Ericsson : Ericsson fourth quarter and full year 2012 report

         Ericsson : Ericsson fourth quarter and full year 2012 report

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 Services    28.0   27.0     4%  24.3    15%  97.0  83.9    16%
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 JVs                                                   2%
                            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), SEK^1)    -1.40   0.81      -  1.04      -  3.55  5.54   -36%
Cash flow from operations   15.7    5.5   187%   7.0   125%  22.0  10.0   121%
Cash conversion             227%    79%      -  149%      -  116%   40%      -
Net cash, end of period     38.5   39.5    -2%  29.0    33%  38.5  39.5    -2%
^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

For further information, please contact

Helena Norrman, Senior Vice President, Communications
Phone: +46 10 719 3472
E-mail: investor.relations@ericsson.com or media.relations@ericsson.com

  Investors

Åsa Konnbjer, Director, Investor Relations
Phone: +46 10713 3928
+46 730 825 928
E-mail: investor.relations@ericsson.com

Stefan Jelvin, Director, Investor Relations
Phone: +46 10714 2039
+46 709 860 227
E-mail: investor.relations@ericsson.com

Rikard Tunedal, Director, Investor Relations
Phone: +46 10714 5400
+46 761 005 400
E-mail: investor.relations@ericsson.com

  Media

Ola Rembe, Vice President,
Head of Corporate Communications & PR
Phone: +46 10 719 9727
+46 730 244 873
E-mail: media.relations@ericsson.com

Corporate Communications & PR
Phone: +46 10719 69 92
E-mail: media.relations@ericsson.com

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

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