Fourth quarter highlights
Sales adjusted for comparable units and currency grew by 13% YoY mainly driven by sales in North East Asia,
Gross margin excluding restructuring charges improved to 40.6% (37.1%) with margin improvements in all segments. Reported gross margin improved to 40.6% (36.8%).
Operating income excluding restructuring charges improved to
Networks sales increased by 20% YoY, adjusted for comparable units and currency. Operating margin excluding restructuring charges was 21.5% (14.5%).
Reported net income was
Free cash flow before M&A was
Full-year highlights
Sales adj. for comp. units and currency grew by 5%, with Networks growing by 10%. Reported sales increased by 2% to
Gross margin excl. restructuring charges was 40.6% (37.5%), with improvements in all segments.
Reported operating income improved to
Reported net income was
Free cash flow before M&A amounted to
The Board of Directors will propose a dividend for 2020 of
Planning assumptions highlights (please see the quarterly report for complete planning assumptions)
Three-year average reported sales seasonality between Q4 and Q1 is -24%; however, the seasonal effect may be somewhat less pronounced due to 5G deployment in some of
SEK b.
Q4
2020 Q4
2019 YoY
change Q3
2020 QoQ
change Jan-Dec
2020 Jan-Dec
2019 YoY
change
Net sales 69.6 66.4 5% 57.5 21% 232.4 227.2 2%
Sales growth adj. for comparable units and currency - - 13% - - - - 5%
Gross margin 40.6% 36.8% - 43.1% - 40.3% 37.3% -
Operating income (loss) 11.0 6.1 80% 8.6 27% 27.8 10.6 163%
Operating margin 15.8% 9.2% - 15.0% - 12.0% 4.6% -
Net income (loss) 7.2 4.5 60% 5.6 29% 17.6 1.8 -
EPS diluted,SEK 2.26 1.33 70% 1.61 40% 5.26 0.67 -
Measures excl. restructuring charges and other items affecting comparability[1]
Gross margin excluding restructuring charges 40.6% 37.1% - 43.2% - 40.6% 37.5% -
Operating income excl. restr. charges & items affecting compar. in 2019[2] 11.0 5.7 92% 9.0 23% 29.1 22.1 32%
Operating margin excl. restr. charges & items affecting compar. in 2019[2] 15.8% 8.6% - 15.6% - 12.5% 9.7% -
Free cash flow before M&A 12.8 -1.9 - 3.9 - 22.3 7.6 192%
Net cash, end of period 41.9 34.5 21% 41.5 1% 41.9 34.5 21%
[1]Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements.
[2]Operating income excludes restructuring charges in all periods and cost provisions related to the resolution of the
Comments from
As we navigate through the pandemic, health and well-being of our colleagues, customers and partners is our number one priority. Despite the challenges, our people continued to deliver and to serve our customers with very limited disturbances. Our R&D investments have continued to drive both technology leadership and cost efficiency which have led to increased market share and improved financial performance. We are today a leader in 5G with 127 commercial contracts and 79 operating networks around the world. Organic[1] sales grew by 5% for the full year. Our operating margin[2] of 12.5% (5.0%) exceeded our 2020 target and reached the 2022 Group target range two years early.
Networks sales grew organically[1] by 20%, reporting a gross margin[2] of 43.5% (41.1%) for Q4. This reflects continued high activity levels in
Digital Services gross margin[2] grew to 41.0% (38.1%) in Q4. From 2017 to 2020, gross margin excluding restructuring charges and items affecting comparability increased from 29% to 42%, as a result of streamlined product portfolio, fewer critical contracts, a growing portion of software sales and lower service delivery costs. We continue to execute on the turnaround plan and the operating income[2] of
Managed Services delivered a gross margin[2] of 17.7% (15.4%) in Q4. Sales declined on operator consolidation in the US during 2020. The full-year 2020 operating margin[2] was 8.1% - above the 5%-8% target. We expect the margin profile to improve further with increasing sales of our Operations Engine with its high value-added services, driven by R&D investments in AI and automation. We see increasingly positive response from customers to our new portfolio.
Emerging Business and Other sales are growing in enterprise offerings such as IoT Platforms, complemented by the acquisition of
Free cash flow before M&A was
Patent licensing revenues for the full year amounted to
The pandemic has fast forwarded the digitalization of societies, including remote working, by months if not years. A resilient digital infrastructure is critical. We see more signs that countries and enterprises see 5G as a key access technology, with increasing deployment speed in
The Swedish telecom regulator's decision to exclude Chinese vendors from 5G networks may create exposure for our operations in
During 2020 we further reinforced our strong commitment to ethics and compliance. We increased the investment with the recruitment of additional dedicated resources and the deployment of new or revised processes and controls. As a vital cornerstone, we put focus on establishing a durable ethical culture that is built on individual accountability for responsible business practices. The ongoing independent monitorship is providing valuable contributions to achieving our ambition.
Long-term business fundamentals remain strong and we will continue to invest in further strengthening our portfolio and growing our global footprint. While we expect temporary negative impact during 2021 from IPR renewals,
I want to take this opportunity for a shout out to all my colleagues who have turned the business around including delivering on customer commitments during a raging pandemic. I'm proud to be part of this team!
Stay healthy and well.
President and CEO
[1]Sales adjusted for comparable units and currency
[2]Excluding restructuring charges
[3]Excluding restructuring charges and amortization of intangible assets
NOTES TO EDITORS
You find the complete report with tables in the attached PDF or by following this link or on www.ericsson.com/investors
Conference call for analysts, investors and journalists
President and CEO
To join the conference call, please phone one of the following numbers:
International/
US: +1 631 913 1422 (Toll-free US: +1 855 85 70686)
PIN code: 39453485#
Please call in at least 15 minutes before the conference call starts.
A live audio webcast of the conference call will be available at www.ericsson.com/investors.
A replay of the conference call will be available from about one hour after the conference call has ended until
International replay number: +44 (0)333 300 0819
US replay number: +1 (866) 931 1566
PIN code: 301335799#
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Phone: +46 705 75 29 06
E-mail: peter.nyquist@ericsson.com
Additional contacts
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com
Investors
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Media
Phone: +46 702 67 34 45
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
(C) 2021 Electronic News Publishing, source