Ericsson Reports Second Quarter Results
By The Editors of AGL
- July 21, 2021
- Group organic sales grew by 8 percent YoY, despite a sales decline in Mainland China of SEK -2.5 b. YoY and an IPR revenue decline of SEK -0.5 b. YoY. Reported sales were SEK 54.9 (55.6) b.
- Gross margin excluding restructuring charges improved to 43.4 percent (38.2 percent driven mainly by operational leverage in Networks. Q2 2020 was negatively impacted by inventory write-down and initial 5G deployments in Mainland China. The reported gross margin was 43.4 percent (37.6 percent
- EBIT excluding restructuring charges improved to SEK 5.8 b. (10.6 percent) from SEK 4.5 b. (8.2 percent) YoY driven by Networks. Reported EBIT was SEK 5.8 (3.9) b.
- Organic sales in Networks grew by 11 percent YoY, driven by market share gains. Sales in Mainland China were SEK -2.0 b. lower YoY. The reported EBIT margin was 21.7 percent (13.2 percent).
- Organic sales in Digital Services were stable YoY, despite a sales decline in Mainland China of SEK -0.5 b. YoY. Reported EBIT (loss) was SEK -1.6 (-0.7) b., impacted by a write-down of SEK -0.3 b. for pre-commercial product investments for the Chinese market.
- The reported net income was SEK 3.9 (2.6) b.
- Free cash flow before M&A was SEK 4.1 (3.2) b. supported by higher incoming IPR payments. Net cash per June 30, 2021, was SEK 43.7 (37.5) b.
- The RAN market outlook for 2021 has been updated to 10 percent growth YoY, compared with previously 3 percent growth. Source: Dell’Oro.
The opportunity from enterprise for 5G provides an exciting growth path for Ericsson. Building on the strong foundations of our core business Ericsson continues to take a stepwise approach to invest in growth in Dedicated Networks, IoT, and the wireless portfolio acquired with Cradlepoint. A 20-30 percent annual market growth in enterprise, with opportunities in automation, remote operations and safety management across whole industry sectors such as smart manufacturing, ports and airports, energy, mining, health and agriculture is expected.
Enterprise use cases in 5G – and the continuing growth in 4G – will drive the digital transformation of business globally combining the high performance, low latency and security benefits of wireless over traditional fixed networks. We are confident that wireless will be the first-choice connection for global business in the 5G era.