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).
|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|
|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|
|EPS diluted, SEK||0.67||1.18||-43%||0.34||97%||3.77||3.42|
|EPS (Non-IFRS), SEK1)||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|
|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, news, filings). "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.
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