ericsson fourth quarter report 2006, ceo slides...fourth 2006 full year quarter report carl-henric...
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2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Safe Harbor Statement
This presentation contains forward looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that couldnegatively affect our business. Please read our earnings reports and our most recentannual report for a better understanding of these risks anduncertainties.
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
An exciting year
Sales up 17% - profit of SEK 36.0 b. Services up 30% - 100 million subscribersBreakthrough year for HSPA, focus on all-IP and multimediaMarconi successfully integrated - Redback acquiredRecord performance by Sony Ericsson
Technology leadership – global presence – operational excellence
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
~70 operators - 100 networks - 100 m. WCDMA subscribersSupporting our customers in driving the industry
– Cingular, E-Mobile, Hutch, MTN, Softbank, Telstra, VodafoneEricsson in the lead – technology, performance, share
Source: Global mobile Suppliers Association, Jan, 2007
Commercial 3G/HSPA networks
Breakthrough year for HSPA
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
~70 operators - 100 networks - 100 m. WCDMA subscribersSupporting our customers in driving the industry
– Cingular, E-Mobile, Hutch, MTN, Softbank, Telstra, VodafoneEricsson in the lead – technology, performance, shareEco system in place
– 130 devices incl. 50 phones - prices quickly decreasing
Source: Global mobile Suppliers Association, Jan, 2007
Commercial 3G/HSPA networks
Breakthrough year for HSPA
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Growing focus on all-IP networks
Broadband and triple play accelerate– Multimedia services drive demand for bandwidth and capacity– Intelligent high-capacity routers necessary– Telecom grade a prerequisite
Intelligent IP routers key in telecom networks
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Growing focus on all-IP networks
Broadband and triple play accelerate– Multimedia services drive demand for bandwidth and capacity– Intelligent high-capacity routers necessary– Telecom grade a prerequisite
Acquisition of Redback – closed January 25, 2007– Strengthens all-IP solutions offering– Enhances R&D capabilities– Accelerates fixed line business, US and globally
Intelligent IP routers key in telecom networks
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Financial highlightsSales
Sales SEK 53.7 (45.7) b. in quarter– Up 18% - strong finish
Sales SEK 177.8 (151.8) b. full year– Up 17% - market growth, market share, Marconi acquired sales
Professional services sales SEK 32.3 (24.9) b. full year– Up 30% - 2/3 recurring revenue
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Steady sales growth 2003-2006
Sales CAGR 15% since 2003
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SEK m.
Sales CAGR 18% since 2003 incl. 50% of Sony Ericsson
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Financial highlightsMargins
Q4 gross margin 41.8%, full year 42.2%* (45.7%)Q4 operating margin 22.7%, full year 20.1% (21.8%)Positive effects of Marconi restructuring
Operating margin %
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Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406
*Excluding restructuring charges and capital gains in third quarter 2006
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Financial highlights
Oper. income SEK 12.2 (10.4) b.– SEK 35.8 (33.1) b. full year
Cash flow SEK 8.9 (13.5) b.– SEK 12.2 (19.6) b. full year
EPS SEK 0.61 (0.54)– SEK 1.65 (1.53) full year
Net cash SEK 40.7 (50.6) b.
Operating income
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Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406
SEK m.
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Cash flow analysisFull year 2006
Net income 26
Working capital -14Inventory, work in progress -2Receivables -10Others -2
Others 0
Cash flow 12
SEK b.
Good cash flow in a year of strong growth
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Cash flow analysisFull year 2006
Net income 26
Working capital -14Inventory, work in progress -2Receivables -10Others -2
Others 0
Cash flow 12
SEK b.
Good cash flow in a year of strong growth
Sales growth 17%Inventory 12%
- Factory inventory flat- Work in progress 20%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Cash flow analysisFull year 2006
Net income 26
Working capital -14Inventory, work in progress -2Receivables -10Others -2
Others 0
Cash flow 12
SEK b.
Good cash flow in a year of strong growth
Sales growth 17%Receivables 24%
- Growth related increase SEK 7 b. - Market mix change SEK 3 b.
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Regional update, Q4 2006- Ericsson sales (BSEK) and growth (%) year-over-year
Opex and outsourcing on operators agendasGrowing traffic from lower tariffs and multimedia offersGrowth driven by services and acquired Marconi sales
Western Europe
FY: 51.9 b. +24%Q: 16.8 b. +35%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Regional update, Q4 2006 - Ericsson sales (BSEK) and growth (%) year-over-year
Strong growth, particularly in Africa and Middle EastStill low penetration in large parts of region Voice the main driver but growing demand for mobile internet
Central & Eastern Europe,Middle East & Africa
FY: 50.3 +23%Q: 15.2 b. +22%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Regional update, Q4 2006 - Ericsson sales (BSEK) and growth (%) year-over-year
Continued high activity, eg. Bangladesh, India, IndonesiaJapan leads global mobile broadband developmentPent up capacity needs in China while waiting for 3G
Asia Pacific
FY: 43.2 b. +42%Q: 12.9 b. +34%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Regional update, Q4 2006 - Ericsson sales (BSEK) and growth (%) year-over-year
Strong subscriber growth continues – 16 m. new subscribersFirst HSPA launched - Entel PCS in ChileFirst phase of Vivo GSM migration completed
Latin America
FY: 16.5 b. -14%Q: 4.8 b. -20%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Regional update, Q4 2006 - Ericsson sales (BSEK) and growth (%) year-over-year
Focus on triple play and fiber-to-the-homeRecent spectrum investments expand the marketT-mobile HSPA first phase rolled out in record time
North America
FY: 15.9 b. - 18%Q: 4.0 b. - 22%
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Latin AmericaRecovery after last year’s
slower market
North AmericaFlattish in mobile systemsOpportunities in triple play
Western EuropeSlight growth, potential upside –
multimedia and opex focus
Central & Eastern Europe,Middle East & Africa
Solid growth potential
Asia PacificDynamic and growing region
with variety of needs
Regional comments
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Sony Ericsson highlightsRecord quarter caps record year
Units shipped up 46% to 74.8 million in 2006– 60 m. music phones– 21.6 m. camera phones
Growing market share - 20% UMTS share 2H 2006“Wow” products drive success - Cyber-shot, Walkman etc.
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Sony Ericsson highlightsRecord quarter caps record year
Q4 sales up 64% - full year up 51% to EUR 11 b.Q4 profit up 144% - full year up 153% to EUR 1.3 b.Strong growth in Europe, Latin America and Asia PacificSEK 2.2 b. of Ericsson’s Q4 operating income
Sony Ericsson sales
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CAGR 37%CAGR 30%
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Thusand
2007-02-02© Copyright Telefon AB LM Ericsson 2006. All rights reserved FOURTH QUARTER REPORT 2006
Market outlook
*All estimates refer to market growth compared to previous year, measured in USD. This slide contains forward-looking statements.
The GSM/WCDMA systems market growth 2006 estimated to mid-single digit*
For 2007 we believe that the GSM/WCDMA track within the global mobile systems market, will continue to show mid-single digit growth*
Addressable market for professional services to show good growth*
Well positioned to capture market opportunities
*Measured in USD