FORM 6-K
Table of Contents

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

April 23, 2014

 

 

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

 

 

Torshamnsgatan 21, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F  x    Form 40-F  ¨

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.     Yes  ¨    No  x

Announcement of LM Ericsson Telephone Company, dated April 23, 2014 regarding “First Quarter Report 2014”

 

 

 


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TELEFONAKTIEBOLAGET LM ERICSSON (publ)
By:   /s/ NINA MACPHERSON
  Nina Macpherson
  Senior Vice President and
  General Counsel
By:   /s/ HELENA NORRMAN
  Helena Norrman
  Senior Vice President
  Corporate Communications

Date: April 23, 2014


Table of Contents

 

LOGO

First quarter report 2014 Stockholm, April 23, 2014

 

FIRST QUARTER HIGHLIGHTS

   Read more (page)  

•   Sales in the quarter were SEK 47.5 (52.0) b. Sales for comparable units, adjusted for currency, decreased -7% YoY and -28% QoQ

     3   

•   Sales declined YoY, primarily in North America and Japan but partly offset by China, Middle East and Latin America

     2   

•   Business mix in the quarter was mainly driven by mobile broadband capacity projects. With current visibility, key contracts awarded will gradually impact sales and business mix, mainly in the second half of the year.

     2   

•   Operating margin improved YoY in all segments to 5.5% (4.0%) mainly driven by mobile broadband capacity sales and lower restructuring charges

     3   

•   Operating income amounted to SEK 2.6 (2.1) b.

     5-7   

•   Cash flow from operating activities was SEK 9.4 b. driven by the payment from Samsung related to the new license agreement as well as reduced trade receivables.

     11   

 

SEK b.

   Q1
2014
    Q1
2013
    YoY
change
    Q4
2013
    QoQ
change
 

Net sales

     47.5        52.0        -9     67.0        -29

Sales growth adj. for comparable units and currency

     —          —          -7     —          -28

Gross margin

     36.5     32.0     —          37.1     —     

Operating income

     2.6        2.1        25     9.1        -71

Operating margin

     5.5     4.0     —          13.5     —     

Net income

     1.7        1.2        41     6.4        -74

EPS diluted, SEK

     0.65        0.37        76     1.97        -67

EPS (Non-IFRS), SEK 1)

     0.90        0.99        -9     2.42        -63

Cash flow from operating activities

     9.4        -3.0        —          14.6        -36

Net cash, end of period

     43.6        32.2        35     37.8        15

 

1)  EPS, diluted, excl. amortizations and write-downs of acquired intangible assets, and restructuring

 

Ericsson First Quarter Report 2014

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CEO Comments

 

Sales for comparable units, adjusted for currency, declined by -7% year-over-year, with continued negative impact from North America and Japan. All segments showed margin improvements.

The main reason behind the decline in sales is, as previously communicated, lower revenues from two large mobile broadband coverage projects in North America, which peaked in the first half of 2013, and the impact from reduced activity in Japan. This was partly offset by growth in China, Middle East and Latin America. The decline in sales impacted segment Networks as well as the Global Services network rollout business.

Our focus on profitability is paying off with gross margin improvement YoY, both including and excluding restructuring. All segments also showed improved operating margins. The business mix in the quarter was predominantly driven by mobile broadband capacity projects. In addition, some of our customers invested more in software to improve network performance and user experience.

Operating cash flow amounted to SEK 9.4 b., compared to a negative operating cash flow of SEK -3.0 b. in the first quarter last year. The payment from Samsung, related to IPR licensing, as well as lower sales had a positive effect on cash flow. Our continued efforts to reduce working capital through a better order-to-cash process are progressing well.

North America is currently characterized by operator investments in capacity and quality enhancements. At the same time we continue to strengthen our position in strategic areas. We are pleased to have been named partner to AT&T for their Domain 2.0 initiative which aims to simplify and scale their network utilizing Network Function Virtualization (NFV) and Software-Defined Networking (SDN).

In region North East Asia we are executing on previously awarded 4G/LTE contracts in mainland China. In addition, we have been awarded important 4G/LTE contracts in Japan and Taiwan.

In Europe, we have been awarded a five-year contract as part of Vodafone’s Project Spring. It includes upgrades and expansions of Vodafone’s 2G and 3G networks, and build-out of 4G/LTE along with professional services.

There is continued demand for our services offering and in the quarter we have won new managed services business in several regions.

With seven additional operators announcing trials of the Ericsson Radio Dot System we see strong interest in the solution. The innovative small-cell indoor solution will be commercially available later this year.

With current visibility, key contracts awarded will gradually impact sales and business mix, mainly in the second half of the year.

Political unrest prevails in parts of the Middle East and Africa and is still impacting sales. There is also an increased political uncertainty in Russia and the Ukraine. In 2013 Ericsson had SEK 5.9 b. in sales in Russia and Ukraine. The current political uncertainty has not impacted sales in the first quarter.

In a transforming ICT market, Ericsson continues to evolve through investments both into its core business and in new and targeted areas. Through our technology and services leadership we are well positioned to continue to stay relevant as our customers move to capture new market opportunities.

Hans Vestberg

President and CEO

 

 

Ericsson First Quarter Report 2014

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Financial highlights

 

SEK b.

   Q1
2014
    Q1
2013
    YoY
change
    Q4
2013
    QoQ
change
 

Net sales

     47.5        52.0        -9     67.0        -29

Of which Networks

     24.4        28.1        -13     34.8        -30

Of which Global Services

     20.4        21.5        -5     27.2        -25

Of which Support Solutions

     2.8        2.4        13     5.1        -46

Of which Modems

     0.0        —          —          0.0        —     

Gross income

     17.3        16.6        4     24.9        -30

Gross margin (%)

     36.5     32.0     —          37.1     —     

Research and development expenses

     -8.3        -7.9        5     -8.9        -7

Selling and administrative expenses

     -6.5        -6.6        -3     -7.2        -11

Other operating income and expenses

     0.0        0.0        5     0.3        -94

Operating income

     2.6        2.1        25     9.1        -71

Operating margin

     5.5     4.0     —          13.5     —     

for Networks

     10     6     —          17     —     

for Global Services

     5     3     —          8     —     

for Support Solutions

     0     -1     —          37     —     

for Modems

     —          —          —          —          —     

Financial net

     -0.2        -0.4        -45     -0.1        48

Taxes

     -0.7        -0.5        41     -2.5        -71

Net income

     1.7        1.2        41     6.4        -74

Restructuring charges

     -0.1        -1.8        -93     -1.0        -86

 

Net sales

Sales, adjusted for comparable units and currency, decreased -7% YoY and -28% sequentially.

The YoY sales decrease was primarily driven by North America and Japan where large mobile broadband coverage projects peaked in the first half of 2013 and are now near completion. IPR revenues grew YoY following the new Samsung license agreement reached in January 2014.

Sales declined sequentially following a strong Q4, with significant decline in China.

Gross margin

The gross margin increased YoY. This was primarily due to a business mix with a large share of mobile broadband capacity projects with higher hardware margins. Lower restructuring charges, increased IPR revenues and lower Network Rollout sales also contributed positively to the gross margin.

The gross margin decreased sequentially following a strong fourth quarter 2013 with SEK 4.2 b. related to the Samsung IPR license agreement. Excluding the license agreement the gross margin was 32.9% in Q413. A higher share of mobile broadband capacity projects in the quarter contributed positively to the gross margin QoQ.

During the quarter a currency revaluation effect of SEK -0.4 b. was recognized mainly related to currency depreciation in emerging markets.

Restructuring charges

Restructuring charges for the Group decreased both YoY and QoQ. The execution on the service delivery strategy, to move service delivery local resources to global centers continued, although at a slower pace in the beginning of the year.

Operating expenses

Total operating expenses increased SEK 0.2 b. YoY mainly due to the added Modems and Mediaroom businesses, while restructuring charges decreased.

 

 

Ericsson First Quarter Report 2014

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LOGO

 

Other operating income and expenses

The hedge effect on other operating income was SEK -0.1 b.

Operating income

Operating income increased YoY driven by mobile broadband capacity sales, IPR revenues and lower restructuring charges but negatively impacted by reduced sales and increased expenses. Currency continued to have a negative impact on operating income YoY and QoQ.

 

Financial net

Financial net improved YoY mainly due to currency revaluation effects.

Net income and EPS

Net income and EPS diluted increased following the improved operating income.

 

 

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Segment results

NETWORKS

 

LOGO

 

SEK b.

   Q1
2014
    Q1
2013
    YoY
change
    Q4
2013
    QoQ
change
 

Net sales

     24.4        28.1        -13     34.8        -30

Sales growth adj. for comparable units and currency

     —          —          -10     —          -30

Operating income

     2.5        1.6        58     5.9        -58

Operating margin

     10     6     —          17     —     

EBITA margin

     13     8     —          19     —     

Restructuring charges

     -0.1        -1.3        -93     -0.3        -71

 

Net sales

Sales, adjusted for comparable units and currency, decreased YoY. The anticipated decline in mobile broadband coverage projects, primarily related to North America and Japan was not fully offset by growth in China, Middle East and Latin America. The capacity business continued to show good growth. Sales declined QoQ following a strong fourth quarter 2013 and lower business activities in North East Asia. CDMA sales continued to decline by -71% YoY and -65% QoQ to SEK 0.4 b.

Ericsson’s LTE business maintained steady YoY while the related adoption of Voice over LTE (VoLTE) contributed to sequential growth in both IP Multimedia Systems (IMS) and User Data Consolidation (UDC), required to support multi-access converged network services.

Operating income and margin

For the third consecutive quarter operating margin was 10% or above. The YoY improvement was supported by a larger share of mobile broadband capacity business, higher IPR revenues and solid development in the underlying business with continued focus on cost adaptation and portfolio efficiency. Lower restructuring charges contributed to the YoY improvement. The operating margin declined QoQ as a result of lower IPR revenues.

Business update

The momentum for the multi-application router, SSR 8000, continued with 109 contracts signed since the launch in December 2011. During the quarter 13 new contracts were signed of which 5 were for fixed networks. To further strengthen IP-optical capabilities, a strategic agreement with Ciena (a top three optical networking supplier) was announced in the quarter.

 

 

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GLOBAL SERVICES

 

LOGO

 

SEK b.

   Q1
2014
    Q1
2013
    YoY
change
    Q4
2013
    QoQ
change
 

Net sales

     20.4        21.5        -5     27.2        -25

Of which Professional Services

     15.1        14.6        3     18.8        -20

Of which Managed Services

     5.8        5.9        -2     6.6        -12

Of which Network Rollout

     5.3        6.8        -23     8.4        -37

Sales growth adj. for comparable units and currency

     —          —          -3     —          -25

Operating income

     1.0        0.7        43     2.1        -50

Of which Professional Services

     1.9        1.8        3     2.6        -28

Of which Network Rollout

     -0.9        -1.1        -23     -0.5        58

Operating margin

     5     3     —          8     —     

for Professional Services

     13     13     —          14     —     

for Network Rollout

     -16     -16     —          -6     —     

EBITA margin

     6     4     —          9     —     

Restructuring charges

     -0.0        -0.4        -92     -0.6        -95

 

Net sales

YoY sales increased in 7 out of 10 regions. Sales, adjusted for comparable units and currency, declined however due to reduced mobile broadband activities in North America and Japan. As anticipated the Network Rollout revenue decline accelerated after a period of high sales. Professional Services sales increased YoY although Managed Services sales declined slightly.

Global Services sales declined QoQ after a strong Q4 and due to reduced activities in Network Rollout.

Operating income and margin

Operating margin for Global Services improved YoY as a result of lower sales and reduced losses in Network Rollout. In the quarter, Network Rollout operating income was negatively impacted by temporary additional project costs in North America as well as losses in the Network modernization projects in Europe. As expected, activities and losses in the European modernization projects continue to trend down. Professional Services margin remained flat.

Business update

The market demand for Professional Services continues to be strong with several new contracts in the quarter.

 

 

Other information

   Q1
2014
     Q1
2013
 

Number of signed Managed Services contracts

     16         21   

Number of signed significant consulting & systems integration contracts 1)

     9         8   

Number of Ericsson services professionals, end of period

     61,000         61,000   

 

1)  In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects.

 

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SUPPORT SOLUTIONS

 

LOGO

 

SEK b.

   Q1
2014
    Q1
2013
    YoY
change
    Q4
2013
    QoQ
change
 

Net sales

     2.8        2.4        13     5.1        -46

Sales growth adj. for comparable units and currency

     —          —          4     —          -45

Operating income

     0.0        0.0        —          1.9        —     

Operating margin

     0     -1     —          37     —     

EBITA margin

     7     5     —          41     —     

Restructuring charges

     0.0        -0.1        —          0.0        —     

 

Net sales

Both reported sales and sales adjusted for comparable units and currency increased YoY. The acquired Microsoft Mediaroom business and increased sales in OSS had a positive impact on sales. Sales declined QoQ after a seasonally strong Q4 and the positive effect from the Samsung IPR-licensing agreement.

Operating income and margin

Operating income and margin was flat YoY. Operating margin declined QoQ due to lower sales.

Business update

During the quarter the acquisition of Azuki Systems was completed and customer interest in the acquired portfolio is strong. The integration of Mediaroom is progressing according to plan.

In the OSS and BSS area Ericsson announced important contracts with CenturyLink in US for Service Agility solutions and with TeliaSonera in Sweden for the Customer Experience Management solution.

 

 

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MODEMS

 

SEK b.

   Q1
2014
     Q4
2013
     QoQ
change
 

Net sales

     0.0         0.0         —     

Sales growth for comparable units and currency

     —           —           —     

Operating income

     -0.7         -0.5         37

Operating margin

     —           —           —     

EBITA margin

     —           —           —     

Restructuring charges

     0.0         0.0         —     

 

Background

Since August, 2013, Ericsson has an LTE thin- modem business with industry leading technology and intellectual property. The operation was integrated into Ericsson after the split-up of the joint venture ST-Ericsson last year. Modems are part of Ericsson’s vision of 50 billion connected devices and the ambition is to be a top-three supplier in the thin-modems market. The first product, Ericsson M7450, was released for commercial use in the fourth quarter last year. Work is ongoing with a tier one smartphone manufacturer to integrate M7450 in their devices. Net sales are expected in the second half of 2014.

Operating income

Operating expenses for the modems business in 2014 are estimated to approximately SEK -2.6 b., of which SEK -0.7 b. in the first quarter.

 

 

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Regional sales

 

     First quarter 2014             Change  

SEK b.

   Networks      Global
Services
     Support
Solutions
     Total      YoY     QoQ  

North America

     6.5         5.0         0.6         12.2         -23     -11

Latin America

     2.4         2.0         0.2         4.7         8     -30

Northern Europe and Central Asia

     1.4         1.0         0.1         2.4         7     -34

Western and Central Europe

     1.8         2.5         0.1         4.4         1     -16

Mediterranean

     2.0         2.6         0.2         4.8         -9     -32

Middle East

     1.8         1.9         0.2         3.9         22     -35

Sub-Saharan Africa

     0.7         0.8         0.3         1.8         -15     -30

India

     0.9         0.7         0.1         1.7         6     -14

North East Asia

     2.8         2.0         0.1         4.9         -19     -43

South East Asia and Oceania

     1.9         1.5         0.1         3.4         -17     -20

Other 1)

     2.2         0.3         0.8         3.3         12     -55

Total

     24.4         20.4         2.8         47.5         -9     -29

 

1)  Region “Other” includes licensing revenues, broadcast services, power modules, mobile broadband modules, Ericsson-LG Enterprise and other businesses.

 

North America

Lower mobile broadband coverage project activity resulted in a Networks sales decline as well as lower network rollout sales, partly offset by network quality and capacity expansion sales. Network ICT transformation drives a strong professional services business, including the modernization of OSS and BSS.

Latin America

Sales increased YoY driven by operators’ investments to increase 3G network quality as well as LTE deployments in Chile and Brazil.

Northern Europe and Central Asia

Sales continued to grow YoY mainly driven by mobile broadband infrastructure investments in Russia. The positive development in Professional Services continued YoY driven by operator focus on network quality. The non-operator business in the Nordics showed stable growth.

Western and Central Europe

Sales were stable YoY. Network performance drives investments in 3G and LTE as well as services. Support Solutions increased YoY with the inclusion of Mediaroom, and increases in OSS and BSS.

Mediterranean

Sales declined YoY as major network modernization projects peaked early 2013. Business activity was lower in Italy and Spain, primarily due to operator consolidation discussions. There is an increasing demand for professional services, driven by managed services.

Middle East

Sales continued to grow YoY mainly driven by mobile broadband infrastructure deployments in Iraq, Pakistan and Saudi Arabia. In the quarter activities in Turkey were low and 4G deployments are delayed. Demand for professional services continued as operators seek network performance quality and operational efficiencies.

Sub-Saharan Africa

Network sales declined due to reduction in capex spend by a major customer. The negative development was partly offset by continued strong sales in OSS and BSS.

India

Sales grew YoY mainly due to network traffic growth in response to increasing smartphone penetration and data usage. Spectrum auctions were concluded in the quarter with operators securing necessary spectrum in their existing circles.

North East Asia

Sales decreased YoY as a result of lower network investment levels in Japan and the continued structural decline of GSM in China. The decline was partly offset by execution on previously awarded 4G/LTE contracts in China.

 

 

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South East Asia and Oceania

Sales in the region declined YoY as major mobile broadband coverage projects in Indonesia and Australia peaked. Demand continued for professional services, both systems integration and network design and optimization. The smartphone penetration is increasing from an overall low level in the region. During the quarter Ericsson announced a contract in Myanmar, which is a new market for the Group.

Other

Licensing revenues showed good development YoY, following the Samsung agreement. Broadcast services continued to grow. Sales of power modules and other businesses are also included in “Other”.

 

 

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CASH flow

 

SEK b.

   Q1
2014
    Q1
2013
    Q4
2013
 

Net income reconciled to cash

     3.2        1.6        12.5   

Changes in operating net assets

     6.2        -4.6        2.1   

Cash flow from operating activities

     9.4        -3.0        14.6   

Cash flow from investing activities

     -8.8        -4.1        -11.4   

Cash flow from financing activities

     -5.1        0.0        3.5   

Net change in cash and cash equivalents

     -4.0        -7.2        6.9   

Cash conversion (%)

     290 %      -186     117

 

The positive cash flow from operating activities was driven by the initial IPR-licensing payment from Samsung and lower working capital. Working capital improved mainly as a result of improved business mix.

Investing activities relates primarily to normal capex investments of SEK 1.0 b.

Short-term investments with maturity more than 3 months have increased by SEK 6.8. b., primarily as a result of transferred liquidity from Cash and cash equivalents.

Cash flow from financing activities was impacted by repayment of debt of SEK -6.0 b.

Payments for ongoing restructuring amounted to approximately SEK -0.5 b. in the quarter.

 

 

Working capital KPIs,

number of days

   Jan-Mar
2014
     Jan-Dec
2013
     Jan-Sep
2013
     Jan-Jun
2013
     Jan-Mar
2013
 

Sales outstanding

     112         97         109         103         108   

Inventory

     72         62         72         73         76   

Payable

     62         53         53         55         55   

 

Despite substantially reduced trade receivables, days sales outstanding increased. The main reason is lower sales in the quarter.

Inventory and payable days increased as an effect of the preparation for coming mobile broadband deployments.

Efforts to reduce working capital through a better order-to-cash process continue.

 

 

 

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FINANCIAL POSITION

 

SEK b.

   Mar 31
2014
    Mar 31
2013
    Dec 31
2013
 

+ Short-term investments

     41.8        34.6        35.0   

+ Cash and cash equivalents

     38.1        37.4        42.1   

Gross cash

     79.9        72.1        77.1   

- Interest bearing liabilities and post-employment benefits

     36.3        39.9        39.3   

Net cash

     43.6        32.2        37.8   

Equity

     142.6        139.2        141.6   

Total assets

     267.2        270.5        269.2   

Capital turnover (times)

     1.1        1.2        1.3   

Return on capital employed (%)

     6.7     5.1     10.7

Equity ratio (%)

     53.4     51.4     52.6

Return on equity (%)

     6.0     3.5     8.7

 

Net cash increased in the quarter as a result of positive cash flow from operating activities. Long-term borrowings decreased as a result of a repayment of a EIB loan of SEK 4.0 b., with original maturity in 2015 and repayment of a USD 300 million bond from the Swedish Export Credit Corporation with original maturity in 2016.

Post-employment benefits increased by SEK 1.8 b. mainly due to lower discount rates.

The average maturity of long-term borrowings as of March 31, 2014, was 5.7 years, compared to 4.8 years 12 months ago. In June 2014, maturing borrowings of SEK 2.0 b. will be repaid.

Ericsson has one unutilized Revolving Credit Facility of USD 2.0 b. The facility was signed in 2013 and is for five years with two one-year extension options.

 

LOGO

 

 

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Parent company

 

Income after financial items was SEK 0.4 (1.2) b. YoY.

Major changes in the Parent Company’s financial position for the year; increased cash, cash equivalents and short-term investments of SEK 4.0 b. and increased current and non-current liabilities to subsidiaries of SEK 9.3 b. At the end of the quarter, cash, cash equivalents and short-term investments amounted to SEK 62.5 (58.5) b.

In January 2014, the Parent Company repaid the SEK 4.0 b. EIB loan with original maturity July 2015. The Parent Company also repaid an USD 300 million bond during the quarter.

 

In accordance with the conditions of the long-term variable compensation program (LTV) for Ericsson employees, 2,777,896 shares from treasury stock were sold or distributed to employees during the first quarter. The holding of treasury stock at March 31, 2014, was 71,190,282 Class B shares.

 

 

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Other information

Antitrust investigations against Ericsson

In March 2013, Ericsson filed a patent infringement lawsuit in the Indian Delhi High Court against Micromax Informatics Limited. As part of its defense, Micromax filed a complaint with the Competition Commission of India (CCI) and in November 2013 the CCI decided to refer the case to the Director General’s Office for an in-depth investigation. In January 2014 the CCI announced they had opened another investigation against Ericsson based on claims made by Intex Technologies (India) Limited. Ericsson has made numerous attempts to sign a license agreement with Micromax and Intex on Fair, Reasonable and Non-discriminatory (FRAND) terms.

Ericsson and Ciena in strategic global agreement

On February 14, 2014, Ericsson and Ciena announced a strategic global agreement to develop joint transport solutions for IP-optical convergence and service provider software-defined networking (SDN). As part of this agreement, Ericsson offers Ciena’s Converged Packet Optical portfolio, including the 6500 Packet-Optical Platform and 5400 switching platform family. Ericsson will benefit from Ciena’s best-in-class optical technology leadership, including its WaveLogic coherent optical processors and global market presence. The strategic agreement is effective immediately, and go-to-market activities and solution integration efforts are underway.

 

Ericsson acquires Azuki Systems

On February 6, 2014, Ericsson announced it had entered into an agreement to acquire Massachusetts-based Azuki Systems, Inc., a provider of TV Anywhere delivery platforms for service providers, content owners and broadcasters. Azuki Systems extends Ericsson’s leading TV and media portfolio which includes the recent addition of Mediaroom from Microsoft. Through the acquisition, Ericsson will accelerate the availability of new and compelling viewing experiences across a variety of devices and screens. The acquisition brings a team of highly skilled software engineers from Azuki Systems. Azuki Systems was founded in 2008 and is based in Acton, Massachusetts, USA. The company has 49 employees. The acquisition was concluded in February and will be incorporated into Business Unit Support Solutions.

POST-CLOSING EVENTS

Changes in Ericsson leadership team

On April 14, 2014, Ericsson announced that Douglas Gilstrap will resign from his role as Senior Vice President and Head of Group Function Strategy and leave Ericsson’s Executive Leadership Team. Gilstrap joined Ericsson in his role in 2009 and has been responsible for developing Ericsson’s business strategy and driving the company’s M&A activities during this time. He has also played a key role in dissolving the ST-Ericsson joint venture and integrating the thin modems business into Ericsson. Since 2013 he also served as Chairman of Business Unit Modems.

 

 

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Risk factors

Ericsson’s operational and financial risk factors and uncertainties along with our strategies and tactics to mitigate risk exposures or limit unfavorable outcomes are described in our Annual Report 2013. Compared to the risks described in the Annual Report 2013, no material, new or changed risk factors or uncertainties have been identified in the year.

Risk factors and uncertainties in focus short-term for the Parent Company and the Ericsson Group include:

 

    Potential negative effects on operators’ willingness to invest in network development due to uncertainty in the financial markets and a weak economic business environment, or reduced consumer telecom spending, or increased pressure on us to provide financing;

 

    Uncertainty regarding the financial stability of suppliers, for example due to lack of financing;

 

    Effects on gross margins and/or working capital of the product mix in the Networks segment between sales of upgrades and expansions (mainly software) and new buildouts of coverage (mainly hardware);

 

    Effects on gross margins of the product mix in the Global Services segment including proportion of new network buildouts and share of new managed services deals with initial transition costs;

 

    A continued volatile sales pattern in the Support Solutions segment or variability in our overall sales seasonality could make it more difficult to forecast future sales;

 

    Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence;

 

    Changes in foreign exchange rates, in particular USD, JPY and EUR;

 

    Political unrest or instability in certain markets;
    Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms;

 

    Natural disasters and other events, affecting business, production, supply and transportation.

Ericsson stringently monitors the compliance with all relevant trade regulations and trade embargos applicable to dealings with customers operating in countries where there are trade restrictions or trade restrictions are discussed. Moreover, Ericsson operates globally in accordance with Group policies and directives for business ethics and conduct.

Stockholm, April 23, 2014

Telefonaktiebolaget LM Ericsson

Hans Vestberg, President and CEO

Org. Nr. 556016-0680

This report has not been reviewed by Telefonaktiebolaget LM Ericsson’s auditors.

Date for next report: July 18, 2014

 

 

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Editor’s note

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), April 23, 2014. 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 34 72

E-mail: investor.relations@ericsson.com or media.relations@ericsson.com

Telefonaktiebolaget LM Ericsson

Org. number: 556016-0680

Torshamnsgatan 23

SE-164 83 Stockholm

Phone: +46 10 719 00 00

www.ericsson.com

Investors

Peter Nyquist, Vice President,

Investor Relations

Phone: +46 10 714 64 49, +46 70 575 29 06

E-mail: peter.nyquist@ericsson.com

Stefan Jelvin, Director,

Investor Relations

Phone: +46 10 714 20 39, +46 70 986 02 27

E-mail: stefan.jelvin@ericsson.com

Åsa Konnbjer, Director,

Investor Relations

Phone: +46 10 713 39 28, +46 73 082 59 28

E-mail: asa.konnbjer@ericsson.com

Rikard Tunedal, Director,

Investor Relations

Phone: +46 10 714 54 00, +46 761 005 400

E-mail: rikard.tunedal@ericsson.com

Media

Ola Rembe, Vice President,

Head of External Communications

Phone: +46 10 719 97 27, +46 73 024 48 73

E-mail: media.relations@ericsson.com

Corporate Communications

Phone: +46 10 719 69 92

E-mail: media.relations@ericsson.com

 

 

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Safe harbor statement

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.

In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.

 

 

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Financial statements and additional information

Financial statements
19    Consolidated income statement
19    Statement of comprehensive income
20    Consolidated balance sheet
21    Consolidated statement of cash flows
22    Consolidated statement of changes in equity
23    Consolidated income statement - isolated quarters
24    Consolidated statement of cash flows - isolated quarters
25    Parent Company income statement
25    Parent Company balance sheet
Additional information
26    Accounting policies
27    Net sales by segment by quarter
27    Sales growth for comparable units, adjusted for currency effects and hedging
28    Operating income by segment by quarter
28    Operating margin by segment by quarter
29    EBITA by segment by quarter
29    EBITA margin by segment by quarter
30    Net sales by region by quarter
31    Net sales by region by quarter (cont.)
31    Top 5 countries in sales
32    Net sales by region by segment
33    Provisions
33    Information on investments in assets subject to depreciation, amortizations, impairment and write-downs
33    Reconciliation table, non-IFRS measurements
34    Other information
34    Number of employees
35    Restructuring charges by function
35    Restructuring charges by segment
 

 

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CONSOLIDATED INCOME STATEMENT

 

     Jan - Mar           Jan - Dec  

SEK million

   2013     2014     Change     2013  

Net sales

     52,032        47,505        -9     227,376   

Cost of sales

     -35,394        -30,184        -15     -151,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross income

     16,638        17,321        4     76,371   

Gross margin (%)

     32.0     36.5       33.6

Research and development expenses

     -7,877        -8,275        5     -32,236   

Selling and administrative expenses

     -6,643        -6,452        -3     -26,273   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     -14,520        -14,727        1     -58,509   

Other operating income and expenses

     20        21          113   

Shares in earnings of JV and associated companies

     -32        15          -130   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     2,106        2,630        25     17,845   

Financial income

     180        401          1,346   

Financial expenses

     -565        -612          -2,093   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income after financial items

     1,721        2,419        41     17,098   

Taxes

     -517        -727          -4,924   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     1,204        1,692        41     12,174   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

        

- Stockholders of the Parent Company

     1,205        2,120          12,005   

- Non-controlling interests

     -1        -428          169   

Other information

        

Average number of shares, basic (million)

     3,222        3,233          3,226   

Earnings per share, basic (SEK) 1)

     0.37        0.66          3.72   

Earnings per share, diluted (SEK) 1)

     0.37        0.65          3.69   

STATEMENT OF COMPREHENSIVE INCOME

 

     Jan - Mar      Jan - Dec  

SEK million

   2013      2014      2013  

Net income

     1,204         1,692         12,174   

Other comprehensive income

        

Items that will not be reclassified to profit or loss

        

Remeasurements of defined benefits pension plans incl. asset ceiling

     819         -1,622         3,214   

Tax on items that will not be reclassified to profit or loss

     -388         329         -1,235   

Items that may be reclassified to profit or loss

        

Cash flow hedges

        

Gains/losses arising during the period

     174         —           251   

Reclassification adjustments for gains/losses included in profit or loss

     -466         —           -1,072   

Adjustments for amounts transferred to initial carrying amount of hedged items

     —           —           0   

Revaluation of other investments in shares and participations

        

Fair value remeasurement

     —           0         71   

Changes in cumulative translation adjustments

     -718         401         -1,687   

Share of other comprehensive income on JV and associated companies

     -16         11         -14   

Tax on items that may be reclassified to profit or loss

     62         —           179   

Total other comprehensive income, net of tax

     -533         -881         -293   
  

 

 

    

 

 

    

 

 

 

Total comprehensive income

     671         811         11,881   
  

 

 

    

 

 

    

 

 

 

Total comprehensive income attributable to:

        

Stockholders of the Parent Company

     693         1,240         11,712   

Non-controlling interest

     -22         -429         169   

 

1)  Based on Net income attributable to stockholders of the Parent Company

 

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CONSOLIDATED BALANCE SHEET

 

     Dec 31      Mar 31  

SEK million

   2013      2014  

ASSETS

     

Non-current assets

     

Intangible assets

     

Capitalized development expenses

     3,348         3,212   

Goodwill

     31,544         32,114   

Intellectual property rights, brands and other intangible assets

     12,815         11,889   

Property, plant and equipment

     11,433         11,209   

Financial assets

     

Equity in JV and associated companies

     2,568         2,595   

Other investments in shares and participations

     505         509   

Customer finance, non-current

     1,294         1,146   

Other financial assets, non-current

     5,684         5,779   

Deferred tax assets

     9,103         10,030   
  

 

 

    

 

 

 
     78,294         78,483   

Current assets

     

Inventories

     22,759         24,962   

Trade receivables

     71,013         63,643   

Customer finance, current

     2,094         1,698   

Other current receivables

     17,941         18,528   

Short-term investments

     34,994         41,779   

Cash and cash equivalents

     42,095         38,096   
  

 

 

    

 

 

 
     190,896         188,706   

Total assets

     269,190         267,189   
  

 

 

    

 

 

 

EQUITY AND LIABILITIES

     

Equity

     

Stockholders’ equity

     140,204         141,643   

Non-controlling interest in equity of subsidiaries

     1,419         990   
  

 

 

    

 

 

 
     141,623         142,633   

Non-current liabilities

     

Post-employment benefits

     9,825         11,633   

Provisions, non-current

     222         198   

Deferred tax liabilities

     2,650         2,466   

Borrowings, non-current

     22,067         18,900   

Other non-current liabilities

     1,459         1,532   
  

 

 

    

 

 

 
     36,223         34,729   

Current liabilities

     

Provisions, current

     5,140         4,730   

Borrowings, current

     7,388         5,737   

Trade payables

     20,502         20,482   

Other current liabilities

     58,314         58,878   
  

 

 

    

 

 

 
     91,344         89,827   

Total equity and liabilities

     269,190         267,189   
  

 

 

    

 

 

 

Of which interest-bearing liabilities and post-employment benefits

     39,280         36,270   

Of which net cash

     37,809         43,605   

Assets pledged as collateral

     2,556         2,528   

Contingent liabilities

     657         658   

 

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CONSOLIDATED STATEMENT OF CASH FLOWS

 

     Jan - Mar      Jan - Dec  

SEK million

   2013      2014      2013  

Operating activities

        

Net income

     1,204         1,692         12,174   

Adjustments to reconcile net income to cash

        

Taxes

     -1,849         -1,348         -1,323   

Earnings/dividends in JV and associated companies

     33         -16         258   

Depreciation, amortization and impairment losses

     2,411         2,360         10,137   

Other

     -201         549         756   
  

 

 

    

 

 

    

 

 

 
     1,598         3,237         22,002   

Changes in operating net assets

        

Inventories

     -1,426         -2,099         4,868   

Customer finance, current and non-current

     260         558         1,809   

Trade receivables

     -1,934         7,957         -8,504   

Trade payables

     -2,948         -110         -2,158   

Provisions and post-employment benefits

     1,155         -464         -3,298   

Other operating assets and liabilities, net

     325         323         2,670   
  

 

 

    

 

 

    

 

 

 
     -4,568         6,165         -4,613   

Cash flow from operating activities

     -2,970         9,402         17,389   

Investing activities

        

Investments in property, plant and equipment

     -1,196         -1,034         -4,503   

Sales of property, plant and equipment

     91         274         378   

Acquisitions/divestments of subsidiaries and other operations, net

     -136         -849         -2,682   

Product development

     -282         -197         -915   

Other investing activities

     298         -169         -1,330   

Short-term investments

     -2,860         -6,790         -2,057   
  

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     -4,085         -8,765         -11,109   

Cash flow before financing activities

     -7,055         637         6,280   

Financing activities

        

Dividends paid

     -61         —           -9,153   

Other financing activities

     92         -5,069         -355   
  

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     31         -5,069         -9,508   

Effect of exchange rate changes on cash

     -214         433         641   

Net change in cash and cash equivalents

     -7,238         -3,999         -2,587   

Cash and cash equivalents, beginning of period

     44,682         42,095         44,682   

Cash and cash equivalents, end of period

     37,444         38,096         42,095   

 

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 

     Jan - Mar      Jan - Mar      Jan - Dec  

SEK million

   2013      2014      2013  

Opening balance

     138,483         141,623         138,483   

Total comprehensive income

     671         811         11,881   

Sale/repurchase of own shares

     21         24         90   

Stock purchase plan

     82         175         388   

Dividends paid

     -61         —           -9,153   

Transactions with non-controlling interests

     -26         —           -66   
  

 

 

    

 

 

    

 

 

 

Closing balance

     139,170         142,633         141,623   
  

 

 

    

 

 

    

 

 

 

 

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CONSOLIDATED INCOME STATEMENT – ISOLATED QUARTERS

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Net sales

     52,032        55,331        52,981        67,032        47,505   

Cost of sales

     -35,394        -37,412        -36,028        -42,171        -30,184   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross income

     16,638        17,919        16,953        24,861        17,321   

Gross margin (%)

     32.0     32.4     32.0     37.1     36.5

Research and development expenses

     -7,877        -7,747        -7,710        -8,902        -8,275   

Selling and administrative expenses

     -6,643        -6,629        -5,778        -7,223        -6,452   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     -14,520        -14,376        -13,488        -16,125        -14,727   

Other operating income and expenses

     20        -1,040        805        328        21   

Shares in earnings of JV and associated companies

     -32        -38        -51        -9        15   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     2,106        2,465        4,219        9,055        2,630   

Financial income

     180        304        678        184        401   

Financial expenses

     -565        -606        -595        -327        -612   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income after financial items

     1,721        2,163        4,302        8,912        2,419   

Taxes

     -517        -647        -1,292        -2,468        -727   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     1,204        1,516        3,010        6,444        1,692   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

          

—Stockholders of the Parent Company

     1,205        1,469        2,921        6,410        2,120   

—Non-controlling interests

     -1        47        89        34        -428   

Other information

          

Average number of shares, basic (million)

     3,222        3,224        3,227        3,230        3,233   

Earnings per share, basic (SEK) 1)

     0.37        0.46        0.91        1.98        0.66   

Earnings per share, diluted (SEK) 1)

     0.37        0.45        0.90        1.97        0.65   

 

1)  Based on Net income attributable to stockholders of the Parent Company

 

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CONSOLIDATED STATEMENT OF CASH FLOWS—ISOLATED QUARTERS

 

     2013      2014  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Operating activities

              

Net income

     1,204         1,516         3,010         6,444         1,692   

Adjustments to reconcile net income to cash

              

Taxes

     -1,849         -689         -881         2,096         -1,348   

Earnings/dividends in JV and associated companies

     33         37         50         138         -16   

Depreciation, amortization and impairment losses

     2,411         2,436         2,546         2,744         2,360   

Other

     -201         183         -327         1,101         549   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     1,598         3,483         4,398         12,523         3,237   

Changes in operating net assets

              

Inventories

     -1,426         600         357         5,337         -2,099   

Customer finance, current and non-current

     260         912         800         -163         558   

Trade receivables

     -1,934         3,084         -4,744         -4,910         7,957   

Trade payables

     -2,948         518         -588         860         -110   

Provisions and post-employment benefits

     1,155         -1,752         -970         -1,731         -464   

Other operating assets and liabilities, net

     325         -2,554         2,206         2,693         323   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     -4,568         808         -2,939         2,086         6,165   

Cash flow from operating activities

     -2,970         4,291         1,459         14,609         9,402   

Investing activities

              

Investments in property, plant and equipment

     -1,196         -1,278         -778         -1,251         -1,034   

Sales of property, plant and equipment

     91         11         97         179         274   

Acquisitions/divestments of subsidiaries and other operations, net

     -136         -39         -1,794         -713         -849   

Product development

     -282         -214         -237         -182         -197   

Other investing activities

     298         -203         -230         -1,195         -169   

Short-term investments

     -2,860         9,209         -144         -8,262         -6,790   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     -4,085         7,486         -3,086         -11,424         -8,765   

Cash flow before financing activities

     -7,055         11,777         -1,627         3,185         637   

Financing activities

              

Dividends paid

     -61         -8,863         -21         -208         —     

Other financing activities

     92         -4,236         43         3,746         -5,069   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     31         -13,099         22         3,538         -5,069   

Effect of exchange rate changes on cash

     -214         2,357         -1,711         209         433   

Net change in cash and cash equivalents

     -7,238         1,035         -3,316         6,932         -3,999   

Cash and cash equivalents, beginning of period

     44,682         37,444         38,479         35,163         42,095   

Cash and cash equivalents, end of period

     37,444         38,479         35,163         42,095         38,096   

 

Ericsson First Quarter Report 2014

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Table of Contents

PARENT COMPANY INCOME STATEMENT

 

     Jan - Mar      Jan - Dec  

SEK million

   2013      2014      2013  

Net sales

     —           —           —     

Cost of sales

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Gross income

     —           —           —     

Operating expenses

     -256         -342         -1,380   

Other operating income and expenses

     640         665         2,768   
  

 

 

    

 

 

    

 

 

 

Operating income

     384         323         1,388   

Financial net

     792         117         5,856   
  

 

 

    

 

 

    

 

 

 

Income after financial items

     1,176         440         7,244   

Transfers to (-) / from untaxed reserves

     —           —           -142   

Taxes

     -119         -74         -247   
  

 

 

    

 

 

    

 

 

 

Net income

     1,057         366         6,855   

STATEMENT OF COMPREHENSIVE INCOME

 

     Jan - Mar      Jan - Dec  

SEK million

   2013      2014      2013  

Net income

     1,057         366         6,855   

Cash flow hedges

        

Fair value remeasurement

     —           —           69   

Total other comprehensive income, net of tax

     —           —           69   
  

 

 

    

 

 

    

 

 

 

Total comprehensive income

     1,057         366         6,924   

PARENT COMPANY BALANCE SHEET

 

     Dec 31      Mar 31  

SEK million

   2013      2014  

ASSETS

     

Fixed assets

     

Intangible assets

     646         591   

Tangible assets

     571         613   

Financial assets

     94,741         94,597   
  

 

 

    

 

 

 
     95,958         95,801   

Current assets

     

Inventories

     7         9   

Receivables

     17,247         17,612   

Short-term investments

     34,520         41,205   

Cash and cash equivalents

     23,954         21,262   
  

 

 

    

 

 

 
     75,728         80,088   

Total assets

     171,686         175,889   
  

 

 

    

 

 

 

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

     

Equity

     

Restricted equity

     48,018         48,018   

Non-restricted equity

     23,798         24,193   
  

 

 

    

 

 

 
     71,816         72,211   

Provisions

     2,097         1,978   

Non-current liabilities

     44,491         42,623   

Current liabilities

     53,282         59,077   

Total stockholders’ equity, provisions and liabilities

     171,686         175,889   
  

 

 

    

 

 

 

Assets pledged as collateral

     553         525   

Contingent liabilities

     15,999         17,739   

 

Ericsson First Quarter Report 2014

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Table of Contents

Accounting policies

The Group

This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2013, and should be read in conjunction with that annual report.

As from January 1, 2014, the Company has applied the following new or amended IFRSs and IFRICs:

Amendment to IAS 32, “Financial instruments: Presentation,” Offsetting Financial Assets and Financial Liabilities. This amendment is related to the application guidance in IAS 32, ‘Financial instruments: Presentation,’ and clarifies some of the requirements for offsetting financial assets and financial liabilities on the balance sheet.

IFRIC 21, “Levies.” This interpretation of IAS 37 “Provisions, contingent liabilities and contingent assets” sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to the need to pay a levy and when a liability should be recognized.

None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no significant difference between IFRS effective as per March 31, 2014 and IFRS as endorsed by the EU. However, IFRIC 21 is not yet endorsed by the EU.

In the interim reports of 2013 disclosure was given in relation to IFRS 7 about fair valuation of financial instruments. Due to that the amounts are not considered material this disclosure will not be given in the interim reports as from the first quarter of 2014. Should amounts become material quarterly disclosure will be given as from then.

 

Ericsson First Quarter Report 2014

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Table of Contents

NET SALES BY SEGMENT BY QUARTER

Segment Modems was consolidated as of October 1, 2013.

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Networks

     28,133        28,142        26,655        34,769        24,383   

Global Services

     21,452        24,851        23,974        27,166        20,356   

Of which Professional Services

     14,626        16,773        16,229        18,767        15,078   

Of which Managed Services

     5,888        6,754        6,264        6,574        5,754   

Of which Network Rollout

     6,826        8,078        7,745        8,399        5,278   

Support Solutions

     2,447        2,338        2,352        5,097        2,765   

Modems

     —          —          —          —          1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,032        55,331        52,981        67,032        47,505   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     -20     0     -5     30     -30

Global Services

     -24     16     -4     13     -25

Of which Professional Services

     -23     15     -3     16     -20

Of which Managed Services

     -13     15     -7     5     -12

Of which Network Rollout

     -26     18     -4     8     -37

Support Solutions

     -33     -4     1     117     -46

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -22     6     -4     27     -29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

Year over year change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     3     1     -1     -1     -13

Global Services

     4     3     -1     -3     -5

Of which Professional Services

     -2     -1     -1     -1     3

Of which Managed Services

     3     4     -1     -3     -2

Of which Network Rollout

     19     13     -2     -8     -23

Support Solutions

     -19     -33     -29     40     13

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2     0     -3     0     -9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

Year to date, SEK million

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     28,133        56,275        82,930        117,699        24,383   

Global Services

     21,452        46,303        70,277        97,443        20,356   

Of which Professional Services

     14,626        31,399        47,628        66,395        15,078   

Of which Managed Services

     5,888        12,642        18,906        25,480        5,754   

Of which Network Rollout

     6,826        14,904        22,649        31,048        5,278   

Support Solutions

     2,447        4,785        7,137        12,234        2,765   

Modems

     —          —          —          —          1   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,032        107,363        160,344        227,376        47,505   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Year to date,    2013     2014  

year over year change, percent

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     3     2     1     0     -13

Global Services

     4     4     2     0     -5

Of which Professional Services

     -2     -1     -1     -1     3

Of which Managed Services

     3     4     2     1     -2

Of which Network Rollout

     19     16     9     4     -23

Support Solutions

     -19     -26     -27     -9     13

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2     1     0     0     -9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
SALES GROWTH ADJUSTED FOR COMPARABLE UNITS AND CURRENCY (%)       
     2013     2014  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     -17     0     -3     31     -30

Global Services

     -20     17     -2     13     -25

Support Solutions

     -30     -5     3     102     -45

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -19     6     -2     27     -28
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Isolated quarter,    2013     2014  

year over year change, percent

   Q1     Q2     Q3     Q4     Q1  

Networks

     7     8     4     3     -10

Global Services

     9     9     3     1     -3

Support Solutions

     -3     -19     -15     35     4

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     7     7     3     4     -7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
Year to date,    2013     2014  

year over year change, percent

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     7     7     6     5     -10

Global Services

     9     9     7     5     -3

Support Solutions

     -3     -12     -13     0     4

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     7     7     5     5     -7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Ericsson First Quarter Report 2014

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Table of Contents

OPERATING INCOME BY SEGMENT BY QUARTER

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Networks

     1,565        1,335        2,557        5,861        2,476   

Global Services

     726        1,564        1,808        2,087        1,036   

Of which Professional Services

     1,837        2,285        2,279        2,628        1,893   

Of which Network Rollout

     -1,111        -721        -471        -541        -857   

Support Solutions

     -29        -283        -113        1,880        12   

Modems

     —          —          —          -543        -745   

Unallocated 1)

     -156        -151        -33        -230        -149   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2,106        2,465        4,219        9,055        2,630   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

Year to date, SEK million

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     1,565        2,900        5,457        11,318        2,476   

Global Services

     726        2,290        4,098        6,185        1,036   

Of which Professional Services

     1,837        4,122        6,401        9,029        1,893   

Of which Network Rollout

     -1,111        -1,832        -2,303        -2,844        -857   

Support Solutions

     -29        -312        -425        1,455        12   

Modems

     —          —          —          -543        -745   

Unallocated 1)

     -156        -307        -340        -570        -149   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2,106        4,571        8,790        17,845        2,630   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
OPERATING MARGIN BY SEGMENT BY QUARTER   
     2013     2014  

As percentage of net sales, isolated quarters

   Q1     Q2     Q3     Q4     Q1  

Networks

     6     5     10     17     10

Global Services

     3     6     8     8     5

Of which Professional Services

     13     14     14     14     13

Of which Network Rollout

     -16     -9     -6     -6     -16

Support Solutions

     -1     -12     -5     37     0

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     4     4     8     14     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

As percentage of net sales, Year to date

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     6     5     7     10     10

Global Services

     3     5     6     6     5

Of which Professional Services

     13     13     13     14     13

Of which Network Rollout

     -16     -12     -10     -9     -16

Support Solutions

     -1     -7     -6     12     0

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     4     4     5     8     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1)  “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses

 

Ericsson First Quarter Report 2014

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Table of Contents

EBITA BY SEGMENT BY QUARTER

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Networks

     2,302        2,074        3,320        6,525        3,052   

Global Services

     942        1,783        2,043        2,342        1,257   

Of which Professional Services

     2,009        2,443        2,466        2,820        2,073   

Of which Network Rollout

     -1,067        -660        -423        -478        -816   

Support Solutions

     118        -132        38        2,076        192   

Modems

     —          —          —          -499        -699   

Unallocated 1)

     -155        -150        -32        -229        -149   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     3,207        3,575        5,369        10,215        3,653   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

Year to date, SEK million

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     2,302        4,376        7,696        14,221        3,052   

Global Services

     942        2,725        4,768        7,110        1,257   

Of which Professional Services

     2,009        4,452        6,918        9,738        2,073   

Of which Network Rollout

     -1,067        -1,727        -2,150        -2,628        -816   

Support Solutions

     118        -14        24        2,100        192   

Modems

     —          —          —          -499        -699   

Unallocated 1)

     -155        -305        -337        -566        -149   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     3,207        6,782        12,151        22,366        3,653   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITA MARGIN BY SEGMENT BY QUARTER

  

     2013     2014  

As percentage of net sales, isolated quarters

   Q1     Q2     Q3     Q4     Q1  

Networks

     8     7     12     19     13

Global Services

     4     7     9     9     6

Of which Professional Services

     14     15     15     15     14

Of which Network Rollout

     -16     -8     -5     -6     -15

Support Solutions

     5     -6     2     41     7

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     6     6     10     15     8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2013     2014  

As percentage of net sales, year to date

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

Networks

     8     8     9     12     13

Global Services

     4     6     7     7     6

Of which Professional Services

     14     14     15     15     14

Of which Network Rollout

     -16     -12     -9     -8     -15

Support Solutions

     5     0     0     17     7

Modems

     —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     6     6     8     10     8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

1)  “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses

 

Ericsson First Quarter Report 2014

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Table of Contents

NET SALES BY REGION BY QUARTER

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

North America

     15,773        15,341        14,453        13,772        12,215   

Latin America

     4,374        5,565        5,294        6,749        4,710   

Northern Europe & Central Asia 1) 2)

     2,283        2,708        2,949        3,678        2,436   

Western & Central Europe 2)

     4,349        4,522        4,399        5,215        4,381   

Mediterranean 2)

     5,271        6,159        5,659        7,067        4,785   

Middle East

     3,160        3,978        4,386        5,914        3,859   

Sub Saharan Africa

     2,131        2,653        2,693        2,572        1,813   

India

     1,606        1,279        1,280        1,973        1,695   

North East Asia

     6,054        6,642        6,053        8,649        4,908   

South East Asia & Oceania

     4,129        3,758        3,617        4,283        3,446   

Other 1) 2)

     2,902        2,726        2,198        7,160        3,257   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,032        55,331        52,981        67,032        47,505   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1)   Of which in Sweden

     1,020        1,276        798        1,333        999   

2)   Of which in EU

     9,782        10,816        10,111        12,835        9,720   
     2013     2014  

Sequential change, percent

   Q1     Q2     Q3     Q4     Q1  

North America

     -7     -3     -6     -5     -11

Latin America

     -33     27     -5     27     -30

Northern Europe & Central Asia 1) 2)

     -24     19     9     25     -34

Western & Central Europe 2)

     -20     4     -3     19     -16

Mediterranean 2)

     -25     17     -8     25     -32

Middle East

     -38     26     10     35     -35

Sub Saharan Africa

     -40     24     2     -4     -30

India

     0     -20     0     54     -14

North East Asia

     -41     10     -9     43     -43

South East Asia & Oceania

     -9     -9     -4     18     -20

Other 1) 2)

     -3     -6     -19     226     -55
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -22     6     -4     27     -29
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1)   Of which in Sweden

     -20     25     -37     67     -25

2)   Of which in EU

     -24     11     -7     27     -24
     2013     2014  

Year-over-year change, percent

   Q1     Q2     Q3     Q4     Q1  

North America

     23     18     3     -19     -23

Latin America

     -9     6     -2     4     8

Northern Europe & Central Asia 1) 2)

     0     -19     9     23     7

Western & Central Europe 2)

     1     10     21     -4     1

Mediterranean 2)

     14     -1     5     0     -9

Middle East

     0     7     21     17     22

Sub Saharan Africa

     -3     -5     -4     -28     -15

India

     13     -25     -26     23     6

North East Asia

     -34     -21     -28     -16     -19

South East Asia & Oceania

     22     2     3     -5     -17

Other 1) 2)

     2     -13     -34     141     12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2     0     -3     0     -9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1)   Of which in Sweden

     22     0     -52     5     -2

2)   Of which in EU

     3     -3     -5     -1     -1

 

Ericsson First Quarter Report 2014

   30


Table of Contents

NET SALES BY REGION BY QUARTER (continued)

 

 

     2013     2014  

Year to date, SEK million

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

North America

     15,773        31,114        45,567        59,339        12,215   

Latin America

     4,374        9,939        15,233        21,982        4,710   

Northern Europe & Central Asia 1) 2)

     2,283        4,991        7,940        11,618        2,436   

Western & Central Europe 2)

     4,349        8,871        13,270        18,485        4,381   

Mediterranean 2)

     5,271        11,430        17,089        24,156        4,785   

Middle East

     3,160        7,138        11,524        17,438        3,859   

Sub Saharan Africa

     2,131        4,784        7,477        10,049        1,813   

India

     1,606        2,885        4,165        6,138        1,695   

North East Asia

     6,054        12,696        18,749        27,398        4,908   

South East Asia & Oceania

     4,129        7,887        11,504        15,787        3,446   

Other 1) 2)

     2,902        5,628        7,826        14,986        3,257   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     52,032        107,363        160,344        227,376        47,505   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1)   Of which in Sweden

     1,020        2,296        3,094        4,427        999   

2)   Of which in EU

     9,782        20,598        30,709        43,544        9,720   
Year to date,    2013     2014  

year-over-year change, percent

   Jan - Mar     Jan - Jun     Jan - Sep     Jan - Dec     Jan - Mar  

North America

     23     21     14     5     -23

Latin America

     -9     -1     -2     0     8

Northern Europe & Central Asia 1) 2)

     0     -12     -5     2     7

Western & Central Europe 2)

     1     6     10     6     1

Mediterranean 2)

     14     6     5     4     -9

Middle East

     0     4     10     12     22

Sub Saharan Africa

     -3     -4     -4     -11     -15

India

     13     -8     -14     -5     6

North East Asia

     -34     -28     -28     -24     -19

South East Asia & Oceania

     22     12     9     5     -17

Other1) 2)

     2     -6     -16     22     12
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2     1     0     0     -9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1)   Of which in Sweden

     22     9     -18     -12     -2

2)   Of which in EU

     3     -1     -2     -2     -1

TOP 5 COUNTRIES IN SALES

 

     Q1     Jan - Mar  

Country

   2013     2014     2013     2014  

UNITED STATES

     30     26     30     26

CHINA

     4     5     4     5

JAPAN

     7     4     7     4

INDIA

     3     4     3     4

KOREA

     2     4     2     4

 

Ericsson First Quarter Report 2014   31


Table of Contents

NET SALES BY REGION BY SEGMENT

Revenue from Telcordia is reported 50/50 between segments Global Services and Support Solutions. In the regional dimension, all of Telcordia sales is reported in Support Solutions, except for North America where it is split 50/50.

 

     Q1 2014, SEK million     Jan - Mar 2014, SEK million  
     Net-
works
    Global
Services
    Support
Solutions
    Modems     Total     Net-
works
    Global
Services
    Support
Solutions
    Modems     Total  

North America

     6,545        5,038        632        —          12,215        6,545        5,038        632        —          12,215   

Latin America

     2,435        2,038        237        —          4,710        2,435        2,038        237        —          4,710   

Northern Europe & Central Asia

     1,373        1,004        59        —          2,436        1,373        1,004        59        —          2,436   

Western & Central Europe

     1,794        2,458        129        —          4,381        1,794        2,458        129        —          4,381   

Mediterranean

     1,988        2,606        191        —          4,785        1,988        2,606        191        —          4,785   

Middle East

     1,808        1,872        179        —          3,859        1,808        1,872        179        —          3,859   

Sub Saharan Africa

     725        830        258        —          1,813        725        830        258        —          1,813   

India

     888        699        108        —          1,695        888        699        108        —          1,695   

North East Asia

     2,770        2,025        113        —          4,908        2,770        2,025        113        —          4,908   

South East Asia & Oceania

     1,862        1,492        92        —          3,446        1,862        1,492        92        —          3,446   

Other

     2,195        294        767        1        3,257        2,195        294        767        1        3,257   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     24,383        20,356        2,765        1        47,505        24,383        20,356        2,765        1        47,505   

Share of Total

     51     43     6     0     100     51     43     6     0     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

     Q1 2014  

Sequential change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Modems      Total  

North America

     23     -32     -39     —           -11

Latin America

     -31     -30     -20     —           -30

Northern Europe & Central Asia

     -41     -20     -29     —           -34

Western & Central Europe

     -13     -16     -43     —           -16

Mediterranean

     -31     -33     -35     —           -32

Middle East

     -40     -20     -69     —           -35

Sub Saharan Africa

     -44     -22     18     —           -30

India

     -25     -2     38     —           -14

North East Asia

     -54     -19     -29     —           -43

South East Asia & Oceania

     -22     -14     -44     —           -20

Other

     -55     -18     -61     —           -55
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

     -30     -25     -46     —           -29
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     Q1 2014  

Year over year change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Modems      Total  

North America

     -29     -18     30     —           -23

Latin America

     22     1     -33     —           8

Northern Europe & Central Asia

     9     5     -8     —           7

Western & Central Europe

     -5     5     10     —           1

Mediterranean

     -19     -3     35     —           -9

Middle East

     28     27     -34     —           22

Sub Saharan Africa

     -34     1     23     —           -15

India

     3     11     -11     —           6

North East Asia

     -18     -22     30     —           -19

South East Asia & Oceania

     -28     5     -15     —           -17

Other

     10     -28     57     —           12
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

     -13     -5     13     —           -9
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

     Jan - Mar 2014  

Year over year change, percent

   Net-
works
    Global
Services
    Support
Solutions
    Modems      Total  

North America

     -29     -18     30     —           -23

Latin America

     22     1     -33     —           8

Northern Europe & Central Asia

     9     5     -8     —           7

Western & Central Europe

     -5     5     10     —           1

Mediterranean

     -19     -3     35     —           -9

Middle East

     28     27     -34     —           22

Sub Saharan Africa

     -34     1     23     —           -15

India

     3     11     -11     —           6

North East Asia

     -18     -22     30     —           -19

South East Asia & Oceania

     -28     5     -15     —           -17

Other

     10     -28     57     —           12
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total

     -13     -5     13     —           -9
  

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

Ericsson First Quarter Report 2014

   32


Table of Contents

PROVISIONS

 

     2013      2014  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Opening balance

     8,638         9,499         7,716         6,414         5,362   

Additions

     1,915         1,215         658         911         625   

Utilization/Cash out

     -758         -2,365         -1,534         -1,364         -977   

Of which restructuring

     -324         -1,001         -457         -307         -512   

Reversal of excess amounts

     -209         -586         -191         -575         -88   

Reclassification, translation difference and other

     -87         -47         -235         -24         6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Closing balance

     9,499         7,716         6,414         5,362         4,928   
     2013      2014  

Year to date, SEK million

   Jan - Mar      Jan - Jun      Jan - Sep      Jan - Dec      Jan - Mar  

Opening balance

     8,638         8,638         8,638         8,638         5,362   

Additions

     1,915         3,130         3,788         4,699         625   

Utilization/Cash out

     -758         -3,123         -4,657         -6,021         -977   

Of which restructuring

     -324         -1,325         -1,782         -2,089         -512   

Reversal of excess amounts

     -209         -795         -986         -1,561         -88   

Reclassification, translation difference and other

     -87         -134         -369         -393         6   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Closing balance

     9,499         7,716         6,414         5,362         4,928   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

INFORMATION ON INVESTMENTS IN ASSETS SUBJECT TO DEPRECIATION, AMORTIZATION, IMPAIRMENT AND WRITE-DOWNS

 

     2013      2014  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Additions

              

Property, plant and equipment

     1,196         1,278         778         1,251         1,034   

Capitalized development expenses

     282         214         237         182         197   

IPR, brands and other intangible assets

     196         22         1,418         562         77   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1,674         1,514         2,433         1,995         1,308   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Depreciation, amortization and impairment losses

              

Property, plant and equipment

     1,008         983         1,008         1,210         1,004   

Capitalized development expenses

     303         342         388         374         333   

IPR, brands and other intangible assets, etc.

     1,100         1,111         1,150         1,160         1,023   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     2,411         2,436         2,546         2,744         2,360   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

RECONCILIATION TABLE, NON-IFRS MEASUREMENTS

CASH CONVERSION

 

     2013     2014  

Isolated quarters, SEK million

   Q1     Q2     Q3     Q4     Q1  

Net income

     1,204        1,516        3,010        6,444        1,692   

Net income reconciled to cash

     1,598        3,483        4,398        12,523        3,237   

Cash flow from operating activities

     -2,970        4,291        1,459        14,609        9,402   

Cash conversion

     -185.9     123.2     33.2     116.7     290.5

NET CASH, END OF PERIOD

 

     Dec 31      Mar 31  

SEK million

   2013      2014  

Cash and cash equivalents

     42,095         38,096   

+ Short term investments

     34,994         41,779   

- Borrowings, non-current

     22,067         18,900   

- Borrowings, current

     7,388         5,737   

- Post employment benefits

     9,825         11,633   

Net cash, end of period

     37,809         43,605   

 

Ericsson First Quarter Report 2014

   33


Table of Contents

OTHER INFORMATION

 

     Jan - Mar     Jan - Dec  
     2013     2014     2013  

Number of shares and earnings per share

      

Number of shares, end of period (million)

     3,305        3,305        3,305   

Of which class A-shares (million)

     262        262        262   

Of which class B-shares (million)

     3,043        3,043        3,043   

Number of treasury shares, end of period (million)

     82        71        74   

Number of shares outstanding, basic, end of period (million)

     3,223        3,234        3,231   

Numbers of shares outstanding, diluted, end of period (million)

     3,254        3,265        3,262   

Average number of treasury shares (million)

     83        72        79   

Average number of shares outstanding, basic (million)

     3,222        3,233        3,226   

Average number of shares outstanding, diluted (million) 1)

     3,253        3,264        3,257   

Earnings per share, basic (SEK)

     0.37        0.66        3.72   

Earnings per share, diluted (SEK) 1)

     0.37        0.65        3.69   

Earnings per share (Non-IFRS), diluted (SEK) 2)

     0.61        0.88        4.69   

Earnings per share (Non-IFRS, excluding restructuring), diluted (SEK) 2)

     0.99        0.90        5.62   
  

 

 

   

 

 

   

 

 

 

Ratios

      

Days sales outstanding

     108        112        97   

Inventory turnover days

     76        72        62   

Payable days

     55        62        53   

Equity ratio (%)

     51.4     53.4     52.6

Return on equity (%)

     3.5     6.0     8.7

Return on capital employed (%)

     5.1     6.7     10.7

Capital turnover (times)

     1.2        1.1        1.3   

Cash conversion %, end of period

     -185.9     290.5     79.0

Payment readiness, end of period

     80,024        87,108        82,631   

Payment readiness, as percentage of sales

     38.4     45.8     36.3
  

 

 

   

 

 

   

 

 

 

Exchange rates used in the consolidation

      

SEK/EUR - average rate

     8.50        8.89        8.67   

- closing rate

     8.34        8.95        8.90   

SEK/USD - average rate

     6.46        6.48        6.52   

- closing rate

     6.51        6.48        6.46   
  

 

 

   

 

 

   

 

 

 

Other

      

Regional inventory, end of period,

     20,781        16,456        14,652   

Export sales from Sweden

     26,154        24,078        108,944   

 

1)  Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share
2)  Excluding amortizations and write-downs of acquired intangibles

NUMBER OF EMPLOYEES

 

     2013      2014  

End of period

   Mar 31      Jun 30      Sep 30      Dec 31      Mar 31  

North America

     15,404         15,047         14,825         14,931         14,902   

Latin America

     11,153         11,412         11,402         11,445         9,731   

Northern Europe & Central Asia 1)

     21,043         21,148         22,038         21,892         21,484   

Western & Central Europe

     11,118         11,235         11,612         11,530         11,455   

Mediterranean

     12,015         12,405         12,350         12,314         12,253   

Middle East

     3,951         3,951         3,766         3,752         3,749   

Sub Saharan Africa

     1,967         2,101         2,081         2,084         2,094   

India

     14,588         16,183         16,978         17,622         17,991   

North East Asia

     14,088         14,059         14,625         14,503         13,490   

South East Asia & Oceania

     4,321         4,264         4,312         4,267         4,234   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     109,648         111,805         113,989         114,340         111,383   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

1) Of which in Sweden

     17,550         17,264         18,008         17,858         17,545   

 

Ericsson First Quarter Report 2014

   34


Table of Contents

RESTRUCTURING CHARGES BY FUNCTION

 

     2013      2014  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Cost of sales

     -698         -707         -600         -652         -82   

Research and development expenses

     -552         -117         -64         -139         -19   

Selling and administrative expenses

     -589         -110         -55         -170         -29   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     -1,839         -934         -719         -961         -130   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2013      2014  

Year to date, SEK million

   Jan - Mar      Jan - Jun      Jan - Sep      Jan - Dec      Jan - Mar  

Cost of sales

     -698         -1,405         -2,005         -2,657         -82   

Research and development expenses

     -552         -669         -733         -872         -19   

Selling and administrative expenses

     -589         -699         -754         -924         -29   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     -1,839         -2,773         -3,492         -4,453         -130   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

RESTRUCTURING CHARGES BY SEGMENT

 

     2013      2014  

Isolated quarters, SEK million

   Q1      Q2      Q3      Q4      Q1  

Networks

     -1,251         -316         -299         -316         -93   

Global Services

     -385         -586         -410         -616         -32   

Of which Professional Services

     -270         -389         -290         -420         -25   

Of which Network Rollout

     -115         -197         -120         -196         -7   

Support Solutions

     -111         -34         -11         -30         -5   

Modems

     —           —           —           —           —     

Unallocated

     -92         2         1         1         0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     -1,839         -934         -719         -961         -130   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2013      2014  

Year to date, SEK million

   Jan - Mar      Jan - Jun      Jan - Sep      Jan - Dec      Jan - Mar  

Networks

     -1,251         -1,567         -1,866         -2,182         -93   

Global Services

     -385         -971         -1,381         -1,997         -32   

Of which Professional Services

     -270         -659         -949         -1,369         -25   

Of which Network Rollout

     -115         -312         -432         -628         -7   

Support Solutions

     -111         -145         -156         -186         -5   

Modems

     —           —           —           —           —     

Unallocated

     -92         -90         -89         -88         0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     -1,839         -2,773         -3,492         -4,453         -130   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Ericsson First Quarter Report 2014

   35