Ericsson third quarter report 2012

STOCKHOLM, SWEDEN--(Marketwire - Oct 26, 2012) -

* Sales decreased -2% YoY and -1% QoQ.

* Networks decreased YoY due to weaker sales in parts of Europe, China, Korea and Russia as well as continued decline in CDMA equipment sales. This was partly offset by strong development in North America. Operating margin was stable QoQ.

* Global Services increased sales 19% YoY. Operating margin increased QoQ.

* The underlying business mix, with higher share of coverage projects than capacity projects, is expected to prevail short-term.

* Operating margin decreased YoY due to higher share of coverage projects and modernization projects in Europe. QoQ operating margin increased due to lower opex.

* Cash flow from operations SEK 7.0 b. and cash conversion YTD at 52%.

* Net income SEK 2.2 b., down from SEK 3.8 b. YoY, impacted by lower profitability in Networks.

* EPS diluted SEK 0.67 (1.18). EPS Non-IFRS SEK 1.04 (1.52).

--------------------------------------------------------------------------- Q3 Q3 YoY Q2 QoQ Nine m. Nine m. SEK b. 2012 2011 Change 2012 Change 2012 2011 --------------------------------------------------------------------------- Net sales 54.6 55.5 -2% 55.3 -1% 160.8 163.3 --------------------------------------------------------------------------- Of which Networks 26.9 32.5 -17% 27.8 -3% 82.0 99.1 --------------------------------------------------------------------------- Of which Global Services 24.3 20.4 19% 24.1 1% 69.0 56.9 --------------------------------------------------------------------------- Of which Support Solutions 3.3 2.6 29% 3.5 -5% 9.8 7.2 --------------------------------------------------------------------------- Gross margin 30.4% 35.0% - 32.0% - 31.9% 37.1% --------------------------------------------------------------------------- EBITA margin excl JVs and Sony Ericsson sale 8.7% 13.4% - 8.0% - 8.2% 13.0% Operating income excl JVs and Sony Ericsson sale 3.7 6.3 -42% 3.3 11% 9.7 17.6 Operating margin excl JVs and Sony Ericsson sale 6.7% 11.3% - 5.9% - 6.1% 10.8% --------------------------------------------------------------------------- EBITA margin excl JVs 8.7% 13.4% - 8.0% - 13.0% 13.0% --------------------------------------------------------------------------- Operating income excl JVs 3.7 6.3 -42% 3.3 11% 17.4 17.6 --------------------------------------------------------------------------- Operating margin excl JVs 6.7% 11.3% - 5.9% - 10.8% 10.8% --------------------------------------------------------------------------- Of which Networks 5% 13% - 5% - 5% 15% --------------------------------------------------------------------------- Of which Global Services 8% 9% - 6% - 6% 7% --------------------------------------------------------------------------- Of which Support Solutions 14% 3% - 12% - 9% -7% --------------------------------------------------------------------------- Operating income incl JVs 3.1 5.7 -45% 2.1 49% 14.3 15.7 --------------------------------------------------------------------------- Income after financial items 3.2 5.9 -45% 1.8 81% 14.1 16.3 --------------------------------------------------------------------------- Net income 2.2 3.8 -42% 1.2 81% 12.2 11.1 --------------------------------------------------------------------------- EPS diluted, SEK 0.67 1.18 -43% 0.34 97% 3.77 3.42 --------------------------------------------------------------------------- EPS (Non-IFRS), SEK(1)) 1.04 1.52 -32% 0.78 33% 4.96 4.73 --------------------------------------------------------------------------- Cash flow from operations 7.0 1.6 - -1.4 - 6.3 4.5 --------------------------------------------------------------------------- Cash conversion 149% 24% - -43% - 52% 25% --------------------------------------------------------------------------- Net cash, end of period 29.0 35.4 -18% 25.9 12% 29.0 35.4 --------------------------------------------------------------------------- (1) EPS, diluted, excl. amortizations, write-downs of acquired intangible assets and restructuring. Nine months 2012 includes a gain from the divestment of Sony Ericsson of SEK 7.7 b. ---------------------------------------------------------------------------

Comments from Hans Vestberg, President and CEO

"Demand for Global Services and Support Solutions continued to be good, while Networks showed a decline in sales YoY. In North America Networks sales developed favorably, despite the expected decline in CDMA sales, while parts of Europe, China, Korea and Russia continued to be slow," says Hans Vestberg, President and CEO of Ericsson (NASDAQ: ERIC). "The growing Global Services business contributes not only with topline but also with stable operating profitability and, together with Support Solutions, represented more than 50% of Group sales.

We believe that the fundamentals for longer-term positive development for the industry remain solid. There are now one billion smartphones in the world and the number is expected to reach three billion in 2017. The introduction of new devices and applications put higher consumer demands on network performance and quality. This drives demand for our technology, software and services capabilities. However, at the same time, we see a continued macroeconomic slow down and political unrest in parts of the world, which has led to more cautious operator spending in some parts of the world.

Our joint venture ST-Ericsson is still in a challenging situation although performance improved in the quarter. Ericsson, together with STMicroelectronics, is continuously reviewing the strategy and business case. We remain confident that ST-Ericsson has a strategic position in the industry to enable the device ecosystem.

We have a strong portfolio, position and capabilities in place. However, our profitability is not satisfactory. Operating expenses for comparable units have declined -7% YoY and we also see steady improvements in execution of projects. These improvements are encouraging, but not enough and we will continue to proactively identify and execute additional efficiency gains and cost reductions," 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/2012/9month12-en.pdf

Editor's note

To read the complete report with tables, please go to: www.ericsson.com/res/investors/docs/q-reports/2012/9month12-en.pdf

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), October 26, 2012. 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 October 26, 2012.

Third quarter report 2012: http://hugin.info/1061/R/1652649/533557.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

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