FOURTH QUARTER REPORT 2007

Size: px

Start display at page:

Download "FOURTH QUARTER REPORT 2007"

Blaise Rodgers
7 years ago
Views:

1 FOURTH QUARTER REPORT 2007 This presentation contains forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

and uncertainties that could negatively affect our business.

2 FOURTH QUARTER REPORT CARL-HENRIC SVANBERG President and CEO 2007

3 Ericsson in 2007 Sales of SEK (179.8) b 8% organic growth in constant currencies Significant market share gains Disappointing margin decline - shift in business mix Operating income SEK 30.6 (35.8) b Cash flow of SEK 19.2 (18.5) b CAGR 12% SEK b Sales

Disappointing margin decline - shift in business mix Operating income SEK 30.6 (35.

4 The networks market in 2007 Mobile infrastructure market tougher Started at mid single digit growth but ended flattish Operator consolidation, political unrest in some emerging markets Change in competitive landscape continues Fundamentals have not changed 3.3 b subscriptions, up 50 m/month 180 m WCDMA subscriptions, up 6.5 m/month - dramatic data growth 320 m fixed broadband connections by Q3, up 4.5 m/month 4

landscape continues Fundamentals have not changed 3.

5 Q4 in short Continued effects from business mix and technology shift Sales SEK 54.5 (54.2) b Operating income SEK 7.6 (12.2) b operating margin 14% (23%) Cash flow SEK 12.0 (11.0) b Slower networks market in parts of Europe and some emerging markets 5

2) b operating margin 14% (23%) Cash flow SEK 12.0 (11.

6 Q4 in short Continued effects from business mix and technology shift Sales SEK 54.5 (54.2) b Operating income SEK 7.6 (12.2) b operating margin 14% (23%) Cash flow SEK 12.0 (11.0) b Slower networks market in parts of Europe and some emerging markets 6

7 Long-term business ambitions Growth Grow faster than market Profitability Best in class margins Cash flow Cash conversion > 70% 7

8 Our planning assumptions for 2008 Planning for flattish mobile infrastructure market Continued good growth for the professional services market Industry fundamentals and consumer behavior support more positive longer-term outlook This slide contains forward looking statements 8

services market Industry fundamentals and consumer behavior support

9 Cost reductions of SEK 4 b Accelerated operational excellence in all areas Savings of SEK 4 b to safeguard our competitive position All areas affected SG&A, sourcing, supply, service delivery main focus areas Reduction of some 1,000 employees in Sweden Through voluntary programs as far as possible Full effects in 2009 SEK ~4 b in charges Recognized as each activity is decided 9

delivery main focus areas Reduction of some 1,000 employees in Sweden Through voluntary

10 FOURTH QUARTER REPORT HANS VESTBERG Executive Vice President and CFO 2007

11 Q4 financial highlights Full year SEK b. Q4 Q3 Q Net sales Sales growth (YoY) 0% - - 4% - Gross margin 36.1% 35.6% 42.2% 39.3% 41.7% Operating income Operating margin 14.0% 12.9% 22.5% 16.3% 19.9% Operating margin ex Sony Ericsson 9.8% 9.0% 18.3% 12.5% 16.7% Full year organic sales growth in constant currencies 8% Margins affected by business mix and slower sales in certain markets Q4 opex SEK 15.2 b. seasonality and newly acquired companies 11

8 Operating margin 14.0% 12.9% 22.5% 16.

12 Q4 financial highlights Full year SEK b. Q4 Q3 Q Income after financial items Net income * EPS, SEK * Cash flow from operating activities Strong cash flow in Q4 Improved working capital SEK 1.6 b in payment from 3 UK Cash conversion for full year of 66% (57%) Still room for improvement *Attributable to stockholders of the parent company, excluding minority interest. 12

0 19.2 18.5 Strong cash flow in Q4 Improved working capital SEK 1.

13 Networks Full year SEK b. Q4 Q3 Q Net sales Sales growth (YoY) -4% - - 1% - EBITDA margin 15% 13% 26% 19% 22% Operating margin 10% 8% 21% 13% 17% Significantly increased market share in increasingly challenging market Sales affected by weakening USD Market and product mix continues to affect sales and margins LTE gaining momentum - Verizon, Vodafone, DoCoMo, etc 13

Significantly increased market share in increasingly challenging market Sales affected by weakening USD

14 Professional Services Full year SEK b. Q4 Q3 Q Net sales Of which managed Services Sales growth (YoY) 15% % - EBITDA margin 16% 17% 16% 16% 16% Operating margin 15% 15% 15% 15% 14% Professional services up 19% in constant currencies Managed services and systems integration show fastest growth 185 million subscribers in managed networks Acquisition of HyC IPTV systems integration company 3 UK contract renegotiated due to network sharing Scope decreased, will affect sales but not margins 14

constant currencies Managed services and systems integration show fastest growth 185 million subscribers in managed networks Acquisition of

15 Multimedia Full year SEK b. Q4 Q3 Q Net sales Sales growth (YoY) 7% % - EBITDA margin -3% 6% 13% 4% 6% Operating margin -9% 1% 12% -1% 5% Mix of existing sound businesses and new investment areas Sales and margins vary over quarters Building positions IPTV and IMS Acquisitions developing well LHS, Mobeon, Drutt and Tandberg Weak quarter but full year more representative 15

of existing sound businesses and new investment areas Sales and margins vary over quarters Building

16 Multimedia Full year SEK b. Q4 Q3 Q Net sales Sales growth (YoY) 7% % - EBITDA margin -3% 6% 13% 4% 6% Operating margin -9% 1% 12% -1% 5% Mix of existing sound businesses and new investment areas Sales and margins vary over quarters Building positions IPTV and IMS Acquisitions developing well LHS, Mobeon, Drutt and Tandberg Weak quarter but full year more representative 16

17 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q407 Regional 2007 comments CAGR -5% Q1 04 Q2 04 Q3 04 Q40 04 Latin America FY: +12% North America FY: -15% Western Europe FY: -1% Asia Pacific FY: +14% Q1 04 Q2 04 Q3 04 Q40 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q Q1 04 Q2 04 Q3 04 Q40 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q407 CAGR 8% Central Europe, Middle East and Africa FY: +5% CAGR 24% CAGR 10% CAGR 13% Q40 04 Q3 04 Q2 04 Q1 04 Q4 05 Q3 05 Q2 05 Q1 05 Q4 06 Q3 06 Q2 06 Q1 06 Q407 Q3 07 Q2 07 Q1 07 Q40 04 Q3 04 Q2 04 Q1 04 Year over year growth

America FY: +12% North America FY: -15% Western Europe FY: -1% Asia Pacific FY: +14% Q1 04 Q2 04 Q3 04 Q40 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q407 16000 14000 12000

18 Regional Q4 comments Verizon going for LTE Strong ending after slower year Continued 2G expansions Accelerated 3G buildouts Latin America Q: +41% FY: +12% North America Q: +9% FY: -15% Effects from operator consolidation, UK, Italy Focus shifted to 3G Good services momentum Western Europe Q: -10% FY: -1% Asia Pacific Q: -2% FY: +14% Central Europe, Middle East and Africa Q:-1% FY: +5% China ended strong Pakistan, Bangladesh and Thailand affected by unrest Australia down after major rollouts 2006 Network buildouts and expansions Middle East slower 3G taking off in Central Europe 18

-10% FY: -1% Asia Pacific Q: -2% FY: +14% Central Europe, Middle East and Africa Q:-1% FY: +5% China ended strong Pakistan, Bangladesh and

19 Sony Ericsson 2007 highlights 103 million units, up 38% year-on-year market share of >9% Margins remain strong when company shift to broader portfolio Leadership position in music million music enabled phones 19

strong when company shift to broader portfolio

20 Summary Good year but disappointing second half Significantly strengthened market share Network margins affected by mix shift Planning for flattish mobile networks market 2008 Actions to safeguard competitive position Competitive landscape continues to evolve Fundamentals support more positive longer-term outlook Proposed unchanged dividend of SEK 0.50 per share 20

Actions to safeguard competitive position Competitive landscape continues to evolve

21 FOURTH QUARTER REPORT Q & A

FIRST QUARTER REPORT 2008-04-25

FIRST QUARTER REPORT 2008-04-25 FIRST QUARTER REPORT This presentation contains forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively