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Ericsson Reports Second Quarter Results 2018STOCKHOLM, July 18, 2018 /PRNewswire/ -- Second quarter highlights
1) EPS diluted, excl. amortizations and write-downs of acquired intangible assets, and excluding restructuring charges. When a company reports a loss, the number of shares used for calculating earnings diluted per share shall be the same as for basic calculation. Non-IFRS financial measures are reconciled to the most directly reconcilable line items in the financial statements at the end of this report. Comments from Börje Ekholm, President and CEO of Ericsson (NASDAQ: ERIC) We continue to execute on our focused business strategy and are tracking well towards our 2020 target of an operating margin1) of at least 10%. The investments in technology leadership have resulted in increased gross margin1) to 37% (31%) and growth in segment Networks. Customers turn to new technology in order to manage growing demand for data with sustained quality and without increasing costs. This, together with fixed wireless access, represent the first business cases for 5G. We will continue to invest in securing leadership in 5G. This includes further investments in R&D, to solidify our complete 5G portfolio, and investments in field trials. We also intend to selectively capture new business opportunities, through our 5G-ready 4G portfolio, to extend our footprint as operators prepare for 5G. We provide solutions for all frequency bands for 5G, which strengthens our global competitiveness. We have good market traction in Networks, with a sales growth of 2%, particularly in North America where all major operators are preparing for 5G. Networks gross margin1) improved to 40% (36%). Digital Services is tracking towards a turnaround and gross margin1) improved to 43% (36%) YoY, and was stable QoQ. However, while losses decreased both YoY and QoQ, we still have a lot of work to do. The top priority is to turn around performance in the segment, but we are in parallel accelerating investments to make the portfolio 5G ready and cloud native. In Managed Services, gross margin1) improved to 14% (2%) supported by continued efficiency gains and customer contract reviews, resulting in a positive operating income. We have also on-boarded several new contracts in the quarter. In segment Emerging Business and Other, we invest in strategic future growth areas such as Internet of Things (IoT). We see increasing momentum with several important customer wins with our connectivity platform in the quarter. However, sales are still low. Our media business generated a loss of SEK -0.4 b. in the quarter. We expect to close the announced divestment of Media Solutions, recently renamed MediaKind, by the end of the third quarter. The SEK 10 b. cost reduction program, launched in Q2 2017, has been successfully completed. We reduced the total workforce by more than 2,000 in the quarter and by 20,500 in total as part of the program. These are tough but necessary actions to ensure competitiveness. Run-rate savings to date amount to more than SEK 10 b., and the effect is gradually becoming visible in the earnings, mainly through lower service delivery costs and common costs. Even though the cost reduction program is completed, our estimate for restructuring charges of SEK 5-7 b. for the full year remains, as we will continue our efficiency activities throughout the year. Free cash flow improved to SEK -0.6 (-1.3) b. and our cash position remains strong. Our work to further strengthen the balance sheet continues. We see strengthened momentum for 5G in the quarter and it is clear that our 5G-ready portfolio is attractive and competitive in the market. We have gradually improved the cost position and will continue to have a strict cost focus in order to further increase competitiveness and efficiency. We are confident in reaching our long-term target of at least 12% operating margin1) beyond 2020. 1) Excluding restructuring charges Planning assumptions going forward Market related
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Ericsson related, 2018
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/2018/6month18-en.pdf or on www.ericsson.com/investors The company will hold two identical conference calls for journalists, financial analysts and investors. President and CEO Börje Ekholm and CFO Carl Mellander will comment on the report and take questions. The first conference call will begin at 09:00 CEST (08:00 BST in London, 03:00 EDT in New York and 16:00 JST in Tokyo), and the second at 14:00 CEST (13:00 BST in London, 08:00 EDT in New York and 21:00 JST in Tokyo). To join the conference call, please phone one of the following numbers: PIN code: For 09:00 CEST call, 12133334# and for 14:00 CEST call, 92267709# Please call in at least 15 minutes before the conference calls begin. As there is usually a large number of callers, it may take some time before you are connected. Replay: Sweden replay number: +46-(8)-519-993-85 For 09:00 CEST call, 301233365# and for 14:00 CEST call, 301233368# FOR FURTHER INFORMATION, PLEASE CONTACT Additional contacts: Investors Media Corporate Communications: This information is information that Telefonaktiebolaget LM Ericsson is obliged to make public pursuant to the EU Market Abuse Regulation and the Swedish Securities Markets Act. The information was submitted for publication, through the agency of the contact person set out above, at 07:30 CEST on July 18, 2018. This information was brought to you by Cision http://news.cision.com http://news.cision.com/ericsson/r/ericsson-reports-second-quarter-results-2018,c2577330 The following files are available for download:
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