Fourth quarter highlights
- The quarter was impacted by an IPR agreement resulting in total IPR revenues of
SEK 6.0 (2.4) b. and previously announced charges ofSEK -4.0 b., including DOJ provision, IoT divestment andCloud Software and Services contract and portfolio exits. -
Group organic sales[1] grew by 1% YoY., of which IPR revenues contributed with 5 percentage points. Reported sales were
SEK 86.0 (71.3) b. of which Vonage contributedSEK 4.1 b. -
Gross income increased to
SEK 35.6 (30.8) b., while gross margin decreased to 41.4% (43.2%) primarily due to business mix change in Networks and previously announced charges for contract exits and portfolio adjustments inCloud Software and Services. -
EBITA excluding restructuring charges amounted to
SEK 9.3 (12.8) b. with an EBITA margin of 10.8% (17.9%). EBITA was impacted by the previously announced charges. -
Free cash flow before M&A was
SEK 16.9 (13.5) b. mainly driven by reduced inventory and high cash collection including IPR collection. - Return on capital employed was 15.4% (26.6%) driven by lower EBIT.
Full-year highlights
- Group organic sales[1] grew by 3%, driven by a 4% increase in Networks and 16% in Enterprise. Reported sales were
SEK 271.5 (232.3) b. -
Gross income increased to
SEK 113.3 (100.7) b. with increases in segments Networks,Cloud Software and Services, and Enterprise. -
EBITA amounted to
SEK 29.1 (33.3) b. with an EBITA margin of 10.7% (14.3%). EBITA was negatively impacted by previously announced charges ofSEK -5.5 b., partly compensated by increased IPR licensing revenues. - EBIT margin excl. restructuring charges was 10.1% (13.9%). Excluding Vonage and previously announced charges during the year, EBIT margin was 12.9%, reaching the 2022 target of 12-14%.
-
Net income was
SEK 19.1 (23.0) b. EPS diluted wasSEK 5.62 (6.81). -
Free cash flow before M&A amounted to
SEK 22.2 (32.1) b. Net cash wasSEK 23.3 (65.8) b. at year-end 2022. - Return on capital employed was 14.0% (18.4%) driven by higher capital employed and lower EBIT.
-
A dividend for 2022 of
SEK 2.70 (2.50) per share will be proposed to the AGM by the Board of Directors.
SEK b. |
Q4 2022 |
Q4 2021 |
YoY change |
Q3 2022 |
QoQ change |
Jan-Dec 2022 |
Jan-Dec 2021 |
YoY change |
Net sales | 86.0 | 71.3 | 21% | 68.0 | 26% | 271.5 | 232.3 | 17% |
Sales growth adj. for comparable units and currency[2] | - | - | 1% | - | - | - | - | 3% |
Gross margin[2] | 41.4% | 43.2% | - | 41.4% | - | 41.7% | 43.4% | - |
EBIT | 7.9 | 11.9 | -34% | 7.1 | 10% | 27.0 | 31.8 | -15% |
EBIT margin[2] | 9.1% | 16.6% | - | 10.5% | - | 10.0% | 13.7% | - |
EBITA[2] | 9.0 | 12.3 | -26% | 7.6 | 19% | 29.1 | 33.3 | -13% |
EBITA margin[2] | 10.5% | 17.2% | - | 11.2% | - | 10.7% | 14.3% | - |
Net income | 6.2 | 10.1 | -39% | 5.4 | 15% | 19.1 | 23.0 | -17% |
EPS diluted, SEK | 1.82 | 3.02 | -40% | 1.56 | 17% | 5.62 | 6.81 | -17% |
Measures excl. restructuring charges[2] | ||||||||
Gross margin excluding restructuring charges | 41.5% | 43.5% | - | 41.4% | - | 41.8% | 43.5% | - |
EBIT excluding restructuring charges | 8.1 | 12.3 | -34% | 7.2 | 12% | 27.4 | 32.3 | -15% |
EBIT margin excluding restructuring charges | 9.4% | 17.3% | - | 10.6% | - | 10.1% | 13.9% | - |
EBITA excluding restructuring charges | 9.3 | 12.8 | -27% | 7.7 | 21% | 29.5 | 33.8 | -13% |
EBITA margin excluding restructuring charges | 10.8% | 17.9% | - | 11.3% | - | 10.9% | 14.6% | - |
Free cash flow before M&A | 16.9 | 13.5 | 25% | 2.5 | - | 22.2 | 32.1 | -31% |
Net cash, end of period | 23.3 | 65.8 | -65% | 13.4 | 74% | 23.3 | 65.8 | -65% |
[1] Sales adjusted for comparable units and currency
[2] Non-IFRS financial measures are reconciled at the end of this report to the most directly reconcilable line items in the financial statements
Comments from
With our fourth quarter result we are on track to deliver on our long-term EBITA target of 15-18% by 2024. We remain fully committed to our strategic ambitions and have full confidence in the long term. During the quarter, we made measurable progress towards achieving these ambitions, against a backdrop of broad macroeconomic headwinds. As we said during our Capital Markets Day, there are near-term uncertainties, however, we are still in the early phase of global 5G rollout and widespread enterprise digitalization.
Our strategy remains rooted in driving sustainable growth and maximizing value across all stakeholders. We are confident that we have the right team and strategy in place to extend our leadership in mobile networks; achieve profitability in
This quarter, we signed a multiyear IPR patent license agreement with a major licensee. This positive outcome positions us well to capture further 5G patent license agreements among handset manufacturers and in new areas such as consumer electronics and IoT. We expect significant IPR revenue growth over the coming 18-24 months.
Group Net Sales[1] grew by 1% YoY, of which IPR revenues contributed with 5 percentage points. EBITA[2] of
Our Networks business grew in
During the quarter, we were able to largely offset the impact of high inflation with commercial activities, including product substitution. We continue to invest in technology to enhance performance and cost leadership, expand our global footprint and improve productivity and capital efficiency across the supply chain.
In
Within Enterprise, we continue to leverage our strength in mobile networks to accelerate our business. Organically, sales[1] grew by 15%. Our Enterprise strategy is underpinned by two pillars: First, our Enterprise Wireless Solutions business, focused on capturing the multi-billion-dollar enterprise market opportunity for 5G optimized networking and security solutions. Second, through the Global Communication Platform business, we will enable new ways of monetizing 5G by transforming how network features such as speed and latency are globally exposed, consumed and paid for. Enterprise is a growth engine for the company, and we continue to fine-tune our portfolio to maximize profitability. To this end, we announced the divestment of our loss-making IoT business in Q4. We continue to invest to strengthen our enterprise go-to-market channel and broaden our enterprise product portfolio. In addition, we are increasing our investments in developing the network APIs that will underpin the long-term growth in Global Communication Platform. From 2024 and beyond our enterprise business will be a major driver of
We remain positive on the long-term outlook for our business. However, the near-term outlook, as we also described at our Capital Markets Day, remains uncertain. We expect operators to continue to sweat assets in response to macroeconomic headwinds. In addition, we expect operators to adjust inventory levels as supply situation eases. These trends started to impact Networks in Q4 and we expect them to continue at least during the first half of 2023. At the same time, we expect good growth from market share wins, albeit not fully offsetting the near-term headwinds. In the longer-term, capex is driven by traffic growth. Given near-term macroeconomic headwinds, we expect Enterprise to grow somewhat slower than during 2022.
While the quarter saw the easing of supply chain related challenges, the inflationary environment persisted. We remain focused on navigating near-term headwinds through our commercial initiatives but also by making
We remain focused on reaching a resolution with the US authorities regarding the previously announced Deferred Prosecution Agreement (DPA) breach notices received by the company. In this regard, we have this quarter booked a
Separately, and with respect to the past matters described in the company's 2019 Iraq investigation report, we continue to thoroughly investigate the facts in full cooperation with the DOJ and the
Building a culture of ethics and integrity remains a top priority, and I am convinced that best-in-class compliance will give our company a competitive advantage. Both the company's resolution with the DOJ and the
In conclusion, I would like to thank all my colleagues for their diligence and efforts to deliver long-term stakeholder value as they continue to execute on our strategy. The commitment and passion of our team is what inspires me the most as we redefine both our company and our industry. The actions we have taken have positioned us to be a true industry leader.
President and CEO
[1] Sales adjusted for comparable units and currency
[2] Excluding restructuring charges
NOTES TO EDITORS
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