SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
October 27, 2014
Commission File Number
000-12033
LM ERICSSON TELEPHONE COMPANY
(Translation of registrants name into English)
Torshamnsgatan 21, Kista
SE-164 83, Stockholm, Sweden
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE REGISTRATION STATEMENTS ON FORM F-3 (NO. 333-180880) AND ON FORM S-8 (Nos. 333-196453, 333-161683, 333-161684 AND 333-167643) OF TELEFONAKTIEBOLAGET LM ERICSSON (PUBL.) AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION. TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED WITH OR FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TELEFONAKTIEBOLAGET LM ERICSSON (publ) | ||
By: | /S/ NINA MACPHERSON | |
Nina Macpherson | ||
Senior Vice President and | ||
General Counsel |
By: | /S/ HELENA NORRMAN | |
Helena Norrman | ||
Senior Vice President | ||
Corporate Communications |
Date: October 27, 2014
Third quarter report 2014, Stockholm, October 24, 2014 as adjusted for incorporation by reference.
THIRD QUARTER HIGHLIGHTS | Read more (page) | |||
Sales in the quarter were SEK 57.6 (53.0) b., a growth of 9% YoY and 5% QoQ. |
3 | |||
The sales growth YoY, mainly driven by growth in the Middle East, China, India and Russia was partly offset by sales decline in North America |
2, 9 | |||
Gross margin increased YoY to 35.2% (32.0%), driven by improved business mix, higher IPR revenues and lower restructuring charges |
3 | |||
Profitability showed stable improvement across all segments |
4 | |||
Operating income amounted to SEK 3.9 (4.2) b. The decline was mainly driven by revaluation of unrealized hedge contracts of SEK -1.0 (0.8) b. |
4 | |||
Cash flow from operating activities was SEK -1.4 (1.5) b. |
10 |
SEK b. |
Q3 2014 |
Q3 2013 |
YoY change |
Q2 2014 |
QoQ change |
9 months 2014 |
9 months 2013 |
|||||||||||||||||||||
Net sales |
57.6 | 53.0 | 9 | % | 54.8 | 5 | % | 160.0 | 160.3 | |||||||||||||||||||
Gross margin |
35.2 | % | 32.0 | % | | 36.4 | % | | 36.0 | % | 32.1 | % | ||||||||||||||||
Operating income |
3.9 | 4.2 | -8 | % | 4.0 | -3 | % | 10.5 | 8.8 | |||||||||||||||||||
Operating margin |
6.7 | % | 8.0 | % | | 7.3 | % | | 6.6 | % | 5.5 | % | ||||||||||||||||
Net income |
2.6 | 3.0 | -13 | % | 2.7 | -1 | % | 7.0 | 5.7 | |||||||||||||||||||
EPS diluted, SEK |
0.81 | 0.90 | -10 | % | 0.79 | 3 | % | 2.25 | 1.72 | |||||||||||||||||||
Cash flow from operating activities |
-1.4 | 1.5 | -193 | % | 2.1 | -166 | % | 10.1 | 2.8 | |||||||||||||||||||
Net cash, end of period 1) |
29.4 | 24.7 | 19 | % | 32.5 | -9 | % | 29.4 | 24.7 |
1) | Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 30. |
Ericsson Third Quarter Report 2014 |
1 |
CEO Comments
Ericsson Third Quarter Report 2014 |
2 |
Financial highlights
SEK b. |
Q3 2014 |
Q3 2013 |
YoY change |
Q2 2014 |
QoQ change |
9 months 2014 |
9 months 2013 |
|||||||||||||||||||||
Net sales |
57.6 | 53.0 | 9 | % | 54.8 | 5 | % | 160.0 | 160.3 | |||||||||||||||||||
Of which Networks |
30.0 | 26.7 | 13 | % | 29.0 | 4 | % | 83.4 | 82.9 | |||||||||||||||||||
Of which Global Services |
24.5 | 24.0 | 2 | % | 23.1 | 6 | % | 67.9 | 70.3 | |||||||||||||||||||
Of which Support Solutions |
3.1 | 2.4 | 30 | % | 2.8 | 8 | % | 8.6 | 7.1 | |||||||||||||||||||
Of which Modems |
0.1 | 0.0 | | 0.0 | | 0.1 | 0.0 | |||||||||||||||||||||
Gross income |
20.3 | 17.0 | 20 | % | 19.9 | 2 | % | 57.5 | 51.5 | |||||||||||||||||||
Gross margin (%) |
35.2 | % | 32.0 | % | | 36.4 | % | | 36.0 | % | 32.1 | % | ||||||||||||||||
Research and development expenses |
-9.3 | -7.7 | 20 | % | -9.1 | 2 | % | -26.6 | -23.3 | |||||||||||||||||||
Selling and administrative expenses |
-6.0 | -5.8 | 4 | % | -6.5 | -8 | % | -19.0 | -19.1 | |||||||||||||||||||
Other operating income and expenses |
-1.1 | 0.8 | -241 | % | -0.2 | 450 | % | -1.3 | -0.2 | |||||||||||||||||||
Operating income |
3.9 | 4.2 | -8 | % | 4.0 | -3 | % | 10.5 | 8.8 | |||||||||||||||||||
Operating margin |
6.7 | % | 8.0 | % | | 7.3 | % | | 6.6 | % | 5.5 | % | ||||||||||||||||
for Networks |
11 | % | 10 | % | | 12 | % | | 11 | % | 7 | % | ||||||||||||||||
for Global Services |
7 | % | 8 | % | | 6 | % | | 6 | % | 6 | % | ||||||||||||||||
for Support Solutions |
-4 | % | -5 | % | | -13 | % | | -5 | % | -6 | % | ||||||||||||||||
for Modems |
| | | | | | | |||||||||||||||||||||
Financial net |
-0.1 | 0.1 | -254 | % | -0.2 | -35 | % | -0.5 | -0.6 | |||||||||||||||||||
Taxes |
-1.1 | -1.3 | -13 | % | -1.1 | -1 | % | -3.0 | -2.5 | |||||||||||||||||||
Net income |
2.6 | 3.0 | -13 | % | 2.7 | -1 | % | 7.0 | 5.7 | |||||||||||||||||||
Restructuring charges |
-0.3 | -0.7 | -61 | % | -0.2 | 15 | % | -0.7 | -3.5 |
Ericsson Third Quarter Report 2014 |
3 |
Ericsson Third Quarter Report 2014 |
4 |
Segment results
NETWORKS
SEK b. |
Q3 2014 |
Q3 2013 |
YoY change |
Q2 2014 |
QoQ change |
9 months 2014 |
9 months 2013 |
|||||||||||||||||||||
Net sales |
30.0 | 26.7 | 13 | % | 29.0 | 4 | % | 83.4 | 82.9 | |||||||||||||||||||
Operating income |
3.2 | 2.6 | 24 | % | 3.6 | -11 | % | 9.2 | 5.5 | |||||||||||||||||||
Operating margin |
11 | % | 10 | % | | 12 | % | | 11 | % | 7 | % | ||||||||||||||||
Restructuring charges |
-0.1 | -0.3 | -73 | % | -0.1 | -38 | % | -0.3 | -1.9 |
Ericsson Third Quarter Report 2014 |
5 |
GLOBAL SERVICES
SEK b. |
Q3 2014 |
Q3 2013 |
YoY change |
Q2 2014 |
QoQ change |
9 months 2014 |
9 months 2013 |
|||||||||||||||||||||
Net sales |
24.5 | 24.0 | 2 | % | 23.1 | 6 | % | 67.9 | 70.3 | |||||||||||||||||||
Of which Professional Services |
17.8 | 16.2 | 10 | % | 16.6 | 7 | % | 49.4 | 47.6 | |||||||||||||||||||
Of which Managed Services |
7.2 | 6.3 | 15 | % | 6.5 | 11 | % | 19.4 | 18.9 | |||||||||||||||||||
Of which Network Rollout |
6.7 | 7.7 | -14 | % | 6.5 | 3 | % | 18.5 | 22.6 | |||||||||||||||||||
Operating income |
1.6 | 1.8 | -11 | % | 1.5 | 8 | % | 4.1 | 4.1 | |||||||||||||||||||
Of which Professional Services |
2.1 | 2.3 | -10 | % | 2.1 | -2 | % | 6.0 | 6.4 | |||||||||||||||||||
Of which Network Rollout |
-0.5 | -0.5 | -4 | % | -0.6 | -26 | % | -1.9 | -2.3 | |||||||||||||||||||
Operating margin |
7 | % | 8 | % | | 6 | % | | 6 | % | 6 | % | ||||||||||||||||
for Professional Services |
12 | % | 14 | % | | 13 | % | | 12 | % | 13 | % | ||||||||||||||||
for Network Rollout |
-7 | % | -6 | % | | -9 | % | | -10 | % | -10 | % | ||||||||||||||||
Restructuring charges |
-0.1 | -0.4 | -70 | % | -0.1 | 51 | % | -0.2 | -1.4 |
Other information |
Q3 2014 |
Q2 2014 |
Q1 2014 |
Full year 2013 |
||||||||||||
Number of signed Managed Services contracts |
17 | 21 | 16 | 84 | ||||||||||||
Number of signed significant consulting & systems integration contracts 1) |
13 | 12 | 9 | 31 | ||||||||||||
Number of Ericsson services professionals, end of period |
65,000 | 64,000 | 61,000 | 64,000 |
1) | In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects. |
Ericsson Third Quarter Report 2014 |
6 |
SUPPORT SOLUTIONS
SEK b. |
Q3 2014 |
Q3 2013 |
YoY change |
Q2 2014 |
QoQ change |
9 months 2014 |
9 months 2013 |
|||||||||||||||||||||
Net sales |
3.1 | 2.4 | 30 | % | 2.8 | 8 | % | 8.6 | 7.1 | |||||||||||||||||||
Operating income |
-0.1 | -0.1 | -4 | % | -0.4 | -71 | % | -0.5 | -0.4 | |||||||||||||||||||
Operating margin |
-4 | % | -5 | % | | -13 | % | | -5 | % | -6 | % | ||||||||||||||||
Restructuring charges |
-0.1 | 0.0 | | 0.0 | | -0.1 | -0.2 |
Ericsson Third Quarter Report 2014 |
7 |
MODEMS
SEK b. |
Q3 2014 |
Q2 2014 |
QoQ change |
Q1 2014 |
||||||||||||
Net sales |
0.1 | 0.0 | | 0.0 | ||||||||||||
Operating income |
-0.7 | -0.5 | 62 | % | -0.7 | |||||||||||
Operating margin |
| | | | ||||||||||||
Restructuring charges |
0.0 | 0.0 | | 0.0 |
Ericsson Third Quarter Report 2014 |
8 |
Regional Sales
Third quarter 2014 | Change | |||||||||||||||||||||||||||
SEK b. |
Networks | Global Services |
Support Solutions |
Modems | Total | YoY | QoQ | |||||||||||||||||||||
North America |
6.8 | 6.5 | 0.8 | | 14.0 | -3 | % | -8 | % | |||||||||||||||||||
Latin America |
2.7 | 2.9 | 0.3 | | 5.9 | 11 | % | 9 | % | |||||||||||||||||||
Northern Europe and Central Asia |
2.1 | 0.9 | 0.1 | | 3.2 | 7 | % | 16 | % | |||||||||||||||||||
Western and Central Europe |
1.8 | 2.7 | 0.2 | | 4.6 | 6 | % | 1 | % | |||||||||||||||||||
Mediterranean |
2.1 | 2.9 | 0.2 | | 5.2 | -8 | % | -5 | % | |||||||||||||||||||
Middle East |
3.7 | 2.0 | 0.3 | | 6.0 | 38 | % | 34 | % | |||||||||||||||||||
Sub-Saharan Africa |
1.2 | 1.1 | 0.1 | | 2.4 | -9 | % | 30 | % | |||||||||||||||||||
India |
1.1 | 0.7 | 0.2 | | 2.0 | 56 | % | 22 | % | |||||||||||||||||||
North East Asia |
4.5 | 2.3 | 0.3 | | 7.0 | 16 | % | 10 | % | |||||||||||||||||||
South East Asia and Oceania |
2.0 | 1.7 | 0.1 | | 3.8 | 5 | % | 4 | % | |||||||||||||||||||
Other 1) |
1.9 | 0.7 | 0.7 | 0.1 | 3.4 | 55 | % | 1 | % | |||||||||||||||||||
Total |
30.0 | 24.5 | 3.1 | 0.1 | 57.6 | 9 | % | 5 | % |
1) | Region Other includes licensing revenues, broadcast services, power modules, mobile broadband modules, Ericsson-LG Enterprise and other businesses. |
Ericsson Third Quarter Report 2014 |
9 |
Cash flow
SEK b. |
Q3 2014 |
Q3 2013 |
Q2 2014 |
|||||||||
Net income reconciled to cash |
5.0 | 4.4 | 5.9 | |||||||||
Changes in operating net assets |
-6.3 | -2.9 | -3.8 | |||||||||
Cash flow from operating activities |
-1.4 | 1.5 | 2.1 | |||||||||
Cash flow from investing activities |
-0.7 | -3.1 | 3.7 | |||||||||
Cash flow from financing activities |
-1.3 | 0.0 | -12.2 | |||||||||
Net change in cash and cash equivalents |
-1.0 | -3.3 | -5.0 | |||||||||
Cash conversion (%) 1) |
-27 | % | 33 | % | 35 | % |
1) | Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 30. |
Working capital KPIs, number of days |
Jan-Sep 2014 |
Jan-Jun 2014 |
Jan-Mar 2014 |
Jan-Dec 2013 |
Jan-Sep 2013 |
Jan-Jun 2013 |
||||||||||||||||||
Sales outstanding |
111 | 113 | 112 | 97 | 109 | 103 | ||||||||||||||||||
Inventory |
69 | 70 | 72 | 62 | 72 | 73 | ||||||||||||||||||
Payable |
57 | 61 | 62 | 53 | 53 | 55 |
Ericsson Third Quarter Report 2014 |
10 |
Financial Position
SEK b. |
Sep 30 2014 |
Jun 30 2014 |
Mar 31 2014 |
Dec 31 2013 |
||||||||||||
+ Short-term investments |
34.0 | 35.3 | 41.8 | 35.0 | ||||||||||||
+ Cash and cash equivalents |
32.0 | 33.1 | 38.1 | 42.1 | ||||||||||||
Gross cash |
66.1 | 68.4 | 79.9 | 77.1 | ||||||||||||
- Interest bearing liabilities and post-employment benefits |
36.6 | 35.9 | 36.3 | 39.3 | ||||||||||||
Net cash 1) |
29.4 | 32.5 | 43.6 | 37.8 | ||||||||||||
Equity |
143.4 | 138.0 | 142.6 | 141.6 | ||||||||||||
Total assets |
274.0 | 265.5 | 267.2 | 269.2 | ||||||||||||
Capital turnover (times) |
1.2 | 1.2 | 1.1 | 1.3 | ||||||||||||
Equity ratio (%) |
52.3 | % | 52.0 | % | 53.4 | % | 52.6 | % |
1) | Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 30. |
Ericsson Third Quarter Report 2014 |
11 |
Other information
Ericsson Third Quarter Report 2014 |
12 |
Risk factors
Ericsson Third Quarter Report 2014 |
13 |
Auditors review report
Ericsson Third Quarter Report 2014 |
14 |
Editors note
Ericsson Third Quarter Report 2014 |
15 |
Safe harbor statement
Ericsson Third Quarter Report 2014 |
16 |
Financial statements and additional information
Ericsson Third Quarter Report 2014 |
17 |
Jul - Sep | Jan - Sep | |||||||||||||||||||||||
SEK million |
2013 | 2014 | Change | 2013 | 2014 | Change | ||||||||||||||||||
Net sales |
52,981 | 57,643 | 9 | % | 160,344 | 159,997 | 0 | % | ||||||||||||||||
Cost of sales |
-36,028 | -37,362 | 4 | % | -108,834 | -102,456 | -6 | % | ||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
|||||||||||||
Gross income |
16,953 | 20,281 | 20 | % | 51,510 | 57,541 | 12 | % | ||||||||||||||||
Gross margin (%) |
32.0 | % | 35.2 | % | 32.1 | % | 36.0 | % | ||||||||||||||||
Research and development expenses |
-7,710 | -9,281 | 20 | % | -23,334 | -26,640 | 14 | % | ||||||||||||||||
Selling and administrative expenses |
-5,778 | -6,000 | 4 | % | -19,050 | -18,993 | 0 | % | ||||||||||||||||
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|
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Operating expenses |
-13,488 | -15,281 | 13 | % | -42,384 | -45,633 | 8 | % | ||||||||||||||||
Other operating income and expenses |
805 | -1,134 | -215 | -1,319 | ||||||||||||||||||||
Shares in earnings of JV and associated companies |
-51 | 10 | -121 | -84 | -31 | % | ||||||||||||||||||
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|
|
|
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Operating income |
4,219 | 3,876 | -8 | % | 8,790 | 10,505 | 20 | % | ||||||||||||||||
Financial income |
678 | 429 | 1,162 | 1,098 | ||||||||||||||||||||
Financial expenses |
-595 | -557 | -1,766 | -1,634 | ||||||||||||||||||||
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|
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Income after financial items |
4,302 | 3,748 | -13 | % | 8,186 | 9,969 | 22 | % | ||||||||||||||||
Taxes |
-1,292 | -1,124 | -2,456 | -2,991 | ||||||||||||||||||||
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|
|
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|
|
|
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Net income |
3,010 | 2,624 | -13 | % | 5,730 | 6,978 | 22 | % | ||||||||||||||||
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|
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|||||||||||||
Net income attributable to: |
||||||||||||||||||||||||
- Stockholders of the Parent Company |
2,921 | 2,646 | 5,595 | 7,345 | ||||||||||||||||||||
- Non-controlling interests |
89 | -22 | 135 | -367 | ||||||||||||||||||||
Other information |
||||||||||||||||||||||||
Average number of shares, basic (million) |
3,227 | 3,238 | 3,225 | 3,235 | ||||||||||||||||||||
Earnings per share, basic (SEK) 1) |
0.91 | 0.82 | 1.74 | 2.27 | ||||||||||||||||||||
Earnings per share, diluted (SEK) 1) |
0.90 | 0.81 | 1.72 | 2.25 | ||||||||||||||||||||
Jul - Sep | Jan - Sep | |||||||||||||||||||||||
SEK million |
2013 | 2014 | 2013 | 2014 | ||||||||||||||||||||
Net income |
3,010 | 2,624 | 5,730 | 6,978 | ||||||||||||||||||||
Other comprehensive income |
||||||||||||||||||||||||
Items that will not be reclassified to profit or loss |
||||||||||||||||||||||||
Remeasurements of defined benefits pension plans incl. asset ceiling |
458 | -441 | 2,231 | -2,637 | ||||||||||||||||||||
Tax on items that will not be reclassified to profit or loss |
-152 | 96 | -858 | 539 | ||||||||||||||||||||
Items that may be reclassified to profit or loss |
||||||||||||||||||||||||
Cash flow hedges |
||||||||||||||||||||||||
Gains/losses arising during the period |
127 | 0 | 265 | 0 | ||||||||||||||||||||
Reclassification adjustments for gains/losses included in profit or loss |
-185 | 0 | -948 | 0 | ||||||||||||||||||||
Adjustments for amounts transferred to initial carrying amount of hedged items |
||||||||||||||||||||||||
Revaulation of other investments in shares and participations |
||||||||||||||||||||||||
Fair value remeasurement |
1 | 39 | 70 | 39 | ||||||||||||||||||||
Changes in cumulative translation adjustments |
-3,150 | 2,656 | -2,464 | 5,676 | ||||||||||||||||||||
Share of other comprehensive income on JV and associated companies |
-150 | 234 | -46 | 362 | ||||||||||||||||||||
Tax on items that may be reclassified to profit or loss |
11 | 0 | 138 | 0 | ||||||||||||||||||||
Total other comprehensive income, net of tax |
-3,040 | 2,584 | -1,612 | 3,979 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||
Total comprehensive income |
-30 | 5,208 | 4,118 | 10,957 | ||||||||||||||||||||
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|
|
|
|
|||||||||||||||||
Total comprehensive income attributable to: |
||||||||||||||||||||||||
Stockholders of the Parent Company |
-79 | 5,180 | 4,008 | 11,212 | ||||||||||||||||||||
Non-controlling interest |
49 | 28 | 110 | -255 |
1) | Based on Net income attributable to stockholders of the Parent Company |
Ericsson Third Quarter Report 2014 |
18 |
Dec 31 | Jun 30 | Sep 30 | ||||||||||
SEK million |
2013 | 2014 | 2014 | |||||||||
ASSETS |
||||||||||||
Non-current assets |
||||||||||||
Intangible assets |
||||||||||||
Capitalized development expenses |
3,348 | 3,082 | 2,925 | |||||||||
Goodwill |
31,544 | 34,243 | 35,179 | |||||||||
Intellectual property rights, brands and other intangible assets |
12,815 | 11,765 | 12,149 | |||||||||
Property, plant and equipment |
11,433 | 11,924 | 12,674 | |||||||||
Financial assets |
||||||||||||
Equity in JV and associated companies |
2,568 | 2,324 | 2,566 | |||||||||
Other investments in shares and participations |
505 | 510 | 567 | |||||||||
Customer finance, non-current |
1,294 | 1,240 | 1,940 | |||||||||
Other financial assets, non-current |
5,684 | 6,303 | 7,085 | |||||||||
Deferred tax assets |
9,103 | 10,880 | 11,325 | |||||||||
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|
|||||||
78,294 | 82,271 | 86,410 | ||||||||||
Current assets |
||||||||||||
Inventories |
22,759 | 26,915 | 28,529 | |||||||||
Trade receivables |
71,013 | 66,763 | 70,624 | |||||||||
Customer finance, current |
2,094 | 1,994 | 2,452 | |||||||||
Other current receivables |
17,941 | 19,208 | 19,953 | |||||||||
Short-term investments |
34,994 | 35,310 | 34,011 | |||||||||
Cash and cash equivalents |
42,095 | 33,088 | 32,042 | |||||||||
|
|
|
|
|
|
|||||||
190,896 | 183,278 | 187,611 | ||||||||||
Total assets |
269,190 | 265,549 | 274,021 | |||||||||
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|||||||
EQUITY AND LIABILITIES |
||||||||||||
Equity |
||||||||||||
Stockholders equity |
140,204 | 136,948 | 142,339 | |||||||||
Non-controlling interest in equity of subsidiaries |
1,419 | 1,010 | 1,035 | |||||||||
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|||||||
141,623 | 137,958 | 143,374 | ||||||||||
Non-current liabilities |
||||||||||||
Post-employment benefits |
9,825 | 12,884 | 13,972 | |||||||||
Provisions, non-current |
222 | 202 | 187 | |||||||||
Deferred tax liabilities |
2,650 | 2,624 | 2,846 | |||||||||
Borrowings, non-current |
22,067 | 19,504 | 20,647 | |||||||||
Other non-current liabilities |
1,459 | 1,699 | 1,809 | |||||||||
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|
|
|||||||
36,223 | 36,913 | 39,461 | ||||||||||
Current liabilities |
||||||||||||
Provisions, current |
5,140 | 4,377 | 4,380 | |||||||||
Borrowings, current |
7,388 | 3,525 | 1,997 | |||||||||
Trade payables |
20,502 | 22,795 | 22,067 | |||||||||
Other current liabilities |
58,314 | 59,981 | 62,742 | |||||||||
|
|
|
|
|
|
|||||||
91,344 | 90,678 | 91,186 | ||||||||||
Total equity and liabilities |
269,190 | 265,549 | 274,021 | |||||||||
|
|
|
|
|
|
|||||||
Of which interest-bearing liabilities and post-employment benefits |
39,280 | 35,913 | 36,616 | |||||||||
Of which net cash 1) |
37,809 | 32,485 | 29,437 | |||||||||
Assets pledged as collateral |
2,556 | 2,522 | 2,499 | |||||||||
Contingent liabilities |
657 | 664 | 666 |
1) | Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 30. |
Ericsson Third Quarter Report 2014 |
19 |
CONSOLIDATED STATEMENT OF CASH FLOWS
Jul-Sep | Jan-Sep | Jan - Dec | ||||||||||||||||||
SEK million |
2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
Operating activities |
||||||||||||||||||||
Net income |
3,010 | 2,624 | 5,730 | 6,978 | 12,174 | |||||||||||||||
Adjustments to reconcile net income to cash |
||||||||||||||||||||
Taxes |
-881 | -388 | -3,419 | -1,710 | -1,323 | |||||||||||||||
Earnings/dividends in JV and associated companies |
50 | -10 | 120 | 330 | 258 | |||||||||||||||
Depreciation, amortization and impairment losses |
2,546 | 2,481 | 7,393 | 7,255 | 10,137 | |||||||||||||||
Other |
-327 | 267 | -345 | 1,220 | 756 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
4,398 | 4,974 | 9,479 | 14,073 | 22,002 | ||||||||||||||||
Changes in operating net assets |
||||||||||||||||||||
Inventories |
357 | -840 | -469 | -4,127 | 4,868 | |||||||||||||||
Customer finance, current and non-current |
800 | -1,101 | 1,972 | -884 | 1,809 | |||||||||||||||
Trade receivables |
-4,744 | -1,222 | -3,594 | 5,843 | -8,504 | |||||||||||||||
Trade payables |
-588 | -1,519 | -3,018 | 15 | -2,158 | |||||||||||||||
Provisions and post-employment benefits |
-970 | -18 | -1,567 | -707 | -3,298 | |||||||||||||||
Other operating assets and liabilities, net |
2,206 | -1,624 | -23 | -4,107 | 2,670 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
-2,939 | -6,324 | -6,699 | -3,967 | -4,613 | ||||||||||||||||
Cash flow from operating activities |
1,459 | -1,350 | 2,780 | 10,106 | 17,389 | |||||||||||||||
Investing activities |
||||||||||||||||||||
Investments in property, plant and equipment |
-778 | -1,415 | -3,252 | -3,769 | -4,503 | |||||||||||||||
Sales of property, plant and equipment |
97 | 139 | 199 | 466 | 378 | |||||||||||||||
Acquisitions/divestments of subsidiaries and other operations, net |
-1,794 | -286 | -1,969 | -2,647 | -2,682 | |||||||||||||||
Product development |
-237 | -155 | -733 | -537 | -915 | |||||||||||||||
Other investing activities |
-230 | -1,302 | -135 | -1,859 | -1,330 | |||||||||||||||
Short-term investments |
-144 | 2,308 | 6,205 | 2,530 | -2,057 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flow from investing activities |
-3,086 | -711 | 315 | -5,816 | -11,109 | |||||||||||||||
Cash flow before financing activities |
-1,627 | -2,061 | 3,095 | 4,290 | 6,280 | |||||||||||||||
Financing activities |
||||||||||||||||||||
Dividends paid |
-21 | -3 | -8,945 | -9,831 | -9,153 | |||||||||||||||
Other financing activities |
43 | -1,288 | -4,101 | -8,750 | -355 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Cash flow from financing activities |
22 | -1,291 | -13,046 | -18,581 | -9,508 | |||||||||||||||
Effect of exchange rate changes on cash |
-1,711 | 2,306 | 432 | 4,238 | 641 | |||||||||||||||
Net change in cash and cash equivalents |
-3,316 | -1,046 | -9,519 | -10,053 | -2,587 | |||||||||||||||
Cash and cash equivalents, beginning of period |
38,479 | 33,088 | 44,682 | 42,095 | 44,682 | |||||||||||||||
Cash and cash equivalents, end of period |
35,163 | 32,042 | 35,163 | 32,042 | 42,095 |
Ericsson Third Quarter Report 2014 |
20 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Jan - Sep | Jan - Sep | Jan - Dec | ||||||||||
SEK million |
2013 | 2014 | 2013 | |||||||||
Opening balance |
138,483 | 141,623 | 138,483 | |||||||||
Total comprehensive income |
4,118 | 10,957 | 11,881 | |||||||||
Sale/repurchase of own shares |
63 | 78 | 90 | |||||||||
Stock purchase plan |
297 | 547 | 388 | |||||||||
Dividends paid |
-8,945 | -9,831 | -9,153 | |||||||||
Transactions with non-controlling interests |
-66 | 0 | -66 | |||||||||
|
|
|
|
|
|
|||||||
Closing balance |
133,950 | 143,374 | 141,623 | |||||||||
|
|
|
|
|
|
Ericsson Third Quarter Report 2014 |
21 |
CONSOLIDATED INCOME STATEMENT ISOLATED QUARTERS
2013 | 2014 | |||||||||||||||||||||||||||
Isolated quarters, SEK million |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
Net sales |
52,032 | 55,331 | 52,981 | 67,032 | 47,505 | 54,849 | 57,643 | |||||||||||||||||||||
Cost of sales |
-35,394 | -37,412 | -36,028 | -42,171 | -30,184 | -34,910 | -37,362 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Gross income |
16,638 | 17,919 | 16,953 | 24,861 | 17,321 | 19,939 | 20,281 | |||||||||||||||||||||
Gross margin (%) |
32.0 | % | 32.4 | % | 32.0 | % | 37.1 | % | 36.5 | % | 36.4 | % | 35.2 | % | ||||||||||||||
Research and development expenses |
-7,877 | -7,747 | -7,710 | -8,902 | -8,275 | -9,084 | -9,281 | |||||||||||||||||||||
Selling and administrative expenses |
-6,643 | -6,629 | -5,778 | -7,223 | -6,452 | -6,541 | -6,000 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating expenses |
-14,520 | -14,376 | -13,488 | -16,125 | -14,727 | -15,625 | -15,281 | |||||||||||||||||||||
Other operating income and expenses |
20 | -1,040 | 805 | 328 | 21 | -206 | -1,134 | |||||||||||||||||||||
Shares in earnings of JV and associated companies |
-32 | -38 | -51 | -9 | 15 | -109 | 10 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Operating income |
2,106 | 2,465 | 4,219 | 9,055 | 2,630 | 3,999 | 3,876 | |||||||||||||||||||||
Financial income |
180 | 304 | 678 | 184 | 401 | 268 | 429 | |||||||||||||||||||||
Financial expenses |
-565 | -606 | -595 | -327 | -612 | -465 | -557 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Income after financial items |
1,721 | 2,163 | 4,302 | 8,912 | 2,419 | 3,802 | 3,748 | |||||||||||||||||||||
Taxes |
-517 | -647 | -1,292 | -2,468 | -727 | -1,140 | -1,124 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income |
1,204 | 1,516 | 3,010 | 6,444 | 1,692 | 2,662 | 2,624 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income attributable to: |
||||||||||||||||||||||||||||
- Stockholders of the Parent Company |
1,205 | 1,469 | 2,921 | 6,410 | 2,120 | 2,579 | 2,646 | |||||||||||||||||||||
- Non-controlling interests |
-1 | 47 | 89 | 34 | -428 | 83 | -22 | |||||||||||||||||||||
Other information |
||||||||||||||||||||||||||||
Average number of shares, basic (million) |
3,222 | 3,224 | 3,227 | 3,230 | 3,233 | 3,235 | 3,238 | |||||||||||||||||||||
Earnings per share, basic (SEK) 1) |
0.37 | 0.46 | 0.91 | 1.98 | 0.66 | 0.80 | 0.82 | |||||||||||||||||||||
Earnings per share, diluted (SEK) 1) |
0.37 | 0.45 | 0.90 | 1.97 | 0.65 | 0.79 | 0.81 |
1) | Based on Net income attributable to stockholders of the Parent Company |
Ericsson Third Quarter Report 2014 |
22 |
CONSOLIDATED STATEMENT OF CASH FLOWS - ISOLATED QUARTERS
2013 | 2014 | |||||||||||||||||||||||||||
Isolated quarters, SEK million |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
Operating activities |
||||||||||||||||||||||||||||
Net income |
1,204 | 1,516 | 3,010 | 6,444 | 1,692 | 2,662 | 2,624 | |||||||||||||||||||||
Adjustments to reconcile net income to cash |
||||||||||||||||||||||||||||
Taxes |
-1,849 | -689 | -881 | 2,096 | -1,348 | 26 | -388 | |||||||||||||||||||||
Earnings/dividends in JV and associated companies |
33 | 37 | 50 | 138 | -16 | 356 | -10 | |||||||||||||||||||||
Depreciation, amortization and impairment losses |
2,411 | 2,436 | 2,546 | 2,744 | 2,360 | 2,414 | 2,481 | |||||||||||||||||||||
Other |
-201 | 183 | -327 | 1,101 | 549 | 404 | 267 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
1,598 | 3,483 | 4,398 | 12,523 | 3,237 | 5,862 | 4,974 | ||||||||||||||||||||||
Changes in operating net assets |
||||||||||||||||||||||||||||
Inventories |
-1,426 | 600 | 357 | 5,337 | -2,099 | -1,188 | -840 | |||||||||||||||||||||
Customer finance, current and non-current |
260 | 912 | 800 | -163 | 558 | -341 | -1,101 | |||||||||||||||||||||
Trade receivables |
-1,934 | 3,084 | -4,744 | -4,910 | 7,957 | -892 | -1,222 | |||||||||||||||||||||
Trade payables |
-2,948 | 518 | -588 | 860 | -110 | 1,644 | -1,519 | |||||||||||||||||||||
Provisions and post-employment benefits |
1,155 | -1,752 | -970 | -1,731 | -464 | -225 | -18 | |||||||||||||||||||||
Other operating assets and liabilities, net |
325 | -2,554 | 2,206 | 2,693 | 323 | -2,806 | -1,624 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
-4,568 | 808 | -2,939 | 2,086 | 6,165 | -3,808 | -6,324 | ||||||||||||||||||||||
Cash flow from operating activities |
-2,970 | 4,291 | 1,459 | 14,609 | 9,402 | 2,054 | -1,350 | |||||||||||||||||||||
Investing activities |
||||||||||||||||||||||||||||
Investments in property, plant and equipment |
-1,196 | -1,278 | -778 | -1,251 | -1,034 | -1,320 | -1,415 | |||||||||||||||||||||
Sales of property, plant and equipment |
91 | 11 | 97 | 179 | 274 | 53 | 139 | |||||||||||||||||||||
Acquisitions/divestments of subsidiaries and other operations, net |
-136 | -39 | -1,794 | -713 | -849 | -1,512 | -286 | |||||||||||||||||||||
Product development |
-282 | -214 | -237 | -182 | -197 | -185 | -155 | |||||||||||||||||||||
Other investing activities |
298 | -203 | -230 | -1,195 | -169 | -388 | -1,302 | |||||||||||||||||||||
Short-term investments |
-2,860 | 9,209 | -144 | -8,262 | -6,790 | 7,012 | 2,308 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash flow from investing activities |
-4,085 | 7,486 | -3,086 | -11,424 | -8,765 | 3,660 | -711 | |||||||||||||||||||||
Cash flow before financing activities |
-7,055 | 11,777 | -1,627 | 3,185 | 637 | 5,714 | -2,061 | |||||||||||||||||||||
Financing activities |
||||||||||||||||||||||||||||
Dividends paid |
-61 | -8,863 | -21 | -208 | | -9,828 | -3 | |||||||||||||||||||||
Other financing activities |
92 | -4,236 | 43 | 3,746 | -5,069 | -2,393 | -1,288 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Cash flow from financing activities |
31 | -13,099 | 22 | 3,538 | -5,069 | -12,221 | -1,291 | |||||||||||||||||||||
Effect of exchange rate changes on cash |
-214 | 2,357 | -1,711 | 209 | 433 | 1,499 | 2,306 | |||||||||||||||||||||
Net change in cash and cash equivalents |
-7,238 | 1,035 | -3,316 | 6,932 | -3,999 | -5,008 | -1,046 | |||||||||||||||||||||
Cash and cash equivalents, beginning of period |
44,682 | 37,444 | 38,479 | 35,163 | 42,095 | 38,096 | 33,088 | |||||||||||||||||||||
Cash and cash equivalents, end of period |
37,444 | 38,479 | 35,163 | 42,095 | 38,096 | 33,088 | 32,042 |
Ericsson Third Quarter Report 2014 |
23 |
The Group
This interim report is prepared in accordance with IAS 34. The term IFRS used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASBs Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2013, and should be read in conjunction with that annual report.
As from January 1, 2014, the Company has applied the following new or amended IFRSs and IFRICs:
Amendment to IAS 32, Financial instruments: Presentation, Offsetting Financial Assets and Financial Liabilities. This amendment is related to the application guidance in IAS 32, Financial instruments: Presentation, and clarifies some of the requirements for offsetting financial assets and financial liabilities on the balance sheet.
IFRIC 21, Levies. This interpretation of IAS 37 Provisions, contingent liabilities and contingent assets sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation addresses what the obligating event is that gives rise to the need to pay a levy and when a liability should be recognized.
None of the new or amended standards and interpretations has had any significant impact on the financial result or position of the Company. There is no significant difference between IFRS effective as per September 30, 2014 and IFRS as endorsed by the EU.
In the interim reports of 2013 disclosure was given in relation to IFRS 7 about fair valuation of financial instruments. Due to that the amounts are not considered material this disclosure will not be given in the interim reports as from the first quarter of 2014. Should amounts become material quarterly disclosure will be given as from then.
Ericsson Third Quarter Report 2014 |
24 |
NET SALES BY SEGMENT BY QUARTER
Segment Modems was consolidated as of October 1, 2013.
2013 | 2014 | |||||||||||||||||||||||||||
Isolated quarters, SEK million |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
Networks |
28,133 | 28,142 | 26,655 | 34,769 | 24,383 | 28,964 | 30,030 | |||||||||||||||||||||
Global Services |
21,452 | 24,851 | 23,974 | 27,166 | 20,356 | 23,059 | 24,467 | |||||||||||||||||||||
Of which Professional Services |
14,626 | 16,773 | 16,229 | 18,767 | 15,078 | 16,554 | 17,794 | |||||||||||||||||||||
Of which Managed Services |
5,888 | 6,754 | 6,264 | 6,574 | 5,754 | 6,485 | 7,175 | |||||||||||||||||||||
Of which Network Rollout |
6,826 | 8,078 | 7,745 | 8,399 | 5,278 | 6,505 | 6,673 | |||||||||||||||||||||
Support Solutions |
2,447 | 2,338 | 2,352 | 5,097 | 2,765 | 2,824 | 3,057 | |||||||||||||||||||||
Modems |
| | | | 1 | 2 | 89 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
52,032 | 55,331 | 52,981 | 67,032 | 47,505 | 54,849 | 57,643 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Sequential change, percent |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
Networks |
-20 | % | 0 | % | -5 | % | 30 | % | -30 | % | 19 | % | 4 | % | ||||||||||||||
Global Services |
-24 | % | 16 | % | -4 | % | 13 | % | -25 | % | 13 | % | 6 | % | ||||||||||||||
Of which Professional Services |
-23 | % | 15 | % | -3 | % | 16 | % | -20 | % | 10 | % | 7 | % | ||||||||||||||
Of which Managed Services |
-13 | % | 15 | % | -7 | % | 5 | % | -12 | % | 13 | % | 11 | % | ||||||||||||||
Of which Network Rollout |
-26 | % | 18 | % | -4 | % | 8 | % | -37 | % | 23 | % | 3 | % | ||||||||||||||
Support Solutions |
-33 | % | -4 | % | 1 | % | 117 | % | -46 | % | 2 | % | 8 | % | ||||||||||||||
Modems |
| | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
-22 | % | 6 | % | -4 | % | 27 | % | -29 | % | 15 | % | 5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Year over year change, percent |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
Networks |
3 | % | 1 | % | -1 | % | -1 | % | -13 | % | 3 | % | 13 | % | ||||||||||||||
Global Services |
4 | % | 3 | % | -1 | % | -3 | % | -5 | % | -7 | % | 2 | % | ||||||||||||||
Of which Professional Services |
-2 | % | -1 | % | -1 | % | -1 | % | 3 | % | -1 | % | 10 | % | ||||||||||||||
Of which Managed Services |
3 | % | 4 | % | -1 | % | -3 | % | -2 | % | -4 | % | 15 | % | ||||||||||||||
Of which Network Rollout |
19 | % | 13 | % | -2 | % | -8 | % | -23 | % | -19 | % | -14 | % | ||||||||||||||
Support Solutions |
-19 | % | -33 | % | -29 | % | 40 | % | 13 | % | 21 | % | 30 | % | ||||||||||||||
Modems |
| | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
2 | % | 0 | % | -3 | % | 0 | % | -9 | % | -1 | % | 9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Year to date, SEK million |
Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | Jan - Jun | Jan - Sep | |||||||||||||||||||||
Networks |
28,133 | 56,275 | 82,930 | 117,699 | 24,383 | 53,347 | 83,377 | |||||||||||||||||||||
Global Services |
21,452 | 46,303 | 70,277 | 97,443 | 20,356 | 43,415 | 67,882 | |||||||||||||||||||||
Of which Professional Services |
14,626 | 31,399 | 47,628 | 66,395 | 15,078 | 31,632 | 49,426 | |||||||||||||||||||||
Of which Managed Services |
5,888 | 12,642 | 18,906 | 25,480 | 5,754 | 12,239 | 19,414 | |||||||||||||||||||||
Of which Network Rollout |
6,826 | 14,904 | 22,649 | 31,048 | 5,278 | 11,783 | 18,456 | |||||||||||||||||||||
Support Solutions |
2,447 | 4,785 | 7,137 | 12,234 | 2,765 | 5,589 | 8,646 | |||||||||||||||||||||
Modems |
| | | | 1 | 3 | 92 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
52,032 | 107,363 | 160,344 | 227,376 | 47,505 | 102,354 | 159,997 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Year to date, | 2013 | 2014 | ||||||||||||||||||||||||||
year over year change, percent |
Jan - Mar | Jan - Jun | Jan - Sep | Jan - Dec | Jan - Mar | Jan - Jun | Jan - Sep | |||||||||||||||||||||
Networks |
3 | % | 2 | % | 1 | % | 0 | % | -13 | % | -5 | % | 1 | % | ||||||||||||||
Global Services |
4 | % | 4 | % | 2 | % | 0 | % | -5 | % | -6 | % | -3 | % | ||||||||||||||
Of which Professional Services |
-2 | % | -1 | % | -1 | % | -1 | % | 3 | % | 1 | % | 4 | % | ||||||||||||||
Of which Managed Services |
3 | % | 4 | % | 2 | % | 1 | % | -2 | % | -3 | % | 3 | % | ||||||||||||||
Of which Network Rollout |
19 | % | 16 | % | 9 | % | 4 | % | -23 | % | -21 | % | -19 | % | ||||||||||||||
Support Solutions |
-19 | % | -26 | % | -27 | % | -9 | % | 13 | % | 17 | % | 21 | % | ||||||||||||||
Modems |
| | | | | | | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
2 | % | 1 | % | 0 | % | 0 | % | -9 | % | -5 | % | 0 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ericsson Third Quarter Report 2014 |
25 |
OPERATING INCOME BY SEGMENT BY QUARTER
1) | Unallocated consists mainly of costs for corporate staff, non-operational capital gains and losses |
Ericsson Third Quarter Report 2014 |
26 |
NET SALES BY REGION BY QUARTER
2013 | 2014 | |||||||||||||||||||||||||||
Isolated quarters, SEK million |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
North America |
15,773 | 15,341 | 14,453 | 13,772 | 12,215 | 15,179 | 14,033 | |||||||||||||||||||||
Latin America |
4,374 | 5,565 | 5,294 | 6,749 | 4,710 | 5,414 | 5,882 | |||||||||||||||||||||
Northern Europe & Central Asia 1) 2) |
2,283 | 2,708 | 2,949 | 3,678 | 2,436 | 2,717 | 3,151 | |||||||||||||||||||||
Western & Central Europe 2) |
4,349 | 4,522 | 4,399 | 5,215 | 4,381 | 4,582 | 4,646 | |||||||||||||||||||||
Mediterranean 2) |
5,271 | 6,159 | 5,659 | 7,067 | 4,785 | 5,487 | 5,218 | |||||||||||||||||||||
Middle East |
3,160 | 3,978 | 4,386 | 5,914 | 3,859 | 4,514 | 6,039 | |||||||||||||||||||||
Sub Saharan Africa |
2,131 | 2,653 | 2,693 | 2,572 | 1,813 | 1,886 | 2,447 | |||||||||||||||||||||
India |
1,606 | 1,279 | 1,280 | 1,973 | 1,695 | 1,645 | 2,000 | |||||||||||||||||||||
North East Asia |
6,054 | 6,642 | 6,053 | 8,649 | 4,908 | 6,406 | 7,033 | |||||||||||||||||||||
South East Asia & Oceania |
4,129 | 3,758 | 3,617 | 4,283 | 3,446 | 3,662 | 3,794 | |||||||||||||||||||||
Other 1) 2) |
2,902 | 2,726 | 2,198 | 7,160 | 3,257 | 3,357 | 3,400 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
52,032 | 55,331 | 52,981 | 67,032 | 47,505 | 54,849 | 57,643 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
1) Of which in Sweden |
1,020 | 1,276 | 798 | 1,333 | 999 | 1,008 | 1,090 | |||||||||||||||||||||
2) Of which in EU |
9,782 | 10,816 | 10,111 | 12,835 | 9,720 | 10,320 | 10,736 | |||||||||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Sequential change, percent |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
North America |
-7 | % | -3 | % | -6 | % | -5 | % | -11 | % | 24 | % | -8 | % | ||||||||||||||
Latin America |
-33 | % | 27 | % | -5 | % | 27 | % | -30 | % | 15 | % | 9 | % | ||||||||||||||
Northern Europe & Central Asia 1) 2) |
-24 | % | 19 | % | 9 | % | 25 | % | -34 | % | 12 | % | 16 | % | ||||||||||||||
Western & Central Europe 2) |
-20 | % | 4 | % | -3 | % | 19 | % | -16 | % | 5 | % | 1 | % | ||||||||||||||
Mediterranean 2) |
-25 | % | 17 | % | -8 | % | 25 | % | -32 | % | 15 | % | -5 | % | ||||||||||||||
Middle East |
-38 | % | 26 | % | 10 | % | 35 | % | -35 | % | 17 | % | 34 | % | ||||||||||||||
Sub Saharan Africa |
-40 | % | 24 | % | 2 | % | -4 | % | -30 | % | 4 | % | 30 | % | ||||||||||||||
India |
0 | % | -20 | % | 0 | % | 54 | % | -14 | % | -3 | % | 22 | % | ||||||||||||||
North East Asia |
-41 | % | 10 | % | -9 | % | 43 | % | -43 | % | 31 | % | 10 | % | ||||||||||||||
South East Asia & Oceania |
-9 | % | -9 | % | -4 | % | 18 | % | -20 | % | 6 | % | 4 | % | ||||||||||||||
Other 1) 2) |
-3 | % | -6 | % | -19 | % | 226 | % | -55 | % | 3 | % | 1 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
-22 | % | 6 | % | -4 | % | 27 | % | -29 | % | 15 | % | 5 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
1) Of which in Sweden |
-20 | % | 25 | % | -37 | % | 67 | % | -25 | % | 1 | % | 8 | % | ||||||||||||||
2) Of which in EU |
-24 | % | 11 | % | -7 | % | 27 | % | -24 | % | 6 | % | 4 | % | ||||||||||||||
2013 | 2014 | |||||||||||||||||||||||||||
Year-over-year change, percent |
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||||||
North America |
23 | % | 18 | % | 3 | % | -19 | % | -23 | % | -1 | % | -3 | % | ||||||||||||||
Latin America |
-9 | % | 6 | % | -2 | % | 4 | % | 8 | % | -3 | % | 11 | % | ||||||||||||||
Northern Europe & Central Asia 1) 2) |
0 | % | -19 | % | 9 | % | 23 | % | 7 | % | 0 | % | 7 | % | ||||||||||||||
Western & Central Europe 2) |
1 | % | 10 | % | 21 | % | -4 | % | 1 | % | 1 | % | 6 | % | ||||||||||||||
Mediterranean 2) |
14 | % | -1 | % | 5 | % | 0 | % | -9 | % | -11 | % | -8 | % | ||||||||||||||
Middle East |
0 | % | 7 | % | 21 | % | 17 | % | 22 | % | 13 | % | 38 | % | ||||||||||||||
Sub Saharan Africa |
-3 | % | -5 | % | -4 | % | -28 | % | -15 | % | -29 | % | -9 | % | ||||||||||||||
India |
13 | % | -25 | % | -26 | % | 23 | % | 6 | % | 29 | % | 56 | % | ||||||||||||||
North East Asia |
-34 | % | -21 | % | -28 | % | -16 | % | -19 | % | -4 | % | 16 | % | ||||||||||||||
South East Asia & Oceania |
22 | % | 2 | % | 3 | % | -5 | % | -17 | % | -3 | % | 5 | % | ||||||||||||||
Other 1) 2) |
2 | % | -13 | % | -34 | % | 141 | % | 12 | % | 23 | % | 55 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total |
2 | % | 0 | % | -3 | % | 0 | % | -9 | % | -1 | % | 9 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
1) Of which in Sweden |
22 | % | 0 | % | -52 | % | 5 | % | -2 | % | -21 | % | 37 | % | ||||||||||||||
2) Of which in EU |
3 | % | -3 | % | -5 | % | -1 | % | -1 | % | -5 | % | 6 | % |
Ericsson Third Quarter Report 2014 |
27 |
NET SALES BY REGION BY QUARTER (continued)
Ericsson Third Quarter Report 2014 |
28 |
NET SALES BY REGION BY SEGMENT
Revenue from Telcordia is reported 50/50 between segments Global Services and Support Solutions.
Q3 2014 | Jan - Sep 2014 | |||||||||||||||||||||||||||||||||||||||
SEK milion |
Net- works |
Global Services |
Support Solutions |
Modems | Total | Net- works |
Global Services |
Support Solutions |
Modems | Total | ||||||||||||||||||||||||||||||
North America |
6,829 | 6,452 | 752 | | 14,033 | 21,082 | 17,855 | 2,490 | 0 | 41,427 | ||||||||||||||||||||||||||||||
Latin America |
2,691 | 2,860 | 331 | | 5,882 | 7,741 | 7,541 | 724 | 0 | 16,006 | ||||||||||||||||||||||||||||||
Northern Europe & Central Asia |
2,143 | 937 | 71 | | 3,151 | 5,270 | 2,855 | 179 | 0 | 8,304 | ||||||||||||||||||||||||||||||
Western & Central Europe |
1,773 | 2,720 | 153 | | 4,646 | 5,397 | 7,770 | 442 | 0 | 13,609 | ||||||||||||||||||||||||||||||
Mediterranean |
2,088 | 2,943 | 187 | | 5,218 | 6,526 | 8,409 | 555 | 0 | 15,490 | ||||||||||||||||||||||||||||||
Middle East |
3,705 | 2,028 | 306 | | 6,039 | 8,054 | 5,676 | 682 | 0 | 14,412 | ||||||||||||||||||||||||||||||
Sub Saharan Africa |
1,237 | 1,126 | 84 | | 2,447 | 2,820 | 2,911 | 415 | 0 | 6,146 | ||||||||||||||||||||||||||||||
India |
1,106 | 743 | 151 | | 2,000 | 2,881 | 2,152 | 307 | 0 | 5,340 | ||||||||||||||||||||||||||||||
North East Asia |
4,463 | 2,293 | 277 | | 7,033 | 11,545 | 6,324 | 478 | 0 | 18,347 | ||||||||||||||||||||||||||||||
South East Asia & Oceania |
2,048 | 1,677 | 69 | | 3,794 | 5,724 | 4,893 | 285 | 0 | 10,902 | ||||||||||||||||||||||||||||||
Other |
1,947 | 688 | 676 | 89 | 3,400 | 6,337 | 1,496 | 2,089 | 92 | 10,014 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total |
30,030 | 24,467 | 3,057 | 89 | 57,643 | 83,377 | 67,882 | 8,646 | 92 | 159,997 | ||||||||||||||||||||||||||||||
Share of Total |
52 | % | 43 | % | 5 | % | 0 | % | 100 | % | 52 | % | 43 | % | 5 | % | 0 | % | 100 | % | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Q3 2014 | ||||||||||||||||||||||||||||||||||||||||
Sequential change, percent |
Net- works |
Global Services |
Support Solutions |
Modems | Total | |||||||||||||||||||||||||||||||||||
North America |
-11 | % | 1 | % | -32 | % | | -8 | % | |||||||||||||||||||||||||||||||
Latin America |
3 | % | 8 | % | 112 | % | | 9 | % | |||||||||||||||||||||||||||||||
Northern Europe & Central Asia |
22 | % | 3 | % | 45 | % | | 16 | % | |||||||||||||||||||||||||||||||
Western & Central Europe |
-3 | % | 5 | % | -4 | % | | 1 | % | |||||||||||||||||||||||||||||||
Mediterranean |
-15 | % | 3 | % | 6 | % | | -5 | % | |||||||||||||||||||||||||||||||
Middle East |
46 | % | 14 | % | 55 | % | | 34 | % | |||||||||||||||||||||||||||||||
Sub Saharan Africa |
44 | % | 18 | % | 15 | % | | 30 | % | |||||||||||||||||||||||||||||||
India |
25 | % | 5 | % | 215 | % | | 22 | % | |||||||||||||||||||||||||||||||
North East Asia |
4 | % | 14 | % | 215 | % | | 10 | % | |||||||||||||||||||||||||||||||
South East Asia & Oceania |
13 | % | -3 | % | -44 | % | | 4 | % | |||||||||||||||||||||||||||||||
Other |
-11 | % | 34 | % | 5 | % | | 1 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total |
4 | % | 6 | % | 8 | % | | 5 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Q3 2014 |
||||||||||||||||||||||||||||||||||||||||
Year over year change, percent |
Net- works |
Global Services |
Support Solutions |
Modems | Total | |||||||||||||||||||||||||||||||||||
North America |
4 | % | -11 | % | 28 | % | | -3 | % | |||||||||||||||||||||||||||||||
Latin America |
-3 | % | 24 | % | 54 | % | | 11 | % | |||||||||||||||||||||||||||||||
Northern Europe & Central Asia |
8 | % | 2 | % | 39 | % | | 7 | % | |||||||||||||||||||||||||||||||
Western & Central Europe |
2 | % | 7 | % | 21 | % | | 6 | % | |||||||||||||||||||||||||||||||
Mediterranean |
-19 | % | -1 | % | 43 | % | | -8 | % | |||||||||||||||||||||||||||||||
Middle East |
64 | % | 12 | % | -6 | % | | 38 | % | |||||||||||||||||||||||||||||||
Sub Saharan Africa |
-9 | % | 1 | % | -62 | % | | -9 | % | |||||||||||||||||||||||||||||||
India |
95 | % | 10 | % | 297 | % | | 56 | % | |||||||||||||||||||||||||||||||
North East Asia |
26 | % | -7 | % | 386 | % | | 16 | % | |||||||||||||||||||||||||||||||
South East Asia & Oceania |
7 | % | 7 | % | -47 | % | | 5 | % | |||||||||||||||||||||||||||||||
Other |
43 | % | 91 | % | 43 | % | | 55 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total |
13 | % | 2 | % | 30 | % | | 9 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Jan - Sep 2014 |
||||||||||||||||||||||||||||||||||||||||
Year over year change, percent |
Net- works |
Global Services |
Support Solutions |
Modems | Total | |||||||||||||||||||||||||||||||||||
North America |
-9 | % | -14 | % | 59 | % | | -9 | % | |||||||||||||||||||||||||||||||
Latin America |
0 | % | 14 | % | -15 | % | | 5 | % | |||||||||||||||||||||||||||||||
Northern Europe & Central Asia |
8 | % | -1 | % | 3 | % | | 5 | % | |||||||||||||||||||||||||||||||
Western & Central Europe |
-3 | % | 6 | % | 16 | % | | 3 | % | |||||||||||||||||||||||||||||||
Mediterranean |
-18 | % | -4 | % | 27 | % | | -9 | % | |||||||||||||||||||||||||||||||
Middle East |
47 | % | 8 | % | -11 | % | | 25 | % | |||||||||||||||||||||||||||||||
Sub Saharan Africa |
-24 | % | -5 | % | -41 | % | | -18 | % | |||||||||||||||||||||||||||||||
India |
51 | % | 6 | % | 31 | % | | 28 | % | |||||||||||||||||||||||||||||||
North East Asia |
8 | % | -19 | % | 137 | % | | -2 | % | |||||||||||||||||||||||||||||||
South East Asia & Oceania |
-12 | % | 6 | % | -18 | % | | -5 | % | |||||||||||||||||||||||||||||||
Other |
20 | % | 39 | % | 41 | % | | 28 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total |
1 | % | -3 | % | 21 | % | | 0 | % | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Ericsson Third Quarter Report 2014 |
29 |
Ericsson Third Quarter Report 2014 |
30 |
Jul - Sep |
Jan - Sep | Jan - Dec | ||||||||||||||||||
2013 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Number of shares and earnings per share |
||||||||||||||||||||
Number of shares, end of period (million) |
3,305 | 3,305 | 3,305 | 3,305 | 3,305 | |||||||||||||||
Of which class A-shares (million) |
262 | 262 | 262 | 262 | 262 | |||||||||||||||
Of which class B-shares (million) |
3,043 | 3,043 | 3,043 | 3,043 | 3,043 | |||||||||||||||
Number of treasury shares, end of period (million) |
77 | 66 | 77 | 66 | 74 | |||||||||||||||
Number of shares outstanding, basic, end of period (million) |
3,228 | 3,239 | 3,228 | 3,239 | 3,231 | |||||||||||||||
Numbers of shares outstanding, diluted, end of period (million) |
3,259 | 3,271 | 3,259 | 3,271 | 3,262 | |||||||||||||||
Average number of treasury shares (million) |
78 | 67 | 81 | 70 | 79 | |||||||||||||||
Average number of shares outstanding, basic (million) |
3,227 | 3,238 | 3,225 | 3,235 | 3,226 | |||||||||||||||
Average number of shares outstanding, diluted (million) 1) |
3,258 | 3,270 | 3,256 | 3,268 | 3,257 | |||||||||||||||
Earnings per share, basic (SEK) |
0.91 | 0.82 | 1.74 | 2.27 | 3.72 | |||||||||||||||
Earnings per share, diluted (SEK) 1) |
0.90 | 0.81 | 1.72 | 2.25 | 3.69 | |||||||||||||||
Ratios |
||||||||||||||||||||
Days sales outstanding |
| | 109 | 111 | 97 | |||||||||||||||
Inventory turnover days |
73 | 68 | 72 | 69 | 62 | |||||||||||||||
Payable days |
51 | 55 | 53 | 57 | 53 | |||||||||||||||
Equity ratio (%) |
| | 52.4 | % | 52.3 | % | 52.6 | % | ||||||||||||
Capital turnover (times) |
1.2 | 1.3 | 1.2 | 1.2 | 1.3 | |||||||||||||||
Cash conversion %, end of period 2) |
33.2 | % | -27.1 | % | 29.3 | % | 71.8 | % | 79.0 | % | ||||||||||
Payment readiness, end of period |
| | 69,651 | 78,595 | 82,631 | |||||||||||||||
Payment readiness, as percentage of sales |
| | 32.6 | % | 36.8 | % | 36.3 | % | ||||||||||||
Exchange rates used in the consolidation |
||||||||||||||||||||
SEK/EUR - average rate |
| | 8.60 | 9.04 | 8.67 | |||||||||||||||
- closing rate |
| | 8.66 | 9.15 | 8.90 | |||||||||||||||
SEK/USD - average rate |
| | 6.53 | 6.69 | 6.52 | |||||||||||||||
- closing rate |
| | 6.42 | 7.27 | 6.46 | |||||||||||||||
Other |
||||||||||||||||||||
Regional inventory, end of period, |
18,416 | 17,094 | 18,416 | 17,094 | 14,652 | |||||||||||||||
Export sales from Sweden |
24,019 | 26,871 | 73,728 | 79,106 | 108,944 |
1) | Potential ordinary shares are not considered when their conversion to ordinary shares would increase earnings per share |
2) | Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial measures can be found on page 30. |
Ericsson Third Quarter Report 2014 |
31 |
RESTRUCTURING CHARGES BY FUNCTION