7/18/13

Ericsson reports second quarter results 2013

Second quarter highlights
  • Sales were flat YoY at SEK 55.3 b. For comparable units and adjusted for FX, sales increased 7% YoY and 6% QoQ.
  • Operating income incl. JV was SEK 2.5 (2.1) b. with an operating margin of 4.5% (3.8%).
  • The quarter was negatively impacted by one-time items of SEK -0.9 b. from losses due to divestments and exiting the telecom and power cable operations.
  • Net income was SEK 1.5 (1.2) b.
  • EPS diluted was SEK 0.45 (0.34). EPS Non-IFRS was SEK 0.88 (0.78).
  • Cash flow from operating activities was SEK 4.3 b.
SEK b.Q2
2013
Q2
2012  
YoY
Change
Q1
2013
QoQ
Change
6 months
2013
6 months
2012
Net sales55.355.30%52.06%107.4106.3
     Of which Networks28.127.81%28.10%56.355.1
     Of which Global Services24.924.13%21.516%46.344.7
     Of which Support Solutions2.33.5-33%2.4-4%4.86.5
Gross margin32.4%32.0%-32.0%-32.2%32.6%
Operating income excl JV2.53.3-24%2.117%4.613.8
Operating margin excl JV4.5%5.9%-4.1%-4.3%13.0%
     Of which Networks5%5%-6%-5%5%
     Of which Global Services6%6%-3%-5%6%
     Of which Support Solutions-12%12%--1%--7%6%
Operating income incl JV2.52.119%2.117%4.611.2
Operating margin incl JV4.5%3.8%-4.0%-4.3%10.5%
Net income1.51.226%1.226%2.710.0
EPS diluted, SEK0.450.3432%0.3722%0.823.10
EPS (Non-IFRS), SEK1)0.880.7813%0.99-1.883.91
Cash flow from operating activities4.3-1.4--3.0-1.3-0.6
Net cash, end of period27.425.96%32.2-15%27.425.9
1)  EPS, diluted, excl. amortizations, write-downs of acquired intangible assets and restructuring
COMMENTS FROM HANS VESTBERG, PRESIDENT AND CEO
"Sales for comparable units, adjusted for FX, grew 7%. Reported sales were flat YoY, due to continued currency headwind," said Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC).
"There was continued high project activity in Europe as well as in North America where two large mobile broadband coverage projects have peaked in first half 2013. North East Asia had another challenging quarter following continued structural decline in GSM investments in China, FX in Japan and lower business activity in South Korea due to spectrum delays.
The business mix, with a higher share of coverage projects than capacity projects, started to shift slightly towards more capacity during the quarter.
We implemented our strategy to capture new market share in the network modernization projects in Europe starting in 2010, despite their initial lower margins. Now that these projects gradually come to an end, we can conclude that we have been successful in gaining market share and regained leadership in Europe. It is also encouraging to see that we are now starting to engage in new business, based on this footprint, regarding capacity and LTE projects in Europe.
We continue to strengthen our leading position in 4G/LTE. The vendor selection processes for 4G/LTE in Russia and China continue and to date we have been awarded contracts by two large operators in Russia.
During the quarter we also reached one billion subscribers in networks managed by Ericsson. This clearly shows the confidence our customers have in our ability to create value for them.
Profitability improved YoY, adjusted for one-time effects related to exiting the telecom and power cable operations and the divestment of Applied Communication Sciences (ACS). The improvement was driven by higher gross margins and lower operating expenses. This was partly offset by currency headwind.
With the announcement in April and July of the intended acquisitions of Microsoft's Mediaroom and Red Bee Media, we continue to strengthen our position in TV and media. As TV and media converge with telecom we can leverage our strength in media management and managed services. Video is already the single largest contributor to traffic in mobile networks and is expected to grow by 60% annually until 2018.
While the macroeconomic situation in Europe remains challenging and the political uncertainty in parts of Region Middle East, such as Egypt, increases, 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/2013/06month13-en.pdf or go to: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), July 18, 2013. An analysts, investors and media conference call will begin at 15.00 (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/broadcast_room
FOR FURTHER INFORMATION, PLEASE CONTACT
Helena Norrman, Senior Vice President, Communications
Phone: +46 10 719 34 72
E-mail: media.relations@ericsson.com
Investors
Åsa Konnbjer, Director, Investor Relations
Phone: +46 10 713 39 28 
E-mail: investor.relations@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 20 39
E-mail: investor.relations@ericsson.com
Rikard Tunedal, Director, Investor Relations
Phone: +46 10 714 54 00
E-mail: investor.relations@ericsson.com
Media
Ola Rembe, Vice President, Head of External Communications 
Phone: +46 10 719 97 27 
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@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, 2013.

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