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Ericsson fourth quarter and full year 2012 report

STOCKHOLM, SWEDEN -- (Marketwire) -- 01/31/13 --


Fourth quarter highlights

* Sales increased 5% YoY and 23% QoQ. Segment Networks sales increased 6% YoY driven mainly by North America. QoQ Networks sales grew 31%, primarily due to normal higher year-end business activity

* Operating margin excl. JVs improved to 7.1% (6.4%) YoY mainly driven by increased Networks sales, offset by continued efficiency measures generating restructuring charges with a negative impact on operating margin of close to -3%-points (-1%)

* Net income SEK -6.3 (1.5) b. negatively impacted by a non-cash charge related to ST-Ericsson of SEK -8.0 b. as previously communicated and a reduction of deferred tax assets of SEK -0.5 b. related to lowered corporate tax rate in Sweden

* EPS diluted SEK -1.99 (0.36). EPS Non-IFRS and excluding ST-Ericsson charge SEK 1.07 (0.81)

* Cash flow from operations increased to SEK 15.7 b. driven by reduced working capital.

Full year highlights

* Sales were flat YoY with growth in Global Services and Support Solutions, while Networks sales declined partly due to the 40% decline of CDMA equipment sales

* Operating margin, excluding JVs, was flat at 9.7% (9.6%). Excluding the gain related to the divestment of Sony Ericsson operating margin was 6.4%

* Net income SEK 5.9 (12.6) b. impacted positively by the Sony Ericsson gain of SEK 7.7 b. and negatively by the ST-Ericsson charge of SEK -8.0 b.

* EPS diluted SEK 1.78 (3.77). EPS Non-IFRS SEK 3.55 (5.54)

* Cash flow from operations SEK 22.0 b. Full year cash conversion of 116%, above the target >70%

* Dividend for 2012, proposed by board of Directors of SEK 2.75 (2.50) per share.

---------------------------------------------------------------------------
                                                     Full       Full   Full
                       Q4    Q4    YoY    Q3    QoQ  year       year   year
 SEK b.             2012   2011 Change  2012 Change  2012       2011 Change
---------------------------------------------------------------------------
 Net sales           66.9  63.7     5%  54.6    23% 227.8      226.9     0%
---------------------------------------------------------------------------
 Of which Networks   35.3  33.3     6%  26.9    31% 117.3      132.4   -11%
---------------------------------------------------------------------------
 Of which Global                                                        16%
 Services            28.0  27.0     4%  24.3    15%  97.0       83.9
---------------------------------------------------------------------------
 Of which Support                                                       26%
 Solutions            3.6   3.4     6%   3.3     9%  13.5       10.6
---------------------------------------------------------------------------
 Gross margin       31.1% 30.2%      - 30.4%      - 31.6%      35.1%      -
---------------------------------------------------------------------------
 EBITA margin excl
 JVs and Sony
 Ericsson sale       8.8%  8.1%      -  8.7%      -  8.4%      11.6%      -
---------------------------------------------------------------------------
 Operating income
 Excl JVs and Sony
 Ericsson sale       4.8   4.1    17%   3.7    30%  14.5       21.7   -33%
---------------------------------------------------------------------------
 Operating margin
 Excl JVs and Sony
 Ericsson sale       7.1%  6.4%      -  6.7%      -  6.4%       9.6%      -
---------------------------------------------------------------------------
 EBITA margin excl
 JVs                 8.8%  8.1%      -  8.7%      - 11.7%      11.6%      -
---------------------------------------------------------------------------
 Operating income
 excl                                                                    2%
 JVs                  4.8   4.1    17%   3.7    30%  22.2       21.7
---------------------------------------------------------------------------
 Operating margin
 excl                                                                     -
 JVs                 7.1%  6.4%      -  6.7%      -  9.7%       9.6%
---------------------------------------------------------------------------
 Of which Networks     8%    8%      -    5%      -    6%        13%      -
---------------------------------------------------------------------------
 Of which Global                                                          -
 Services              6%    6%      -    8%      -    6%         7%
---------------------------------------------------------------------------
 Of which Support                                                         -
 Solutions             8%    0%      -   14%      -    9%        -5%
---------------------------------------------------------------------------
 Operating income
 incl JVs            -3.8   2.2      -   3.1      -  10.5       17.9
---------------------------------------------------------------------------
 Of which
 ST-Ericsson         -8.5  -0.8      -  -0.6      - -11.7       -2.7      -
---------------------------------------------------------------------------
 Income after
 Financial items     -3.9   1.8      -   3.2      -  10.2       18.1
---------------------------------------------------------------------------
 Net income          -6.3   1.5      -   2.2      -   5.9       12.6
---------------------------------------------------------------------------
 EPS diluted, SEK   -1.99  0.36      -  0.67      -  1.78       3.77   -53%
---------------------------------------------------------------------------
 EPS (Non-IFRS),                                                       -36%
 SEK(1))            -1.40  0.81      -  1.04      -  3.55       5.54
---------------------------------------------------------------------------
 Cash flow from                                                        121%
 operations          15.7   5.5   187%   7.0   125%  22.0       10.0
---------------------------------------------------------------------------
 Cash conversion     227%   79%      -  149%      -  116%        40%      -
---------------------------------------------------------------------------
 Net cash, end of                                                       -2%
 period              38.5  39.5    -2%  29.0    33%  38.5       39.5
---------------------------------------------------------------------------
 (1))  EPS, diluted, excl. amortizations, write-downs of acquired
 intangible assets, restructuring
 Twelve months 2012 includes a gain from the divestment of Sony Ericsson
 of SEK 7.7 b.
---------------------------------------------------------------------------

Comments from Hans Vestberg, President and CEO

"Our segments showed mixed developments during the year with strong growth in Global Services and Support Solutions, while Networks had a more challenging year. Support Solutions went from losses in 2011 into profitability and together with Global Services represented close to 50% of Group sales in 2012, compared to 42% in 2011," says Hans Vestberg, President and CEO of Ericsson (NASDAQ: ERIC).

"During the year profitability was negatively impacted by operating losses in ST-Ericsson, the ongoing network modernization projects in Europe as well as the underlying business mix, with a higher share of coverage projects than capacity projects. With present visibility of customer demand, and with the current global economic development, underlying business mix is expected to gradually shift towards more capacity projects during the second half of 2013.

We ended the year with strong cash flow and a full-year cash conversion well above target. The Board of Directors proposes a dividend for 2012 of SEK 2.75 (2.50) per share, an increase by 10%.

Throughout 2012 North America was our strongest market, driven by continued mobile broadband investments and demand for services. However, regions such as South East Asia and Oceania and Sub-Saharan Africa gradually improved during the year.

In the fourth quarter Networks sales recovered, despite continued expected decline in CDMA. Profitability in Networks improved sequentially due to higher sales and a higher share of software sales. Sales and profitability for Global Services and Support Solutions remained stable.

The quarter was negatively impacted by a non-cash charge related to ST-Ericsson. Following the announcement of STMicroelectronics' intention to exit as a shareholder, Ericsson will explore various strategic options for ST-Ericsson assets. We believe that the modem technology, which we originally contributed to the JV, has a strategic value to the wireless industry.

The work to leverage our strength in the growth areas mobile broadband, managed services and operations and business support systems (OSS/BSS) has continued during the year, with both selective acquisitions and divestments. In addition, we completed the divestment of Sony Ericsson and introduced a new strategy for Support Solutions. Improving profitability, reducing costs and working capital remain high on the agenda also for 2013. While the macroeconomic and political uncertainty continues in certain regions the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market," concludes Vestberg.

You find the complete report with tables in the attached PDF or by following this link: www.ericsson.com/res/investors/docs/q-reports/2012/12month12-en.pdf

Editor's note

To read the complete report with tables, please go to:

www.ericsson.com/thecompany/investors/financial-reports/interim-reports/Q4-report-2012

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), January 31, 2013. An analysts, investors and media conference call will begin at 14.00 (CET).

Live webcast of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors

Video material will be published during the day on www.ericsson.com/broadcast_room

Ericsson discloses the information provided herein pursuant to the Securities Markets Act. The information was submitted for publication at 07.30 CET, on January 31, 2013.

Ericsson fourth quarter and full year 2012:

http://hugin.info/1061/R/1674425/545208.pdf

This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that:

(i) the releases contained herein are protected by copyright and other applicable laws; and

(ii) they are solely responsible for the content, accuracy and originality of the information contained therein.

Source: Ericsson via Thomson Reuters ONE

[HUG#1674425]

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