Ericsson reports second quarter results 2021

Ericsson said 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.
Ericsson LTE network supplierGross margin excl. 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. 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. 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.

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.