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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 could negatively affect our business.
Please read our earnings reports and our most recent
annual report for a better understanding of these risks and uncertainties.
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CARL-HENRIC SVANBERG
President and CEOAn exciting year
Sales up 17% - profit of SEK 36.0 b.
Services up 30% - 100 million subscribers
Breakthrough year for HSPA, focus on all-IP and multimedia
Marconi successfully integrated - Redback acquired
Record performance by Sony Ericsson
~70 operators - 100 networks - 100 m. WCDMA subscribers
Supporting our customers in driving the industry
– Cingular, E-Mobile, Hutch, MTN, Softbank, Telstra, Vodafone
Ericsson in the lead – technology, performance, share
Commercial 3G/HSPA networks
~70 operators - 100 networks - 100 m. WCDMA subscribers
Supporting our customers in driving the industry
– Cingular, E-Mobile, Hutch, MTN, Softbank, Telstra, Vodafone
Ericsson in the lead – technology, performance, share
Eco system in place
– 130 devices incl. 50 phones - prices quickly decreasing
Source: Global mobile Suppliers Association, Jan, 2007
Commercial 3G/HSPA networks
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
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
Financial highlights
Sales 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
Steady sales growth 2003-2006
Sales CAGR 15% since 2003
0 50000 100000 150000 200000 250000 2003 2004 2005 2006 0 50000 100000 150000 200000 250000 2003 2004 2005 2006 SEK m.
Financial highlights
Margins 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 % -20,00% -10,00% 0,00% 10,00% 20,00% 30,00% Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406
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 -8000 -6000 -4000 -2000 0 2000 4000 6000 8000 10000 12000 14000 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 SEK m.
Cash flow analysis
Full year 2006 Net income 26
Working capital -14
Inventory, work in progress -2 Receivables -10 Others -2
Others 0
Cash flow 12
SEK b.
Cash flow analysis
Full year 2006 Net income 26
Working capital -14
Inventory, work in progress -2
Receivables -10
Others -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%
Cash flow analysis
Full year 2006 Net income 26
Working capital -14
Inventory, work in progress -2
Receivables -10
Others -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.
Regional update, Q4 2006
- Ericsson sales (BSEK) and growth (%) year-over-year
Opex and outsourcing on operators agendas
Growing traffic from lower tariffs and multimedia offers
Growth driven by services and acquired Marconi sales
Western Europe
FY: 51.9 b. +24%
Regional update, Q4 2006
- Ericsson sales (BSEK) and growth (%) year-over-year
Strong growth, particularly in Africa and Middle East
Still 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%
Regional update, Q4 2006
- Ericsson sales (BSEK) and growth (%) year-over-year
Continued high activity, eg. Bangladesh, India, Indonesia
Japan leads global mobile broadband development
Pent up capacity needs in China while waiting for 3G
Asia Pacific
FY: 43.2 b. +42%
Regional update, Q4 2006
- Ericsson sales (BSEK) and growth (%) year-over-year
Strong subscriber growth continues – 16 m. new subscribers
First HSPA launched - Entel PCS in Chile
First phase of Vivo GSM migration completed
Latin America
FY: 16.5 b. -14%
Regional update, Q4 2006
- Ericsson sales (BSEK) and growth (%) year-over-year
Focus on triple play and fiber-to-the-home
Recent spectrum investments expand the market
T-mobile HSPA first phase rolled out in record time
North America
FY: 15.9 b. - 18%
Latin America
Recovery after last year’s slower market
North America
Flattish in mobile systems Opportunities in triple play
Western Europe
Slight growth, potential upside – multimedia and opex focus
Central & Eastern Europe, Middle East & Africa
Solid growth potential
Asia Pacific
Dynamic and growing region with variety of needs
Sony Ericsson highlights
Record 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
Sony Ericsson highlights
Record 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 Pacific
SEK 2.2 b. of Ericsson’s Q4 operating income
Sony Ericsson sales
0 500 1000 1500 2000 2500 3000 3500 4000 EUR m. CAGR 37% CAGR 30%
Sony Ericsson Units thousand
0 5000 10000 15000 20000 25000 30000 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 Q105 Q205 Q305 Q405 Q106 Q206 Q306 Q406 Thusand
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
