FIRST QUARTER REPORT

Transcription

1 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 affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties

2 FIRST QUARTER REPORT CARL-HENRIC SVANBERG President and CEO

3 Q1 in summary Mobile broadband and HSPA in focus World s leading operators support LTE New network builds increases in high-growth markets Africa and BRIC countries Continued USD decline affects sales and earnings Organic growth 9% in constant currencies Unchanged planning assumptions Cost adjustment program on plan 3

4 Market and business update Networks Continued strong subscriber growth Up 160 m in Q1 to 3.5 b China 9 m, India 7 m in March WCDMA has passed 200 m Mobile technologies will co-exist GSM > 80% market share - HSPA to dominate for years to come LTE the first true global standard Adds business drives R&D migration in focus 4

5 Market and business update Multimedia 100 m videos, 250 m images, billions of SMS s per day Dramatic data traffic increases, transmission bottle necks We provide enablers World leader in revenue management, 670 m subscribers Strong growth in service delivery platforms and provisioning Investing in IPTV - 40% market share in IPTV head end 5

6 Market and business update Services Managed services a growing business opportunity Growth driven in emerging markets Cost driven in mature markets Accelerating demand for systems integration Network complexity Multimedia services 6

7 Q1 numbers in short Sales SEK 44.2 (42.2) b, up 5% Organic sales growth in constant currencies 9% Operating income SEK 4.3 (8.2) b Operating margin 9.7% (19.3%) EBITDA of 14.7% (23.8%) Cash flow SEK 4.7 (4.6) b Good progress in cash flow related activities Cash contribution from Sony Ericsson of SEK 2.2 (3.5) b 7

8 Regional Q1 comments North America, +39% Increasing WCDMA upgrades Higher level IPR sales Spectrum winners to start rollouts Western Europe, -7% Continued operator consolidation UK slower, Spain tough comparison Service driven growth in Germany Latin America, +25% Continued 2G expansions 3G rollouts in Brazil and Mexico Asia Pacific, +5% India significantly up, China strong Bangladesh affected by uncertainty Japan and Australia tough comparison Central Europe, Middle East, Africa, +1% Overall high business activities Africa and Middle East strong 3G rollouts started in Russia 8

9 Unchanged planning assumptions Still planning for flattish mobile infrastructure market in 2008 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 9

10 FIRST QUARTER REPORT HANS VESTBERG Executive Vice President and CFO

11 Q1 financial highlights First quarter Fourth quarter SEK b Change 2007 Change Net sales % % Gross margin 38.6% 43.0% % - EBITDA margin 14.7% 23.8% % - Operating income % % Operating margin 9.7% 19.3% % - Operating margin ex Sony Ericsson 7.7% 15.5% - 9.8% - Increased new network builds pressures margins Q1 opex SEK 14.1 b, up SEK 2.3 b. year-over-year Primarily acquired intangibles and opex, higher R&D investments in LTE, IPTV, EMP EBITDA margin healthy despite USD decline Intangibles and software amortizations, Capex depreciations Excluding restructuring charges of SEK 0.8 b., of which SEK 0.2 b. in cost of sales and SEK 0.6 b. in operating expenses in

12 Q1 financial highlights First quarter Fourth quarter SEK b Change 2007 Change Income after financial items % % Net income % % 2) 2) EPS, SEK % % Cash flow from operating activities % % Improved cash flow continued focus on capital efficiency Cash contribution from Sony Ericsson of SEK 2.2 (3.5) b Cash conversion of 83% (80%) Net income and EPS includes restructuring charges of SEK 0.8 b Excluding restructuring charges of SEK 0.8 b., of which SEK 0.2 b. in cost of sales and SEK 0.6 b. in operating expenses in ) Attributable to stockholders of the Parent Company, excluding minority interest. 12

13 Networks SEK b. Q1 Q1 Change Q4 Change Net sales % % Of which network rollout % % EBITDA margin 15% 23% - 15% - Operating margin 9% 17% - 10% - Increased proportion of sales in high-growth markets Network rollout up 20% GSM rollouts in India accelerating Weaker USD effects on sales and margins Slightly higher software and IPR sales Excluding restructuring charges in

14 Multimedia SEK b. Q1 Q1 Change Q4 Change Net sales % % EBITDA margin -6% 9% - -3% - Operating margin -13% 8% - -9% - A business in early phase - sales and margins may vary between quarters ~75% of sales in business areas with good growth and margins Revenue management, service delivery platforms, Tandberg, EMP ~25% of sales in new investment areas with significant R&D IPTV, IMS and enterprise applications EMP negatively affected by SEK 0.3 b from lower sales to Sony Ericsson Excluding restructuring charges in

15 Professional Services SEK b. Q1 Q1 Change Q4 Change Net sales % % Of which managed services % 3.3-6% EBITDA margin 15% 16% - 16% - Operating margin 13% 15% - 15% - Organic growth 10% in constant currencies despite 3 UK contract effects New major deals with TDC in Denmark, Mobily in Saudi Arabia Margin decline due to managed services contracts in early cycle Excluding restructuring charges in

16 Cost reductions on track Savings of SEK ~4 b with full effect in 2009 Charges of SEK ~4 b recognized as activities are decided Progress Reductions announced in Sweden, UK, Germany and Italy Charges of SEK 0.8 b in Q1, mainly Europe Sweden announced and will impact Q2 16

17 Sony Ericsson Q1 highlights 22.3 million units, up 2% year-on-year R&D investments continue to expand portfolio and addressable market New brand launched - XPERIA X1 high-end multimedia phone Q1 dividend of SEK 2.2 (3.5) b, second dividend later in the year 17

18 Summary Challenging but stable business environment Business mix and declining dollar Focus on market trends and execution Cost reductions on track Continue to outperform the market Good organic growth in constant currencies Fundamentals support more positive longer-term outlook 18

19 FIRST QUARTER REPORT Q & A