Third quarter highlights
- Group organic sales declined by -1% YoY. Sales in Mainland China in Networks and Digital Services declined by
SEK -3.6 b. impacting the growth rate by -6%. Some impact was seen from disturbances in the supply chain. Reported sales wereSEK 56.3 (57.5) b. -
Gross margin excl. restructuring charges improved to 44.0% (43.2%) mainly driven by increased and partly retroactive IPR revenues and the acquired
Cradlepoint business. Operational leverage continued to be strong in Networks. Reported gross margin was 44.0% (43.1%). -
EBIT margin excl. restructuring charges increased slightly to 15.7% (15.6%). Reported EBIT increased to
SEK 8.8 b. (15.7%) fromSEK 8.6 b. (15.0%). EBIT was supported by a market revaluation of investments and an impairment write-off, amounting toSEK 0.4 b. - Organic sales development in Networks was stable YoY. The quarter was impacted by market share loss in Mainland China. Reported EBIT margin was 23.7% (22.0%).
-
Reported net income was
SEK 5.8 (5.6) b. -
Free cash flow before M&A was
SEK 13.0 (3.9) b. driven primarily by strong cash collection. Net cash perSeptember 30, 2021 wasSEK 55.7 b. compared withSEK 41.5 b. perSeptember 30, 2020 . -
Investor Update (
Nov. 9 ) will be postponed into next year with the intent to host a full-day, in-person CMD with the entire executive management present.
SEK b. |
Q3 2021 |
Q3 2020 |
YoY change |
Q2 2021 |
QoQ change |
Jan-Sep 2021 |
Jan-Sep 2020 |
YoY change |
Net sales | 56.3 | 57.5 | -2% | 54.9 | 2% | 161.0 | 162.8 | -1% |
Sales growth adj. for comparable units and currency [1] | - | - | -1% | - | - | - | - | 6% |
Gross margin [1] | 44.0% | 43.1% | - | 43.4% | - | 43.4% | 40.2% | - |
EBIT | 8.8 | 8.6 | 2% | 5.8 | 52% | 19.9 | 16.8 | 19% |
EBIT margin [1] | 15.7% | 15.0% | - | 10.6% | - | 12.4% | 10.3% | - |
Net income | 5.8 | 5.6 | 4% | 3.9 | 48% | 12.8 | 10.4 | 23% |
EPS diluted, SEK | 1.73 | 1.61 | 7% | 1.10 | 57% | 3.79 | 3.00 | 26% |
Measures excl. restructuring charges [1] | ||||||||
Gross margin excluding restructuring charges | 44.0% | 43.2% | - | 43.4% | - | 43.5% | 40.7% | - |
EBIT excluding restructuring charges | 8.8 | 9.0 | -1% | 5.8 | 52% | 20.0 | 18.1 | 10% |
EBIT margin excluding restructuring charges | 15.7% | 15.6% | - | 10.6% | - | 12.4% | 11.1% | - |
Free cash flow before M&A | 13.0 | 3.9 | 229% | 4.1 | 218% | 18.6 | 9.5 | 96% |
Net cash, end of period | 55.7 | 41.5 | 34% | 43.7 | 27% | 55.7 | 41.5 | 34% |
[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
We continue to win footprint across our business by leveraging our competitive 5G portfolio. The 5G contracts now awarded by all three tier-1 US carriers are the largest in
Networks sales[1] were stable YoY, despite considerably lower volumes from Mainland China, reflecting market share gains in other markets. Excluding sales in Mainland China, Networks sales[1] increased by 8% in the third quarter compared to the same period last year. However, late in Q3 we experienced some impact on sales from disturbances in the supply chain, and such issues will continue to pose a risk. Gross margin[2] improved to 47.8% (46.7%), driven by operational leverage and higher IPR revenues.
Digital Services sales[1] grew by 1% despite a stark sales reduction in Mainland China. Excluding sales in Mainland China, Digital Services sales[1] increased by 6% in the third quarter compared to the same period last year. We are starting to see initial revenues from 5G contracts, driving growth in our Core business. Gross margin[2] was 42.3% (43.5%), impacted mainly by initial deployment costs in cloud native 5G Core projects. We continue to increase our R&D investments in the 5G portfolio, including Core and orchestration, further strengthening our competitive position. With increasing sales in combination with a higher share of software sales, we expect profitability to gradually improve and over time exceed our original target of EBIT margin[2] of 10%-12%.
As a consequence of the reduced market share in Mainland China we are planning to resize our sales and delivery organization in the country, starting in Q4, adding to our restructuring charges.
We increased IPR revenues to
We continue to improve our Ethics and Compliance program in accordance with our strategy and activities based on input from our independent compliance monitor. Such initiatives and activities have enabled the strengthening of an integrity-based culture, compliance governance and anti-corruption internal controls. We are firmly committed to continuously develop and improve in the years to come to ensure a sustainable compliance program.
We continue to strengthen our sustainability work. Supporting our customers by improving energy efficiency in our products as well as reducing our own carbon emissions has been crucial for our success in recent years. In the quarter, we signed a
We continue to see results of our strategy to improve flexibility, reduce sensitivity to business mix and lower the working capital. Free cash flow before M&A amounted to
5G for Enterprise provides an exciting opportunity 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/2021/9month21-en.pdf or on www.ericsson.com/investors
Video webcast for analysts, investors and journalists
President and CEO
To join the webcast, please go to www.ericsson.com/investors
To ask a question, please call:
International/
US: +1 631 913 1422 (Toll-free US: +1 855 85 70686)
PIN code: 20703222#
Please call in at least 15 minutes before the webcast starts.
The webcast will be available on-demand after the event and can be viewed at www.ericsson.com/investors.
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Phone: +46 10 714 64 99
E-mail: peter.nyquist@ericsson.com
Additional contacts
Phone: +46 10 713 65 39
E-mail: media.relations@ericsson.com
Investors
Lena Häggblom, Director, Investor Relations
Phone: +46 10 713 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 10 714 20 39
E-mail: stefan.jelvin@ericsson.com
Media
Kristoffer Edshage, Director Corporate Media
Phone: +46 722 20 44 46
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
This is information that
https://news.cision.com/ericsson/r/ericsson-reports-third-quarter-results-2021,c3435411
https://mb.cision.com/Main/15448/3435411/1482655.pdf
(c) 2021 Cision. All rights reserved., source