STOCKHOLM, Jan. 25, 2022 /PRNewswire/ --
Fourth quarter
highlights
- Group organic sales grew by 2% YoY. Sales in Mainland China
declined by SEK -1.8 b. (-3
percentage points), meaning that excluding Mainland China organic
sales growth was 5%. Reported sales were SEK
71.3 (69.6)
b.
- Gross margin improved in all segments to 43.5% (40.6%)
excluding restructuring charges. Reported gross margin was 43.2%
(40.6%).
- EBIT excluding restructuring charges improved to SEK 12.3 b. (17.3% EBIT margin) from SEK 11.0 b. (15.8% EBIT margin) YoY. Reported
EBIT was SEK 11.9 (11.0)
b.
- Networks organic sales increased by 3%, despite significant
market share loss in Mainland China. EBIT margin excluding
restructuring charges was 23.6%
(21.5%).
- Digital Services organic sales were flat and EBIT excluding
restructuring charges was SEK 0.4
(0.5)
b.
- Reported net income was SEK 10.1
(7.2) b. EPS diluted was SEK 3.02
(2.26).
Full-year
highlights
- Group organic sales grew by 4%, with an increase in Networks
sales of 7%. Reported sales were stable at SEK 232.3 b. The loss of market share in Mainland
China impacted sales by SEK -7.7 b.
and the growth rate by -3 percentage points, meaning that excluding
Mainland China, organic sales growth was
8%.
- Gross margin excl. restructuring charges was 43.5% (40.6%),
driven primarily by strengthened operational leverage in
Networks.
- EBIT margin excluding restructuring charges improved to 13.9%
(12.5%), reaching the 2022 group target already in
2021.
- Reported net income was SEK 23.0
(17.6) b. EPS diluted was
SEK 6.81
(5.26).
- Free cash flow before M&A amounted to SEK 32.1 (22.3) b.
Net cash was SEK 65.8 (41.9) b. on December
31,
2021.
- The Board of Directors will propose a dividend for 2021 of
SEK 2.50 (2.00) per share to the
AGM.
SEK b.
|
Q4
2021
|
Q4
2020
|
YoY
change
|
Q3
2021
|
QoQ
change
|
Jan-Dec
2021
|
Jan-Dec
2020
|
YoY
change
|
Net sales
|
71.3
|
69.6
|
3%
|
56.3
|
27%
|
232.3
|
232.4
|
0%
|
Sales growth adj.
for comparable units and currency [1]
|
-
|
-
|
2%
|
-
|
-
|
-
|
-
|
4%
|
Gross margin
[1]
|
43.2%
|
40.6%
|
-
|
44.0%
|
-
|
43.4%
|
40.3%
|
-
|
EBIT
|
11.9
|
11.0
|
8%
|
8.8
|
34%
|
31.8
|
27.8
|
14%
|
EBIT margin
[1]
|
16.6%
|
15.8%
|
-
|
15.7%
|
-
|
13.7%
|
12.0%
|
-
|
Net
income
|
10.1
|
7.2
|
41%
|
5.8
|
76%
|
23.0
|
17.6
|
30%
|
EPS diluted,
SEK
|
3.02
|
2.26
|
34%
|
1.73
|
75%
|
6.81
|
5.26
|
29%
|
Measures excl.
restructuring charges [1]
|
Gross margin
excluding restructuring charges
|
43.5%
|
40.6%
|
-
|
44.0%
|
-
|
43.5%
|
40.6%
|
-
|
EBIT excluding
restructuring charges
|
12.3
|
11.0
|
12%
|
8.8
|
39%
|
32.3
|
29.1
|
11%
|
EBIT margin excluding
restructuring charges
|
17.3%
|
15.8%
|
-
|
15.7%
|
-
|
13.9%
|
12.5%
|
-
|
Free cash flow before
M&A
|
13.5
|
12.8
|
6%
|
13.0
|
4%
|
32.1
|
22.3
|
44%
|
Net cash, end of
period
|
65.8
|
41.9
|
57%
|
55.7
|
18%
|
65.8
|
41.9
|
57%
|
[1] 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 Börje Ekholm, President and CEO of Ericsson
(NASDAQ:ERIC)
Our strategy to invest in technology leadership and grow market
share in our core business underpinned a robust financial
performance in 2021 and ensured a good Q4 for Ericsson overall. Our
commitment to pursue value from growth in wireless enterprise took
a significant step forward with the announcement of our ambition to
acquire Vonage, which will give us the foundation to develop a
Global Network Platform to drive innovation on top of the 5G
networks. This adds to already strong progress in 2021 in our
organic enterprise portfolio - Dedicated Networks and IoT - and
follows the successful integration of Cradlepoint. With a full-year
EBIT margin[2] of 13.9%, we reached our 2022 target one year early,
while absorbing significantly increased investments in R&D,
Enterprise, cybersecurity and compliance. Fourth quarter organic
sales[1] grew by 2%, gross margin[2] improved to 43.5% (40.6%), the
EBIT margin[2] reached 17.3% (15.8%) and free cash flow before
M&A amounted to SEK 13.5
(12.8) b.
Networks sales[1] grew organically by 3% in Q4, despite
considerably lower volumes in Mainland China. Gross margin[2]
improved to 46.4% (43.5%). The 2021 financial performance and
continued market share gains outside of Mainland China are
underpinned by our investments in technology leadership. We have so
far been able to mitigate the inflationary pressure by continuously
evolving our product portfolio. We strengthened our
industry-leading portfolio during the year with ultra-light,
energy-efficient Massive MIMO radios for enhanced network
performance and our new Cloud RAN portfolio for 5G mid band.
In Q4, Digital Services organic sales[1] were stable YoY.
Excluding sales in Mainland China, where we had considerably lower
volumes, sales[1] increased by 3% YoY in the fourth quarter. Fourth
quarter gross margin[2] improved to 43.4% (41.0%) with a positive
EBIT[2] of SEK 0.4 b. During 2021 we
continued to invest in R&D, particularly for the cloud native
offerings and our portfolio is now substantially transformed
compared with a few years ago. We will continue to increase
investments in our 5G portfolio, including in our orchestration
offerings, to further strengthen our long-term competitiveness and
position us in an open world for future standards and technologies.
We expect profitability to gradually improve and over time exceed
our original EBIT margin[2] target of 10–12%.
Managed Services delivered a gross margin[2] of 18.9% (17.7%) in
Q4. For the full year of 2021 organic sales[1] declined by -6% as
new deals did not offset lower customer demand, contract rescoping
and planned exits. To grow profits, we will accelerate the ongoing
transformation towards a more software-driven offering with higher
margin potential.
Emerging Business and Other delivered an improved gross
margin[2] of 35.2% (33.8%) in Q4. For full-year 2021, gross
margin[2] improved to 37.3% (28.0%), where Cradlepoint's
performance is the main contributor. We are seeing increasing
momentum for our 5G portfolio in Dedicated Networks and
Cradlepoint.
IPR revenues amounted to SEK 2.4
(2.6) b., including a new smaller
agreement with retroactive impact. With our strong position in 5G
and leading, broad patent portfolio we believe we are well
positioned to conclude pending and future patent license renewals.
Ericsson's IPR licensing revenues continue to be affected by
several expiring patent license agreements pending renewal and 5G
license negotiations. This will lead to estimated revenues from IPR
licensing of SEK 1.0-1.5 b. in Q1, unless renewals are signed in the
first quarter. The actual financial impact will depend on the
timing as well as terms and conditions of new agreements.
In October, we received correspondence from the Department of
Justice that we had breached our obligations under the Deferred
Prosecution Agreement by failing to provide certain documents and
factual information. At this point in time, we cannot provide
further information or predict the outcome. We continue to invest
in improving our Ethics and Compliance program in accordance with
our strategy and objectives. We are firmly committed to
continuously develop and improve in the years to come to ensure a
sustainable compliance program.
Free cash flow before M&A was SEK
32.1 (22.3) b. for full-year
2021, the highest in Ericsson's history, further strengthening the
net cash position to SEK 65.8
(41.9) b. During the last few years,
our strategy has been to increase the flexibility of our business
and reduce the capital tied up in the business. Consequently, we
are now able to operate the Company with less capital than in the
past. The Board will propose a dividend of SEK 2.50 (2.00) per share to the AGM, underlining
the confidence in Ericsson's business going forward.
Based on current business momentum, we expect fundamentals to
remain strong in our core mobile infrastructure business during
2022. We will continue to increase investments in R&D to
sustain our technology leadership and strengthen our competitive
position to take advantage of the rollout of 5G networks. At the
same time, we will continue our efforts to expand our presence in
the enterprise market. Over time, we expect the enterprise segment
to provide higher growth and profitability than our mobile
infrastructure business. The Group EBIT target[2] for 2022 of
12-14% remains, excluding the Vonage-related segment. With the
different business mix compared to when we set the 2022 target back
in 2018, the target becomes less relevant, and our key focus is
therefore now to accelerate the pace towards reaching our long-term
target of EBITA margin[2] of 15-18%. After delivering an EBITA
margin[2] of 14.6% in 2021, our ambition is to reach the long-term
target no later than in 2-3 years. At that time, we will have a
higher growth profile as a company.
2021 was a successful year for Ericsson and I want to take this
opportunity to thank all my colleagues who relentlessly delivered
on customer commitments while navigating through supply chain
challenges and a raging pandemic. I am proud to be part of this
team!
Stay healthy and well.
Börje Ekholm
President and CEO
[1] Sales adjusted for comparable units and currency
[2] Excluding restructuring charges
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/2021/12month21-en.pdf or
on www.ericsson.com/investors
Video webcast for analysts, investors and journalists
President and CEO Börje Ekholm and CFO Carl Mellander will comment on the report and
take questions at a live video webcast at 9:00 AM CET (8:00 AM
GMT London, 3:00 AM EST New
York).
To join the webcast, please go to www.ericsson.com/investors
To ask a question, please call:
Sweden: +46
(0)8 566 426 51 (Toll-free Sweden: 0200 883 685)
International/UK: +44 (0)333 300 0804 (Toll-free UK:
0800 358 9473)
US: +1 631 913 1422 (Toll-free US: +1 855 85
70686)
PIN code: 67215644#
Please call in at least 15 minutes before the webcast
starts.
The webcast will be available on-demand after the event and can
be viewed at www.ericsson.com/investors.
FOR FURTHER INFORMATION, PLEASE CONTACT
Contact person
Peter Nyquist, Head of Investor
Relations
Phone: +46 705 75 29 06
E-mail: peter.nyquist@ericsson.com
Additional contacts
Stella Medlicott, Senior Vice
President, Marketing and Corporate Relations
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com
Investors
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Stefan Jelvin, Director, Investor Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Media
Kristoffer Edshage, Director Corporate Media
Phone: +46 722 20 44 46
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
This is information that Telefonaktiebolaget LM Ericsson is
obliged to make public pursuant to the EU Market Abuse Regulation.
The information was submitted for publication, through the agency
of the contact person set out above, at 07:00 CET on January 25,
2022.
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|
Ericsson fourth
quarter and full year report 2021
|