Fourth quarter highlights
- Group organic sales grew by 2% YoY. Sales in Mainland China declined by
SEK -1.8 b. (-3 percentage points), meaning that excluding Mainland China organic sales growth was 5%. Reported sales wereSEK 71.3 (69.6) b. - Gross margin improved in all segments to 43.5% (40.6%) excluding restructuring charges. Reported gross margin was 43.2% (40.6%).
-
EBIT excluding restructuring charges improved to
SEK 12.3 b. (17.3% EBIT margin) fromSEK 11.0 b. (15.8% EBIT margin) YoY. Reported EBIT wasSEK 11.9 (11.0) b. - Networks organic sales increased by 3%, despite significant market share loss in Mainland China. EBIT margin excluding restructuring charges was 23.6% (21.5%).
-
Digital Services organic sales were flat and EBIT excluding restructuring charges was
SEK 0.4 (0.5) b. -
Reported net income was
SEK 10.1 (7.2) b. EPS diluted wasSEK 3.02 (2.26).
Full-year highlights
- Group organic sales grew by 4%, with an increase in Networks sales of 7%. Reported sales were stable at
SEK 232.3 b. The loss of market share in Mainland China impacted sales bySEK -7.7 b. and the growth rate by -3 percentage points, meaning that excluding Mainland China, organic sales growth was 8%. - Gross margin excl. restructuring charges was 43.5% (40.6%), driven primarily by strengthened operational leverage in Networks.
- EBIT margin excluding restructuring charges improved to 13.9% (12.5%), reaching the 2022 group target already in 2021.
-
Reported net income was
SEK 23.0 (17.6) b. EPS diluted wasSEK 6.81 (5.26). -
Free cash flow before M&A amounted to
SEK 32.1 (22.3) b. Net cash wasSEK 65.8 (41.9) b. onDecember 31, 2021 . -
The Board of Directors will propose a dividend for 2021 of
SEK 2.50 (2.00) per share to the AGM.
SEK b. |
Q4 2021 |
Q4 2020 |
YoY change |
Q3 2021 |
QoQ change |
Jan-Dec 2021 |
Jan-Dec 2020 |
YoY change |
Net sales | 71.3 | 69.6 | 3% | 56.3 | 27% | 232.3 | 232.4 | 0% |
Sales growth adj. for comparable units and currency [1] | - | - | 2% | - | - | - | - | 4% |
Gross margin [1] | 43.2% | 40.6% | - | 44.0% | - | 43.4% | 40.3% | - |
EBIT | 11.9 | 11.0 | 8% | 8.8 | 34% | 31.8 | 27.8 | 14% |
EBIT margin [1] | 16.6% | 15.8% | - | 15.7% | - | 13.7% | 12.0% | - |
Net income | 10.1 | 7.2 | 41% | 5.8 | 76% | 23.0 | 17.6 | 30% |
EPS diluted, SEK | 3.02 | 2.26 | 34% | 1.73 | 75% | 6.81 | 5.26 | 29% |
Measures excl. restructuring charges [1] | ||||||||
Gross margin excluding restructuring charges | 43.5% | 40.6% | - | 44.0% | - | 43.5% | 40.6% | - |
EBIT excluding restructuring charges | 12.3 | 11.0 | 12% | 8.8 | 39% | 32.3 | 29.1 | 11% |
EBIT margin excluding restructuring charges | 17.3% | 15.8% | - | 15.7% | - | 13.9% | 12.5% | - |
Free cash flow before M&A | 13.5 | 12.8 | 6% | 13.0 | 4% | 32.1 | 22.3 | 44% |
Net cash, end of period | 65.8 | 41.9 | 57% | 55.7 | 18% | 65.8 | 41.9 | 57% |
[1] Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements
Comments from
Our strategy to invest in technology leadership and grow market share in our core business underpinned a robust financial performance in 2021 and ensured a good Q4 for
Networks sales[1] grew organically by 3% in Q4, despite considerably lower volumes in Mainland China. Gross margin[2] improved to 46.4% (43.5%). The 2021 financial performance and continued market share gains outside of Mainland China are underpinned by our investments in technology leadership. We have so far been able to mitigate the inflationary pressure by continuously evolving our product portfolio. We strengthened our industry-leading portfolio during the year with ultra-light, energy-efficient Massive MIMO radios for enhanced network performance and our new Cloud RAN portfolio for 5G mid band.
In Q4, Digital Services organic sales[1] were stable YoY. Excluding sales in Mainland China, where we had considerably lower volumes, sales[1] increased by 3% YoY in the fourth quarter. Fourth quarter gross margin[2] improved to 43.4% (41.0%) with a positive EBIT[2] of
Managed Services delivered a gross margin[2] of 18.9% (17.7%) in Q4. For the full year of 2021 organic sales[1] declined by -6% as new deals did not offset lower customer demand, contract rescoping and planned exits. To grow profits, we will accelerate the ongoing transformation towards a more software-driven offering with higher margin potential.
Emerging Business and Other delivered an improved gross margin[2] of 35.2% (33.8%) in Q4. For full-year 2021, gross margin[2] improved to 37.3% (28.0%), where
IPR revenues amounted to
In October, we received correspondence from the
Free cash flow before M&A was
Based on current business momentum, we expect fundamentals to remain strong in our core mobile infrastructure business during 2022. We will continue to increase investments in R&D to sustain our technology leadership and strengthen our competitive position to take advantage of the rollout of 5G networks. At the same time, we will continue our efforts to expand our presence in the enterprise market. Over time, we expect the enterprise segment to provide higher growth and profitability than our mobile infrastructure business. The Group EBIT target[2] for 2022 of 12-14% remains, excluding the Vonage-related segment. With the different business mix compared to when we set the 2022 target back in 2018, the target becomes less relevant, and our key focus is therefore now to accelerate the pace towards reaching our long-term target of EBITA margin[2] of 15-18%. After delivering an EBITA margin[2] of 14.6% in 2021, our ambition is to reach the long-term target no later than in 2-3 years. At that time, we will have a higher growth profile as a company.
2021 was a successful year for
Stay healthy and well.
President and CEO
[1] Sales adjusted for comparable units and currency
[2] Excluding restructuring charges
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or by following this link https://www.ericsson.com/assets/local/investors/documents/financial-reports-and-filings/interim-reports-archive/2021/12month21-en.pdf or on www.ericsson.com/investors
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