Turn-around completed establishing a strong platform to accelerate growth and investments in 5G enterprise applications.
New long-term EBITA margin target, excluding restructuring, for the Group of 15% - 18%
New long-term Free Cash flow (before M&A) target of 9% - 12% of sales
The 2022 operating margin target, excluding restructuring, of 12 - 14% remains for the Group with some adjustments between segments
Executives from across the business will join President and CEO,
Since the launch of the focused business strategy in 2017, the company has restored profitability, delivered organic growth and is on track towards its 2020 financial targets. With global technology leadership and growing market share in 5G the company is now turning to the next phase of its journey - growing the business through incremental core business growth and acceleration of enterprise focus.
Long-term targets
Beyond 2022, the long-term profitability target is an EBITA margin excluding restructuring charges of 15% - 18% for the Group. The company aims to achieve this through improvement activities across the Group. Growth as well as gross margin improvements, driven by software sales and operational leverage, will be the cornerstones in reaching the long-term targets.
The company will continue its focus on free cash flow (before M&A) with a target of 9% - 12% of sales.
2022 profitability targets
The 2022 profitability target for the Group remains unchanged with an operating margin of 12% - 14%, excluding restructuring charges. Each segment target for 2022 is updated with operating margin targets per segment detailed in the table below.
The increased target in segment Networks is mainly driven by our foot-print gains in the market. The 2022 operating margin target for Networks is raised to 16% - 18% (15% - 17%).
In segment Digital Services, the priority continues to be restoring profitability. Due to the increase in R&D spend in combination with the decline in legacy sales the Operating Margin target is adjusted to 4% - 7% (10% - 12%) in 2022.
In segment Managed Services, expected margin growth will be achieved through R&D investments in Artificial Intelligence and automation. The 2022 target for Managed Services is raised to 9% - 11% (8% - 10%).
In segment Emerging Business and Other focus continues to be on establishing new businesses which drive organic growth. Revenue growth will be targeted through the rapid and disciplined product deployment in 5G and IoT as well as the recent acquisition of
Financial targets 2022 and long-term
Investor Update 2019 numbers in brackets.
% of sales
Networks Digital Services Managed Services Emerging Business and Other Group
2022 EBIT excluding restructuring 16% - 18%
(15% - 17%) 4% - 7%
(10% - 12%) 9% - 11%
(8% - 10%) - 12%-14%
(no change)
Long-term target EBITA excluding restructuring 15% - 18%
Long-term Free Cash Flow (before M&A) 9% - 12%
Addition to Risk Factors (as published in Annual and Quarterly Reports)
Ongoing geopolitical and trade uncertainty from a range of factors may have a material adverse impact on
Speakers and details of the event
https://www.ericsson.com/en/investors/events-and-presentations/CMD2020
Presentation materials can also be downloaded from the website once the webcast has started.
NOTES TO EDITORS:
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