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Ericsson’s 2015 Sales Grows 8 Percent Thanks To Chindia

Ericsson – Hans Vestberg
Ericsson's-2015-Sales-Grows-8-Percent-Thanks-To-Chindia
Hans Vestberg, president and chief executive officer, Ericsson, receives the 2016 Hunger Hero Award

Ericsson’s 2015 full year sales has grown by 8 percent to reach SEK 247 billion thanks to sales growth in India, North America and China.

India continues to be the top third country with 5% contribution to overall net sales in the FY15. Full year sales for India grew by percent over the previous year whereas year on year growth for India in Q4 is 34 percent.

The reported Q4 sales increased by 8 percent YoY to reach SEK 73.6 billion. In North America, mobile broadband investments remained stable, with additional hardware sales in the quarter. 4G deployments in Mainland China recovered after a weak third quarter.

The global cost and efficiency program is progressing according to plan, contributing to lower operating expenses YoY. Operating margin increased to 15 percent YoY with improvements in all segments.

Full year sales growth in India, North America and China as well as higher IPR licensing revenues were partly offset by lower sales in Japan, Russia and Brazil. Sales, adjusted for comparable units and currency, decreased by -5 percent.

Operating income, excluding restructuring charges, increased to SEK 26.8 billion with improvements in all segments. Cash flow from operating activities was SEK 20.6 billion and cash conversion was 85 percent.

The board of directors will propose a dividend for 2015 of SEK 3.70 per share, an increase of 9 percent compared to last year.

Hans Vestberg, president and CEO, Ericsson said, “Reported sales in the quarter increased by 8 percent YoY. Sales, adjusted for comparable units and currency, decreased by -1 percent. Sales in North America grew YoY as well as QoQ. Profitability improved YoY, with higher IPR licensing revenues and lower operating expenses as main contributors. Network Rollout continued on its path to sustainable profitability.”

We saw a recovery in Networks in the quarter. In North America, the mobile broadband investments remained stable, with additional hardware sales in the quarter. 4G deployments in Mainland China recovered after a weak third quarter.

Emerging markets such as India, Indonesia and Mexico remained strong while markets such as Russia, Brazil and parts of the Middle East continued to be weak, mainly due to macro-economic developments.

Investments in Europe were driven by the transition from 3G to 4G and capacity enhancements. Operators increased their investments in telecom core networks, driven by deployment of new service offerings such as VoLTE (Voice over LTE).

In the quarter, sales growth in Global Services was mainly driven by growth in systems integration and managed services while network rollout sales declined.

We ended the year with good YoY sales development in TV and Media which contributed to growth in Support Solutions.

Ericsson’s IPR strategy has been successful over the last five years as we have more than tripled our IPR licensing revenues. After the recent announcements of two important patent license agreements, we now have agreements with the majority of handset suppliers.

In 2015, we had good progress in all our targeted growth areas and we continued to invest in order to establish leadership. Sales grew by more than 20 percent YoY, reaching SEK 45 billion, corresponding to 18 percent of group sales.

The strategic partnership with Cisco, announced in the quarter, will give us strong end-to-end network solutions with a complete IP portfolio. As a result of the partnership, we will extend our addressable market and expect to generate $1 billion or more of additional sales by 2018. Additional sales are expected to be accretive to operating income in 2016.

Operating margin increased to 15 percent YoY with improvements in all segments. The major contributors to the profit improvement were higher IPR licensing revenues and lower operating expenses, mainly in networks.

Tags : BrazilChinaChIndiaciscoEricssonFeaturednewsglobal servicesHans VestbergIndiaIP portfolioIPR LicensingJapanNorth AmericaRussiasupport solutionsTV and mediavoice over LTEVoLTE
TA Staff

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