Ericsson Reports Second Quarter Results 2020

STOCKHOLM, July 17, 2020 /PRNewswire/ -- Second quarter highlightsAAAAAAAAAAA

Sales were SEK 55.6(54.8) b. Sales adjusted for comparable units and currency were flat YoY.AAAAAAAAAAA

Gross margin excluding restructuring charges improved to 38.2% (36.7%), including the earlier communicated inventory write-down related to Mainland China (SEK -0.9 b., which equals to -1.6 percentage points).AAAAAAAAAAA

Operating income excluding restructuring charges improved to SEK 4.5 b. (8.2% operating margin) from SEK 3.9 b. (7.0% operating margin) driven by improvements in segment Digital Services.AAAAAAAAAAAA

Networks sales[1] increased by 4% YoY. Networks operating margin excluding restructuring chargesA was 14.1% (15.0%) impacted by strategic contracts and the inventory write-down, partly compensated by operational leverage and a favorable business mix.AAAAAAAAAAAA

Digital Services operating income excluding restructuring charges was SEK -0.7(-1.3) b. Gross margin improved driven mainly by higher software sales while sales1 declined by -5%.AAAAAAAAAAAA

Net income was SEK 2.6(1.8) b.AAAAAAAAAAAA

Free cash flow before M&A was SEK 3.2(1.6) b. Net cash June 30, 2020, was SEK 37.5(33.8) b.AAAAAAAAAAA

The Covid-19 pandemic had a limited impact on operating income and cash flow in the quarter.

1 Adjusted for comparable units and currency.Planning assumptions highlights (please see the quarterly report for complete planning assumptions)AAAAAAAAAAA

With current visibility Group financial targets for 2020 and 2022 are maintained.AAAAAAAAAAA

R&D investments in Digital Services are accelerated to capture additional business opportunities. In combination with lower sales, this will likely cause a delay of some quarters in reaching the 2020 financial target. 2022 operating margin target of 10-12% remains firm.

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