband – 2G expansions in China SEK b Net sales 2010 SEK 203.3 b Y/Y -2% Q410 SEK 62.8 b Y/Y +8% Q/Q +32% Comparable units and adj for net FX/hedge 2009/2010 -7% Q409/Q410 +7%
Slide 7: Profitability
profitability › Improved gross margin › Improved Sony Ericsson earnings › Less restructuring SEK b SEK Net income 2010 SEK 11.2 b Y/Y +172% Q410 SEK 4.4 Y/Y 504% Q/Q 23% Net income EPS, diluted © Telefonaktiebolaget LM Ericsson 2010 | FOURTH QUARTER REPORT 2010 | January 25, 2011
Slide 8: Regional Comments
ERICSSON e @ e. 2) @ De. @ee REGIONAL COMMENTS e°. @ e e
Slide 9: Q4 Regional sales split
Q4 Regional sales split South East Asia Other and Oceania 3% 6% North America 22% China and North East Asia 15% SEK India 5% 62.8 b 10% Latin America Sub-Saharan Africa 3% 7% 8% Northern Europe Middle East and Central Asia 9% 11% Western and Mediterranean Central Europe © Telefonaktiebolaget LM Eric
Slide 10: Regional sales
Regional sales North America 2010 SEK 49.5 b Mediterranean 2010 SEK 22.6 b China and 2010 SEK 26.0 b Y/Y +107% Y/Y -10% Y/Y 0% Q410 SEK 14.1 b Q410 SEK 6.9 b North East Asia Q410 SEK 9.5 b • 4G/LTE commercially • Network modernization Y/Y +28% Y/Y +49% Y/Y -2% launched Q/Q 9%+ • Italy strong, Spain
Slide 11: North America
North america › Data traffic continues to grow SEK b Sales – CDMA/HSPA/LTE › 4G/LTE commercially launched › In 2010 Ericsson became the leading vendor in North America – Supplier to all major operators – Key partner to Sprint in their network evolution strategy MULTIMEDIA GLOBAL SERVICES NETWORKS Sa
Slide 12: India
INDIA › Strong 3G footprint SEK b Sales – 3G rollouts started – Impact on Group gross margin › Security clearance – Impacted sales first half 2010 – Interim security clearance with all operators for all technologies MULTIMEDIA GLOBAL SERVICES NETWORKS Sales Full year: SEK 8.6 b, -43% Y/Y Q410: SEK 2
Slide 13: China and North East Asia
CHINA AND NORTH EAST ASIA › Strong mobile broadband demand SEK b Sales in Japan › Strong 2G sales in China › Added sales from LG-Ericsson MULTIMEDIA GLOBAL SERVICES NETWORKS Sales Full year: SEK 26.0 b, 0% Y/Y Q410: SEK 9.5 b Y/Y: +28% Q/Q: +36% © Telefonaktiebolaget LM Ericsson 2010 | FOURTH QUARTE
Slide 14: Segments
s 4 ERICSSON
Slide 15: Networks
networks › +14% YoY sales growth driven by increased demand mobile broadband › Organic growth and positive impact from acquired Nortel businesses › Continued slow voice sales › Strong 2G sales in China › Component supply normalized › Still not fully meeting increased demand on certain mobile broadba
Slide 16: Global Services
global services › Professional Services sales +5% YoY in local currencies › Managed Services +5% YoY – tough comparison › 2010: 54 new managed services contracts of which 26 extensions or Sales expansions 2010 SEK 80.1 b › Network rollout sales -8% YoY Y/Y +1% Q410 SEK 22.9 b › Delayed project imple
Slide 17: Multimedia
multimedia › Recovery in the quarter › Increased revenue management sales › TV business developing favorably › Strong margin improvement Sales 2010 SEK 10.5 b Y/Y -21% Q410 SEK 3.5 b SEK b Y/Y +3% Q/Q +50% EBITA margin Q410 16% Q409 17% Q310 0% Multimedia EBITA Multimedia sales All numbers excl. res
Slide 18: Q4 joint ventures
Q4 joint ventures Sales MEUR Sony Ericsson Fourth consecutive quarter of profit Successful shift to Android Sales MUSD ST-Ericsson Increased loss due to seasonality and FX Cost savings completed, company on right track SEK b Ericsson share in JV earnings Q4: SEK -0.3 (-0.4) b Sony Ericsson SEK 0.2 (
Slide 19: Jan Frykhammar, CFO and Executive Vice President
JAN FRYKHAMMAR CFO AND EXECUTIVE VICE PRESIDENT
Slide 20: Profitability
Profitability Gross margin Q4: 37% (35%) Positive: cost reductions, lower proportion services Negative: sequential decrease due to higher proportion of hardware sales related to increased rollout projects, including initial 3G rollouts in India and network modernization projects Gross margin 2010: 3
Slide 21: Profitability
Profitability SEK b Q4: Operating margin excl JVs 13% (13%) 2010: Operating margin excl JVs 12% (12%) Positive: gross margin development, decreased SG&A relative to sales Negative: Increased investments in LTE and added R&D expenses, added Nortel and LG-Ericsson businesses Operating income EBITA mar
Slide 22: Restructuring charges
Restructuring charges › Restructuring charges – Q4 charges of SEK 1.7 b, SEK 6.8 b full year – Cash outlays Q4 SEK 1.0 b, SEK 3.3 b full year – SEK 3.2 b remain to be paid › Efficiency high on agenda – Activities primarily in service delivery, product development and administration › Restructuring c
Slide 23: Balance sheet ratios
Balance sheet ratios › DSO target achieved due to good collections › Inventory days decreased due to higher business activity › Capital efficiency remains top of agenda Days DSO target <90 days Inventory days target <65 days Payable days target >60 days DSO Inventory days Payables days © Telefonakti
Slide 24: Change in Gross Cash Q4 2010
Change in Gross Cash Q4 2010 Operating cash flow Investing Financing FX on cash 15.2 b (excl short term investments) -2.8 b -1.7 b 0.2 b SEK b 87.2 76.2 Adjusted cash flow SEK 16.2 Change in gross cash SEK 11.0 b Change in net cash +15.6 b (from 35.7 to 51.3) © Telefonaktiebolaget LM Ericsson 2010 |
Slide 25: Change in Gross Cash FY 2010
Change in Gross Cash FY 2010 Operating cash flow Investing Financing FX on cash 26.6 b (excl short term investments) -10.2 b (incl dividend) -5.7 b -0.3 b SEK b 87.2 76.7 Adjusted cash flow SEK 29.8 Change in gross cash SEK 10.4 b Change in net cash +15.2 b (from 36.1 to 51.3) © Telefonaktiebolaget
Slide 26: 2010 summary
2010 summary Growth in 2H2010 - Economic uncertainty impacted investments during 1H2010 - Portfolio momentum on mobile broadband and services - Component shortage during parts of the year - Long-term footprint gains from 3G and modernization Improved efficiency - Improved cash flow and margins, cost
Slide 27: Market trends 2011
Market trends 2011 GOING MOBILE: VIDEO, CLOUD SERVICES, INTERNET & M2M MORE CONNECTED DEVICES & AFFORDABLE SMARTPHONES TIERED PRICING & NEW BUSINESS MODELS FOR MOBILE BROADBAND MODERNIZATION OF NETWORKS, OSS/BSS & OPERATIONS FOCUS ON HIGH PERFORMANCE BROADBAND NETWORKS © Telefonaktiebolaget LM Erics
Slide 28: Focus areas
FOCUS AREAS GROW FASTER THAN THE MARKET BEST IN CLASS MARGINS STRONG CASH CONVERSION GROWTH IN JV EARNINGS © Telefonaktiebolaget LM Ericsson 2010 | FOURTH QUARTER REPORT 2010 | January 25, 2011
Slide 29: Fourth Quarter 2010
FOURTH QUARTER 2010 25 january 2011
Slide 30: Mobile World Congress 2011
Mobile world congress 2011 › Monday February 14 - Press Conference – Analysts welcome – Hall 6, 8:30-9:30 am (breakfast from 8 am) – Speaker: Hans Vestberg – RSVP: [email protected] › Tuesday February 15 – Keynote (GSMA program) - ”The power of applications” – Hall 5, 11:15 am -1:15 pm ›
Slide 31: Ericsson
ERICSSON