* Sales increased 1% YoY and showed a good performance QoQ, +9%.
* Networks sales decreased YoY due to the expected decline in CDMA equipment
sales as well as weaker sales in China and Russia.
* Global Services and Support Solutions showed strong performance YoY and
QoQ.
* The underlying business mix, with higher share of coverage projects than
capacity projects, was unchanged in the quarter and is expected to prevail
short-term. The negative gross margin impact from the network modernization
projects in Europe will start to gradually decline end 2012.
* Cash flow from operations SEK -1.4 b. impacted by high working capital
mainly due to late invoicing.
* Net income SEK 1.2 b., down from SEK 3.2 b. YoY, impacted by lower
profitability in Network and increased loss in ST-Ericsson.
* EPS diluted SEK 0.34 (0.96). EPS Non-IFRS SEK 0.78 (1.60).
-------------------------------------------------------------------------------
Q2 Q2 YoY Q1 QoQ Six m. Six m.
SEK b. 2012 2011 Change 2012 Change 2012 2011
-------------------------------------------------------------------------------
Net sales 55.3 54.8 1% 51.0 9% 106.3 107.7
-------------------------------------------------------------------------------
Of which Networks 27.8 33.4 -17% 27.3 2% 55.1 66.6
-------------------------------------------------------------------------------
Of which Global Services 24.1 19.0 26% 20.6 17% 44.7 36.5
-------------------------------------------------------------------------------
Of which Support 3.5 2.4 47% 3.0 15% 6.5 4.7
Solutions
-------------------------------------------------------------------------------
Gross margin 32.0% 37.8% - 33.3% - 32.6% 38.1%
-------------------------------------------------------------------------------
EBITA margin excl JVs and 8.0% 11.4% - 7.7% - 7.9% 12.7%
Sony Ericsson sale
Operating income excl JVs 3.3 5.0 -35% 2.8 17% 6.1 11.3
and Sony Ericsson sale
Operating margin excl JVs 5.9% 9.2% - 5.5% - 5.7% 10.5%
and Sony Ericsson sale
-------------------------------------------------------------------------------
EBITA margin excl JVs 8.0% 11.4% - 22.8% - 15.2% 12.7%
-------------------------------------------------------------------------------
Operating income excl JVs 3.3 5.0 -35% 10.5 - 13.8 11.3
-------------------------------------------------------------------------------
Operating margin excl JVs 5.9% 9.2% - 20.6% - 13.0% 10.5%
-------------------------------------------------------------------------------
Of which Networks 5% 14% - 6% - 5% 16%
-------------------------------------------------------------------------------
Of which Global Services 6% 5% - 6% - 6% 6%
-------------------------------------------------------------------------------
Of which Support 12% -11% - -1% - 6% -13%
Solutions
-------------------------------------------------------------------------------
Operating income incl JVs 2.1 4.3 -51% 9.1 - 11.2 10.1
-------------------------------------------------------------------------------
Income after financial 1.8 4.6 - 9.1 - 10.8 10.4
items
-------------------------------------------------------------------------------
Net income 1.2 3.2 -63% 8.8 - 10.0 7.3
-------------------------------------------------------------------------------
EPS diluted, SEK 0.34 0.96 -65% 2.76 -88% 3.10 2.23
-------------------------------------------------------------------------------
EPS (Non-IFRS), SEK(1)) 0.78 1.60 -51% 3.14 -75% 3.91 3.21
-------------------------------------------------------------------------------
Cash flow from operations -1.4 5.8 - 0.7 - -0.6 2.9
-------------------------------------------------------------------------------
Cash conversion -43% 115% - 17% - -9% 25%
-------------------------------------------------------------------------------
Net cash, end of period - - - 37.1 - 25.9 42.6
-------------------------------------------------------------------------------
(1)) EPS, diluted, excl. amortizations, write-downs of acquired intangible
assets and restructuring.
Q112 includes a gain from the divestment of Sony Ericsson of SEK 7.7 b.
-------------------------------------------------------------------------------
Comments from Hans Vestberg, President and CEO
"In the quarter, demand for Global Services and Support Solutions was strong,
while Networks sales decreased YoY mainly due to the expected decline in CDMA
equipment sales as well as lower business activity in China, including weaker
sales of GSM and lower 3G sales in Russia," says Hans Vestberg, President and
CEO of Ericsson (NASDAQ:ERIC). "In Global Services all areas showed good growth
in the quarter due to operators' focus on operational efficiency and high
project activities. The strong development for Support Solutions was driven by
billing systems and TV solutions. Global Services and Support Solutions together
represented about half of the Group's revenues. The growing Global Services
business has a dilutive impact on gross margin.
We continue to stay close to our customers to monitor the impacts of
macroeconomic development and political uncertainty in certain regions on their
investments. In customer conversations it is clear that the fundamental drivers
for increased data traffic are unchanged. Today there are more than 700 million
smartphone subscriptions and according to our estimates this number will
increase to three billion in 2017. Based on these drivers, we see an increasing
focus from our customers on network performance and quality of service. This
will require continuous operator investments in hardware, software and services.
Our joint venture ST-Ericsson is still in a challenging situation due to a
significant drop in sales of new products to one of the largest customers and
continued decline in legacy products. The company continues to focus on securing
the successful execution and delivery of its NovaThor ModAp platforms and Thor
modems to customers while executing on company transformation aiming at lowering
its break-even point.
In 2010 we made a conscious decision to gain market share and increase
technology and services leadership, well aware of the short-term profitability
pressure. Our focus is now on translating these gains into sustainable
profitable growth," concludes Vestberg.
You find the complete report with tables in the attached PDF or by following
this link:
www.ericsson.com/res/investors/docs/q-reports/2012/6month12-en.pdf
NOTES TO EDITORS
To read the complete report with tables, please go to:
www.ericsson.com/res/investors/docs/q-reports/2012/6month12-en.pdf
Ericsson invites media, investors and analysts to a press conference at the
Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), July 18, 2012. An
analysts, investors and media conference call will begin at 14.00 (CET).
Live webcast of the press conference and conference call 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/press
FOR FURTHER INFORMATION, PLEASE CONTACT
Helena Norrman, Senior Vice President, Communications
Phone: +46 10 719 3472
E-mail: investor.relations@ericsson.com or media.relations@ericsson.com
Investors
Åse Lindskog, Vice President,
Head of Investor and Analyst Relations
Phone: +46 10 719 9725 , +46 730 244 872
E-mail: investor.relations@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 2039 , +46 709 860 227
E-mail: investor.relations@ericsson.com
Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 3928 , +46 730 825 928
E-mail: investor.relations@ericsson.com
Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 5400, +46 761 005 400
E-mail: investor.relations@ericsson.com
Media
Ola Rembe, Vice President,
Head of Corporate Public & Media Relations
Phone: +46 10 719 97 27, +46 730 244 873
E-mail: media.relations@ericsson.com
Corporate Public & Media Relations
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Telefonaktiebolaget LM Ericsson (publ)
Org. number: 556016-0680
Torshamnsgatan 23
SE-164 83 Stockholm
Phone: +46 10 719 00 00
www.ericsson.com
Ericsson discloses the information provided herein pursuant to the Securities
Markets Act. The information was submitted for publication at 07.30 CET, on July
18, 2012.
[HUG#1627496]
