STOCKHOLM, Nov. 10, 2020 /PRNewswire/ --
- Turn-around completed establishing a strong platform to
accelerate growth and investments in 5G enterprise
applications
- New long-term EBITA margin target, excluding restructuring, for
the Group of 15% - 18%
- New long-term Free Cash flow (before M&A) target of 9% -
12% of sales
- The 2022 operating margin target, excluding restructuring, of
12 - 14% remains for the Group with some adjustments between
segments
Ericsson (NASDAQ: ERIC) will outline revised strategic growth
ambitions and new long-term financial targets at its Capital
Markets Day 2020 on November 10,
2020.
Executives from across the business will join President and CEO,
Börje Ekholm, to share insights from the company's three-year
focused turnaround, and articulate ambitions to strengthen the
Group, with a particular emphasis on long-term growth in the
enterprise market.
Since the launch of the focused business strategy in 2017, the
company has restored profitability, delivered organic growth and is
on track towards its 2020 financial targets. With global technology
leadership and growing market share in 5G the company is now
turning to the next phase of its journey - growing the business
through incremental core business growth and acceleration of
enterprise focus.
Börje Ekholm, President and CEO, says: "The execution on our
focused strategy has delivered a turnaround which creates a robust
base for the future and delivered global leadership in 5G today.
The Covid-19 pandemic is a humbling reminder that wireless
connectivity fundamentally underpins future global growth and so
urgent deployment is critical. It will support a global innovation
opportunity for consumers and enterprise which touches every corner
of our world and every sector of the economy. Our future value is
inextricably linked to wider economic growth and we are
well-positioned to play a lead role in the ecosystem of operators,
businesses, and decision-makers on whose combined shoulders 5G's
full success rests."
Long-term targets
Beyond 2022, the long-term profitability target is an EBITA
margin excluding restructuring charges of 15% - 18% for the Group.
The company aims to achieve this through improvement activities
across the Group. Growth as well as gross margin improvements,
driven by software sales and operational leverage, will be the
cornerstones in reaching the long-term targets.
The company will continue its focus on free cash flow (before
M&A) with a target of 9% - 12% of sales.
2022 profitability targets
The 2022 profitability target for the Group remains unchanged
with an operating margin of 12% - 14%, excluding restructuring
charges. Each segment target for 2022 is updated with operating
margin targets per segment detailed in the table below.
The increased target in segment Networks is mainly driven by our
foot-print gains in the market. The 2022 operating margin target
for Networks is raised to 16% - 18% (15% - 17%).
In segment Digital Services, the priority continues to be
restoring profitability. Due to the increase in R&D spend in
combination with the decline in legacy sales the Operating Margin
target is adjusted to 4% - 7% (10% - 12%) in 2022.
In segment Managed Services, expected margin growth will be
achieved through R&D investments in Artificial Intelligence and
automation. The 2022 target for Managed Services is raised to 9% -
11% (8% - 10%).
In segment Emerging Business and Other focus continues to be on
establishing new businesses which drive organic growth. Revenue
growth will be targeted through the rapid and disciplined product
deployment in 5G and IoT as well as the recent acquisition of
Cradlepoint.
Financial targets 2022 and long-term
Investor Update 2019 numbers in brackets.
% of sales
|
Networks
|
Digital
Services
|
Managed
Services
|
Emerging Business and
Other
|
Group
|
2022 EBIT excluding
restructuring
|
16% - 18%
(15% -
17%)
|
4% - 7%
(10% -
12%)
|
9% - 11%
(8% - 10%)
|
-
|
12%-14%
(no
change)
|
Long-term target
EBITA excluding restructuring
|
|
|
|
|
15% - 18%
|
Long-term Free Cash
Flow (before M&A)
|
|
|
|
|
9% - 12%
|
Addition to Risk Factors (as published in Annual and
Quarterly Reports)
Ongoing geopolitical and trade uncertainty from a range of
factors may have a material adverse impact on Ericsson's business,
operations, business prospects and consequently on operating
results, financial conditions and our ability to meet its
targets. These uncertainties, include the effects from
ongoing trade disputes - notably between the US and China, and the uncertainty on how the change
in US administration following the result of the 2020 Presidential
Election may impact that trade dispute; and uncertainties for the
future bilateral trading relationship between Sweden and China as a result of the decision of the
Swedish Post and Telecom Authority to exclude Chinese vendors from
participation in 5G.
Speakers and details of the event
Börje Ekholm, President and CEO, and Carl Mellander, CFO, will be joined by members
of the company's Executive Team. The speakers include Erik Ekudden,
CTO, Fredrik Jejdling, Head of
Business Area Networks, Jan
Karlsson, Head of Business Area Digital Services,
Peter Laurin, Head of Business Area
Managed Services, Åsa Tamsons, Head of Business Area Technologies
and New Businesses, Niklas Heuveldop, Head of Market Area North
America, and Chris Houghton, Head of
Market Area North East Asia.
Ericsson's Capital Markets Day event can be accessed via the
Ericsson website:
https://www.ericsson.com/en/investors/events-and-presentations/CMD2020
Presentation materials can also be downloaded from the website
once the webcast has started.
NOTES TO EDITORS:
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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 contact
Stella
Medlicott, Senior Vice President, Marketing and Corporate
Relations
Phone: +46 730 95 65 39
E-mail: media.relations@ericsson.com
Investors
Stefan Jelvin, Director, Investor
Relations
Phone: +46 709 86 02 27
E-mail: stefan.jelvin@ericsson.com
Lena Häggblom, Director, Investor Relations
Phone: +46 72 593 27 78
E-mail: lena.haggblom@ericsson.com
Media
Peter Olofsson,
Head of Corporate Communications
Phone: +46 702 67 34 45
E-mail: media.relations@ericsson.com
Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
About Ericsson
Ericsson enables communications service providers to capture the
full value of connectivity. The company's portfolio spans Networks,
Digital Services, Managed Services, and Emerging Business and is
designed to help our customers go digital, increase efficiency and
find new revenue streams. Ericsson's investments in innovation have
delivered the benefits of telephony and mobile broadband to
billions of people around the world. The Ericsson stock is listed
on Nasdaq Stockholm and on Nasdaq New York. www.ericsson.com
Forward-looking statements
This release includes forward-looking statements, including
statements reflecting management's current views relating to the
growth of the market, future market conditions, future events,
financial condition, and expected operational and financial
performance, including, in particular the following:
- Our goals, strategies, planning assumptions and operational or
financial performance expectations
- Industry trends, future characteristics and development of the
markets in which we operate
- Our future liquidity, capital resources, capital expenditures,
cost savings and profitability
- The expected demand for our existing and new products and
services as well as plans to launch new products and services
including research and development expenditures
- The ability to deliver on future plans and to realize potential
for future growth
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cooperation activities and joint ventures
- The time until acquired entities and businesses will be
integrated and accretive to income
- Technology and industry trends including the regulatory and
standardization environment in which we operate, competition and
our customer structure.
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including any underlying assumptions, are forward-looking
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generally beyond our control that could cause actual results to
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by, the forward-looking information and statements.
Important factors that could affect whether and to what extent
any of our forward-looking statements materialize include, but are
not limited to, the factors described in the section "Risk Factors"
in the latest interim report, and in "Risk Factors" in the Annual
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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 10:00 pm CET on November
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Ericsson Capital
Markets Day 2020
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