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Electronics Production | April 25, 2008

Ericsson reports better result than expected

The year-over-year sales increased by 5%. Growth was negatively affected by a continued weakened USD. Organic growth in constant currencies is estimated to 9% and acquisitions added 2%.
Gross margin amounted to 38.6% (43.0%) and declined year-over-year, mainly due to the business mix with a high proportion of new network buildouts. Sales of software and IPRs were slightly higher in the quarter.

Operating income amounted to SEK 4.3 (8.2) b. in the quarter. Operating expenses amounted to SEK 14.1 (11.8) b. in the quarter due to the impact of the acquired companies, including amortization of intangibles, and increased R&D investments, mainly in LTE, mobile platforms and IPTV. Sony Ericsson's pre-tax profit contributed SEK 0.9 (1.6) b. to Group operating income in the quarter.

Cash flow from operating activities reached SEK 4.7 (4.6) b. in the quarter. The cash flow includes a dividend from Sony Ericsson of SEK 2.2 b. In the first quarter 2007, Sony Ericsson made an advance payment equivalent to a dividend of SEK 3.5 b. The working capital was slightly up. Cash conversion for the quarter amounted to 83% (80%). Days sales outstanding have increased by eight days in the quarter.

Cash flow from investing activities was SEK 3.2 (-9.2) b. First quarter 2007 was impacted by acquisitions.



Cost reductions
As announced in the fourth quarter report 2007, cost reductions of SEK 4 b. in annual savings will be made. These reductions will have full effect in 2009. Restructuring charges are estimated to SEK 4 b. and will be recognized as each activity is decided.

During the first quarter, restructuring costs of SEK 0.8 b., of which SEK 0.2 b. in cost of sales and SEK 0.6 b. in operating expenses, have been taken, primarily for reductions in Western Europe. Charges for the restructuring program in Sweden that was announced in April will be affected in the second quarter 2008.
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November 11 2018 12:47 pm V11.8.0-2