Form 6-K
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN ISSUER

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

January 26, 2017

Commission File Number

000-12033

LM ERICSSON TELEPHONE COMPANY

(Translation of registrant’s name into English)

Torshamnsgatan 21, Kista

SE-164 83, Stockholm, Sweden

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F. Form 20-F  ☒ Form 40-F  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):  ☐

 

 

 

Announcement of LM Ericsson Telephone Company, January 26, 2017 regarding “Ericsson reports fourth quarter and full year results 2016”.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

TELEFONAKTIEBOLAGET LM ERICSSON (publ)
By:  

/s/    NINA MACPHERSON        

  Nina Macpherson
  Senior Vice President and
  General Counsel
By:  

/s/    HELENA NORRMAN        

  Helena Norrman
  Senior Vice President
  Corporate Marketing & Communications Officer

Date: January 26, 2017


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LOGO

FOURTH QUARTER AND

FULL-YEAR REPORT 2016

Stockholm, January 26, 2017

 

FOURTH QUARTER HIGHLIGHTS

 

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(page)

   Reported sales decreased by -11% YoY, with SEK -5.5 b. lower IPR licensing revenues.   2
   Despite strong sequential sales growth in Networks, the underlying market remained weak in the fourth quarter.   2
   Gross margin was 26.1% (36.3%). Gross margin, excluding restructuring charges, was stable QoQ, but declined to 29.4% (36.6%) YoY, following lower IPR licensing revenues and a higher share of Global Services sales with reduced margin in the quarter.   3
   Operating income was SEK -0.3 (11.0) b. Operating income, excluding restructuring charges, decreased to SEK 4.4 (11.7) b., mainly due to lower IPR licensing revenues.   4
   The cost and efficiency program is tracking towards target. The execution pace was faster than predicted in the quarter, resulting in full-year restructuring charges of SEK 7.6 b. compared with estimated SEK 5.5-6.5 b.   2
   The baseline for current IPR licensing contract portfolio is approximately SEK 7 b. on an annual basis. Smartphone volumes, new agreements and IoT licensing will determine growth opportunities going forward.   2
   Cash flow from operating activities was SEK 19.4 (21.9) b. supported by reduced operating assets.   2
   Effective January 16, 2017, Börje Ekholm assumed the position of President and CEO.   17

FULL YEAR HIGHLIGHTS

   
   Reported sales decreased by -10% mainly due to weaker demand for mobile broadband, especially in markets with a weak macroeconomic environment. IPR licensing revenues declined to SEK 10.0 (14.4) b.   3
   Operating income declined to SEK 6.3 (21.8) b. due to lower sales and a changed business mix in mobile broadband, with a lower proportion of capacity business. This was partly offset by lower operating expenses.   2
   Cash flow from operating activities was SEK 14.0 (20.6) b. Net cash at year-end was SEK 31.2 b.   2
   The Board of Directors will propose a dividend for 2016 of SEK 1.00 (3.70) per share to the AGM.   9

 

SEK b.

   Q4
2016
    Q4
2015
    YoY
change
    Q3
2016
    QoQ
change
    Full year
2016
    Full year
2015
 

Net sales

     65.2        73.6        -11     51.1        28     222.6        246.9   

Sales growth adj. for comparable units and currency

     —          —          -15     —          23     -10     -5

Gross margin

     26.1     36.3     —          28.3     —          29.8     34.8

Gross margin excluding restructuring charges

     29.4     36.6     —          29.4     —          31.4     35.7

Operating income

     -0.3        11.0        -103     0.3        -182     6.3        21.8   

Operating income excluding restructuring charges

     4.4        11.7        -63     1.6        172     13.9        26.8   

Operating margin

     -0.4     15.0     —          0.7     —          2.8     8.8

Operating margin excluding restructuring charges

     6.7     16.0     —          3.1     —          6.2     10.9

Net income

     -1.6        7.0        -123     -0.2        —          1.9        13.7   

EPS diluted, SEK

     -0.48        2.15        -122     -0.07        —          0.52        4.13   

EPS (Non-IFRS), SEK1)

     0.62        2.50        -75     0.34        82     2.66        6.06   

Cash flow from operating activities

     19.4        21.9        -11     -2.3        —          14.0        20.6   

Net cash, end of period 2)

     31.2        41.2        -24     16.3        91     31.2        41.2   

 

1)  EPS, diluted, excl. amortizations and write-downs of acquired intangible assets, and excluding restructuring charges.
2)  The definition of Net cash was changed in Q1 2016 and now excludes post-employment benefits, see accounting policies.

Non-IFRS financial measures are reconciled to the most directly reconcilable line items in the financial statements at the end of this report.

 

1      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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CEO COMMENTS

 

The negative industry trends remained in the fourth quarter. However, sales were positively impacted by favorable currency exchange rates combined with hardware deliveries, previously planned for Q1 2017. Profitability declined YoY following lower IPR licensing revenues mainly due to last year’s agreement with Apple as well as increased restructuring charges. Operating cash flow in the fourth quarter was SEK 19.4 b., supported by reduced operating assets.

Business

Group sales declined by -11% YoY, primarily due to the decrease of SEK -5.5. b in IPR licensing revenues. Full-year IPR licensing revenues were SEK 10.0 (14.4) b.

In 2016, a number of markets, in regions such as Latin America, the Middle East and Africa, were impacted by a weak macroeconomic environment with a negative effect on mobile broadband investments. The underlying market remained weak in the fourth quarter with further weakness in Latin America. However, hardware deliveries previously planned for Q1 2017 were made on customer requests, and had a positive impact on sales in the fourth quarter. In combination with a weakened SEK versus USD, this resulted in a stronger than expected sequential sales growth in mobile broadband. Segment Networks sales increased by 39% QoQ. The new radio platform, Ericsson Radio System (ERS), represented almost 15% of total deliveries of radio units for 2016 and the roll-out of the new platform is gradually ramping up.

Global Services sales declined by -4% YoY mainly due to the reduced scope of a managed services contract in North America. Support Solutions sales declined by -39% YoY, mainly due to lower IPR licensing revenues. In addition, TV & Media sales were lower than expected due to a rapid decline in legacy products.

Sales in the targeted areas declined by -7% YoY, mainly impacted by lower sales in OSS and BSS following the transition from legacy to new products. We are allocating resources into our digital transformation projects to secure important deliveries in 2017. Full-year sales for targeted areas were flat and accounted for 20% of group sales in 2016.

The current industry trends and business mix of coverage and capacity sales in mobile broadband are expected to prevail in 2017. At the Investor Update in November we presented our estimate of the Radio Access Network (RAN) equipment market in USD; a decline by -10% to -15% in 2016 and further decline by -2% to -6% in 2017.

The baseline for current IPR licensing contract portfolio is approximately SEK 7 b. on an annual basis. Smartphone volume growth, agreements with currently unlicensed handset manufacturers and IoT licensing will determine growth opportunities going forward.

Profitability

Operating income decreased to SEK -0.3 (11.0) b. in the quarter, mainly due to lower IPR licensing revenues, higher restructuring charges and lower gross margin.

The cost and efficiency program, first initiated in November 2014, is tracking to target of an annual run rate of operating expenses, excluding restructuring charges, of SEK 53 b. by second half of 2017. Full-year operating expenses, excluding restructuring charges, amounted to SEK 56.4 b., corresponding to a full-year reduction of SEK 5 b. The execution pace was faster than predicted in the quarter resulting in front-loaded restructuring charges. With current plans, we expect restructuring charges of approximately SEK 3 b. for 2017.

Cash flow

Operating cash flow in Q4 was SEK 19.4 b. Operating cash flow was mainly driven by reduced operating assets. Full-year operating cash flow amounted to SEK 14.0 b. Net cash at the end of quarter was SEK 31.2 b.

The Board will propose a dividend of SEK 1.00 (3.70) per share to the AGM. The Board believes that it is prudent to align the dividend level with 2016 earnings adjusted for restructuring charges and the current market outlook. However, the Board expresses confidence in the ongoing actions to improve Ericsson’s financial performance, and has the ambition to increase the dividend over time as our performance improves.

Focus going forward

We as well as our customers are going through a period of rapid change. As a consequence, we are reviewing our priorities in order to set the future direction of the company. This work has been initiated involving key teams in the company, to secure quality of decisions and speed in implementation once decisions are made. Emphasis will be on refining the strategy to focus investments into areas where we both can and must win. Building on the suggestion from the famous ice hockey player Wayne Gretzky; We will focus on skating where the puck will be, not where it has been.

In the near term, stability will be key to establishing a strong base for future growth. This means prioritizing profitability over growth, but also to diligently continue to work on efficiency and effectiveness across all operations. This can and will ensure that we remain at the forefront of technological development – building on the combined strength across products, services and solutions.

Börje Ekholm

President and CEO

 

 

2      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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FINANCIAL HIGHLIGHTS

 

SEK b.

   Q4
2016
    Q4
2015
    YoY
change
    Q3
2016
    QoQ
change
    Full year
2016
    Full year
2015
 

Net sales

     65.2        73.6        -11     51.1        28     222.6        246.9   

Of which Networks

     32.4        37.3        -13     23.3        39     108.3        123.7   

Of which Global Services

     29.4        30.7        -4     24.8        19     101.7        108.0   

Of which Support Solutions

     3.4        5.6        -39     2.9        16     12.5        15.0   

Of which Modems

     —          —          —          —          —          —          0.1   

Gross income

     17.0        26.7        -36     14.5        18     66.4        85.8   

Gross margin (%)

     26.1     36.3     —          28.3     —          29.8     34.8

Research and development expenses

     -8.9        -7.9        12     -7.9        13     -31.6        -34.8   

Selling and administrative expenses

     -8.8        -8.0        10     -6.2        41     -28.9        -29.3   

Other operating income and expenses

     0.4        0.3        43     0.0        —          0.4        0.2   

Operating income

     -0.3        11.0        -103     0.3        -182     6.3        21.8   

Operating margin

     -0.4     15.0     —          0.7     —          2.8     8.8

for Networks

     2     19     —          -1     —          4     10

for Global Services

     1     8     —          4     —          3     8

for Support Solutions

     -12     30     —          -12     —          -8     10

for Modems

     —          —          —          —          —          —          —     

Financial net

     -0.7        -0.7        -6     -0.6        14     -2.3        -1.9   

Taxes

     -0.6        -3.3        -81     0.1        —          -2.1        -6.2   

Net income

     -1.6        7.0        -123     -0.2        —          1.9        13.7   

Restructuring charges

     -4.6        -0.7        —          -1.3        —          -7.6        -5.0   

FOURTH QUARTER COMMENTS

 

Net sales

Sales as reported decreased by -11% YoY, with SEK -5.5 b. lower IPR licensing revenues, mainly related to last year’s agreement with Apple. Sales, adjusted for comparable units and currency, decreased by -15%.

In 2016, a number of markets, in regions such as Latin America, the Middle East and Africa, were impacted by a weak macroeconomic environment with a negative effect on mobile broadband investments. The underlying market remained weak in the fourth quarter with further weakness in Latin America. However, hardware deliveries previously planned for Q1 2017 were made on customer requests in countries such as Japan, Vietnam and Iran, and had a positive impact on sales in the fourth quarter. In combination with a weakened SEK versus USD, this resulted in a stronger than expected sequential sales growth in mobile broadband. Segment Networks sales increased by 39% QoQ.

The Networks business in North America, measured in local currency, declined slightly YoY due to continued reduced investments by one customer. Sales in Europe continued to decline YoY following completion of mobile broadband projects in 2015. Sales in Asia Pacific increased YoY, driven by transition from 3G to 4G.

Global Services sales declined by -4% YoY mainly due to lower sales in Managed Services related to the renewed managed services contract in North America. Support Solutions sales declined by -39% mainly due to lower IPR licensing revenues and lower TV & Media sales.

 

IPR licensing revenues declined by SEK -5.5 b. YoY. IPR licensing revenues were flat QoQ. The baseline for current IPR licensing contract portfolio is approximately SEK 7 b. on an annual basis.

Sales in the targeted areas declined by -7% YoY, mainly impacted by lower sales in OSS and BSS.

Gross margin

Gross margin declined YoY due to lower IPR licensing revenues, higher restructuring charges and a higher share of Global Services sales with reduced margin in the quarter. Sequentially gross margin was flat, negatively impacted by a lower share of IPR licensing revenues, offset by a lower share of services sales.

Cost and efficiency program and restructuring charges

The cost and efficiency program, first initiated in November 2014, is progressing according to plan. Full-year operating expenses, excluding restructuring charges, amounted to SEK 56.4 b., corresponding to a full-year reduction of SEK 5 b. The execution pace was faster than predicted in the quarter resulting in full-year restructuring charges of SEK 7.6 b. compared with the estimated SEK 5.5-6.5 b. As a consequence, restructuring charges will be lower in 2017. With current plans, they are estimated to be approximately SEK 3 b.

The target remains to reduce the annual run rate of operating expenses, excluding restructuring charges, to SEK 53 b. in the second half of 2017 compared with SEK 63 b. in 2014. In addition, focus on reducing cost of sales to improve gross margin remains.

 

 

3      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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LOGO

 

Operating expenses

Operating expenses increased YoY and QoQ, due to higher restructuring charges. Seasonality impacted operating expenses negatively. Currency movements had a negative effect on operating expenses both QoQ and YoY.

Items affecting comparability of SEK -0.4 b., impacted operating expenses negatively in the quarter.

Other operating income and expenses

Other operating income and expenses were stable YoY. The revaluation and realization effects of currency hedge contracts were SEK -0.4 (-0.1) b. The negative effects were more than offset by several positive items. The effects of currency hedge contracts are to be compared with SEK -0.2 b. in Q3, 2016.

The main part of the currency hedge contract balance is in USD. The SEK weakened further against the USD between Sep 30, 2016 (SEK/USD rate 8.62) and Dec 31, 2016 (SEK/USD rate 9.06).

Operating income

Operating income decreased YoY to SEK -0.3 (11.0) b. mainly due to SEK -5.5 b. lower IPR licensing revenues, SEK 3.9 b. higher restructuring charges and lower gross margin. In the quarter operating margin was 0% (15%). Operating margin, excluding restructuring charges, was 7% in the quarter.

Operating income decreased QoQ due to higher restructuring charges and increased operating expenses. The decrease was partly offset by higher sales and higher other operating income and expenses.

Financial net

Financial net declined YoY, due to lower interest rates. Financial net declined QoQ, mainly related to depreciated local currencies in certain markets.

Taxes

The tax cost in the quarter decreased to SEK -0.6 (-3.3) b. due to low net income offset by non-deductable expenses and tax adjustments related to prior years.

Net income and EPS

Net income and EPS diluted decreased YoY and QoQ, following the low operating income. EPS diluted was SEK -0.48 (2.15) and EPS (Non-IFRS) was SEK 0.62 (2.50).

Employees

The number of employees on Dec 31, 2016 was 111,464 compared with 113,797 on Sep 30, 2016. The decrease was mainly a result of headcount reductions as part of the cost and efficiency program.

 

 

4      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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FULL-YEAR COMMENTS

 

Net sales

Reported sales decreased by -10% mainly due to lower demand for mobile broadband, especially in markets with a weak macroeconomic environment. Sales in Europe declined following completion of mobile broadband projects in 2015. Mobile broadband sales in North America remained stable while Professional Services sales declined, mainly due to lower managed services activities. A significant managed services contract in North America was renewed with reduced scope. Sales in South East Asia increased, driven by large deliveries in coverage projects.

IPR licensing revenues amounted to SEK 10.0 (14.4) b. Sales in 2015 were positively impacted by a global patent license agreement signed with Apple. The baseline for current IPR licensing contract portfolio is approximately SEK 7 b. on an annual basis. Smartphone volume growth, agreements with currently unlicensed handset manufacturers and IoT licensing will determine growth opportunities going forward.

Networks reported sales decreased by -12% mainly due to lower mobile broadband sales in markets negatively impacted by a weak macroeconomic environment. In addition, sales declined in Europe and India following completion of large coverage projects in 2015 and delayed spectrum auctions respectively. Lower IPR licensing revenues also impacted Networks sales negatively.

Reported Global Services sales declined by -6%. Professional Services sales declined, mainly due to lower managed services activities in North America where a contract was renewed with reduced scope. In addition, CDMA customer support sales declined. Lower mobile broadband demand impacted Network Rollout sales negatively, primarily in Europe and Latin America.

Reported Support Solutions sales decreased by -17%. OSS and BSS sales declined, partly due to lower sales of legacy products and lower software sales in digital transformation projects where sales are mainly project milestone based. In addition, sales declined in markets with a weak macroeconomic environment. Sales in TV & Media declined due to lower sales of legacy products primarily in North America. Lower IPR licensing revenues also impacted Support Solutions sales negatively.

Currency exchange rates had no material impact on full-year sales. Sales, adjusted for comparable units and currency, decreased by -10%.

Full-year sales for targeted areas were flat and accounted for 20% of group sales. The partnership with Cisco has to date generated more than 100 deals across all regions.

The sales mix by commodity was: software 22% (23%), hardware 33% (34%) and services 45% (43%).

Gross margin

Gross margin declined to 29.8% (34.8%). Gross margin, excluding restructuring charges, declined to 31.4% (35.7%) due to a sales mix with lower share of mobile capacity business, higher share of Global Services sales and lower IPR licensing revenues as well as lower Global Services margins.

Restructuring charges and efficiency program

Restructuring charges amounted to SEK -7.6 (-5.0) b. The charges were mainly related to the cost and efficiency program initially announced in November 2014, and expanded in 2016. The cost and efficiency program is progressing according to plan and the target is to reduce the annual run rate of operating expenses, excluding restructuring charges, to SEK 53 b. in the second half of 2017. Efforts continue in order to reduce cost of sales, targeting to improve gross margin in the second half of 2017 compared with full-year 2016. With current plans, total restructuring charges for 2017 are estimated to be SEK 3 b.

Operating expenses

Total operating expenses decreased to SEK 60.5 (64.1) b. Operating expenses, excluding restructuring charges, decreased from SEK 61.4 to 56.4 b., as a result of the cost and efficiency program and lower amortizations of intangible assets (see page 38, Information on investments).

Other operating income and expenses

Other operating income and expenses was SEK 0.4 (0.2) b. Currency hedge contract effects impacted the result with SEK -0.9 (-1.1) b. They derive from the hedge contract balance in USD. The SEK has weakened against the USD between December 31, 2015 (SEK/USD rate 8.40) and December 31, 2016 (SEK/USD 9.06). The negative currency hedge effects were more than offset by several minor positive items.

Operating income

Operating income decreased to SEK 6.3 (21.8) b. due to lower sales and lower gross margin, partly offset by lower operating expenses. The net currency effect had a positive impact on operating income. Operating margin was 2.8% (8.8%).

Financial net

The financial net declined to SEK -2.3 (-1.9) b. following decreased interest rates and depreciated local currencies in certain markets.

Taxes

Tax cost decreased to SEK -2.1 (-6.2) b. due to low net income, offset by prior-year adjustments and non-deductable expenses. These factors resulted in a tax rate of 53% in 2016 compared with the more normal tax rate of 31% in 2015. Average tax rate for the years 2011-2015 was 32%.

Net income and EPS

Net income decreased to SEK 1.9 (13.7) b., for the same reasons as for the decrease in operating income. EPS diluted was SEK 0.52 (4.13) and EPS (Non-IFRS) was SEK 2.66 (6.06).

Employees

In 2016, the number of employees decreased by almost 5,000 driven by the ongoing cost and efficiency program. At year-end 2016, the total number of employees was 111,464 (116,281).

Modems

The discontinuation of the modems business was completed in Q3 2015 and had no financial impact on 2016.

 

 

5      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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REGIONAL SALES

 

     Fourth quarter 2016      Change     Full year 2016      Change  

SEK b.

   Networks      Global
Services
     Support
Solutions
     Total      YoY     QoQ     Total      YoY  

North America

     7.9         6.2         0.8         14.9         -13     13     54.7         -6

Latin America

     1.9         2.8         0.3         5.0         -19     13     17.9         -16

Northern Europe and Central Asia

     1.4         1.3         0.1         2.7         -5     33     9.1         -15

Western and Central Europe

     1.3         2.7         0.2         4.2         -21     19     16.2         -18

Mediterranean

     2.2         4.2         0.3         6.6         -5     46     20.9         -10

Middle East

     2.7         3.4         0.3         6.4         5     49     19.2         -16

Sub-Saharan Africa

     1.3         1.3         0.1         2.7         -4     36     9.2         -11

India

     1.9         1.0         0.1         3.0         -4     17     10.7         -20

North East Asia

     6.5         2.9         0.2         9.6         8     57     27.4         -3

South East Asia and Oceania

     3.6         3.0         0.1         6.7         25     32     22.2         15

Other 1)

     1.8         0.7         0.9         3.3         -63     2     15.1         -23
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

Total

     32.4         29.4         3.4         65.2         -11     28     222.6         -10
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

    

 

 

 

 

1)  Region “Other” includes licensing revenues, broadcast services, power modules, mobile broadband modules, Ericsson-LG Enterprise and other businesses.

FOURTH QUARTER AND FULL-YEAR COMMENTS

 

North America

Q4: The Networks business in North America, measured in local currency, declined slightly YoY due to continued reduced investments by one customer. Professional Services sales in North America were negatively impacted by a renewed managed services contract with reduced scope. Support Solutions sales decreased in OSS and BSS as well as in TV & Media.

Full year: Mobile broadband investments were stable. Professional Services sales were negatively impacted by reduced scope in a managed services contract. Support Solutions sales declined due to delayed investment decisions by customers. The focus on 5G strongly increased, with trials ongoing with all major customers.

Latin America

Q4: Sales declined as operators reduced their mobile broadband investments following a worsening macroeconomic environment across the region.

Full year: Sales decreased following reduced mobile broadband investments due to a weak macroeconomic environment in the region and due to devaluation of local currencies. The strong momentum for digital transformation continued. Professional Services sales declined due to lower activities in managed services.

Northern Europe and Central Asia

Q4: Sales declined as Networks and related services business were impacted by lower mobile broadband investments in Russia. Operators are investing in ICT transformation, creating demand for OSS and BSS.

Full year: Sales declined, primarily due to continued lower mobile broadband investments in Russia. Global Services sales were flat with a decline in Network Rollout, offset by increased Managed Services sales in Sweden. OSS and BSS sales were flat while TV & Media sales declined.

Western and Central Europe

Q4: Sales declined, following the same trend as earlier quarters, with reduced operator investments in mobile broadband as initial large LTE build-out programs have come to an end.

Full year: Sales declined as the initial LTE deployments were finalized. Operators continue to focus on transforming their networks to meet the increasing demand for coverage and capacity, while at the same time improving efficiency.

Mediterranean

Q4: Sales declined due to lower investments in mobile broadband infrastructure, with a continued weak development in the capacity business. Growth continued in managed services and operator investments in ICT transformation.

Full year: Sales declined due to lower investments in mobile broadband infrastructure, mainly related to capacity business. Operator investments in ICT transformation and demand for managed services continued.

Middle East

Q4: Sales increased in the quarter due to project completion in Saudi Arabia and mobile broadband sales in Iran. The overall challenge in the capacity business remains across the region, driven by the macroeconomic environment.

Full year: Sales declined, primarily in Networks due to lower broadband investments in Egypt, Pakistan, Ethiopia and Turkey. The decrease was partly offset by growth in Global Services sales, mainly in network rollout and optimization services in Saudi Arabia.

 

 

6      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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Sub-Saharan Africa

Q4: Sales declined due to lower investment levels in a few key markets impacted by weak macroeconomic environment. The decline was partly offset by increased network roll-out activities in South Africa.

Full year: Investments declined, impacted by a weak macroeconomic environment, local currency depreciation in key markets as well as low oil and commodity prices.

India

Q4: Following the completed spectrum auctions in October, the pace of 4G deployments increased with a positive impact on mobile broadband sales in the quarter.

Full year: Mobile broadband sales declined mainly driven by delayed spectrum auctions which delayed operator investments. Professional Services sales remained stable with operators’ higher focus on network quality and cost optimization.

North East Asia

Q4: Sales increased driven by network modernizations in Japan. Sales were flat in Mainland China with continued 4G deployments despite significantly reduced investments by one customer.

Full year: Sales declined slightly due to lower investments in Mainland China and Korea, partly offset by market share gains in Japan and Taiwan. In Mainland China 4G deployments continued. However, reduced investments in legacy technologies and significantly reduced investment by one customer, impacted sales negatively.

South East Asia and Oceania

Q4: Sales growth YoY was driven primarily by mobile broadband investments in Vietnam and Myanmar. Professional Services developed favorably, mainly driven by managed services and network optimization.

Full year: Sales increased, primarily driven by mobile broadband deployments across several markets. Professional Services sales developed favorably as operators focus on efficiency and network optimization services.

Other

Q4: IPR licensing revenues declined by SEK -5.5 b. YoY, mainly related to last year’s agreement with Apple. IPR licensing revenues were flat QoQ.

Full year: IPR licensing revenues amounted to SEK 10.0 (14.4) b. Sales in 2015 were positively impacted by a global patent license agreement signed with Apple.

 

 

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SEGMENT RESULTS

NETWORKS

 

LOGO

 

SEK b.

   Q4
2016
    Q4
2015
    YoY
change
    Q3
2016
    QoQ
change
    Full year
2016
    Full year
2015
 

Net sales

     32.4        37.3        -13     23.3        39     108.3        123.7   

Sales growth adj. for comparable units and currency

     —          —          -17     —          33     -13     -8

Operating income

     0.7        7.2        -91     -0.3        —          4.7        12.9   

Operating income excluding restructuring charges

     3.2        7.4        -57     0.4        —          8.8        15.8   

Operating margin

     2     19     —          -1     —          4     10

Operating margin excluding restructuring charges

     10     20     —          2     —          8     13

EBITA margin

     3     21     —          0     —          5     12

Restructuring charges

     -2.5        -0.3        —          -0.6        —          -4.0        -2.8   

FOURTH QUARTER COMMENTS

 

Net sales

Sales as reported decreased by -13% YoY, mainly due to lower IPR licensing revenues. In addition, core networks sales declined YoY due to lower sales of legacy products, not offset by growth in the new portfolio.

In 2016, a number of markets, in regions such as Latin America, the Middle East and Africa, were impacted by a weak macroeconomic environment with a negative effect on mobile broadband investments. The underlying market remained weak in the fourth quarter with further weakness in Latin America. However, hardware deliveries, previously planned for Q1 2017, were made on customer requests in countries such as Japan, Vietnam and Iran, and had a positive impact on sales in the fourth quarter. In combination with a weakened SEK versus USD, this resulted in a stronger than expected sequential sales growth in mobile broadband. Sales increased by 39% QoQ.

Sales in Asia Pacific increased YoY, driven by the transition from 3G to 4G. In addition, a large mobile broadband coverage project in Vietnam contributed to the growth. In India, 4G deployments related to the recently issued spectrum licenses, had a positive impact on sales. Sales in Europe continued to decline YoY following completion of mobile broadband projects in 2015. The Networks business in North America, measured in local currency, declined slightly YoY due to continued reduced investments by one customer.

Sales, adjusted for comparable units and currency, decreased by -17%.

The current industry trends are expected to prevail in 2017. At the Investor Update in November the company presented estimates of the Radio Access Network (RAN) equipment market in USD; a decline by -10% to -15% in 2016 and further decline by -2% to -6% in 2017.

Operating income and margin

Operating income and margin decreased YoY, mainly due to lower IPR licensing revenues, higher restructuring charges and lower sales. The decrease was partly offset by lower operating expenses.

Operating income and margin increased QoQ mainly due to higher sales and positive effects from other operating income and expenses. The increase was partly offset by higher restructuring charges and seasonally higher operating expenses.

The effects of revaluation and realization of currency hedge contracts were negative at SEK -0.3 (-0.1) b. in the quarter. In Q3, 2016, the effects of currency hedge contracts were negative at SEK -0.2 b.

 

 

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FULL-YEAR COMMENTS

 

Net sales

Sales as reported decreased by -12%. The decrease was mainly due to lower sales of mobile broadband, reduced sales of core networks and lower IPR licensing revenues. Core networks sales declined due to lower sales of legacy products, not offset by growth of the new portfolio. Sales related to network products were SEK 84.6 b.

Mobile broadband investments were negatively impacted by a weak macroeconomic environment in a number of markets such as Latin America, the Middle East and South Africa. In addition, sales declined in Europe following the completion of large coverage projects in 2015 and in India due to delayed spectrum auctions. The sales decline was partly offset by sales growth in South East Asia where large deliveries in mobile broadband coverage projects were made.

In North America and in North East Asia investments in network equipment were stable. In Mainland China large-scale LTE deployments continued for the third consecutive year.

Sales, adjusted for comparable units and currency, decreased by -13% YoY.

Ericsson Radio System (ERS) represented almost 15% of total deliveries of radio units for full-year 2016. The company is on track to reaching the target for 2017 of approximately 50% ERS of total deliveries.

Operating income and margin

Operating income and margin decreased, mainly due to a lower share of mobile broadband capacity sales and lower IPR licensing revenues. The decrease was partly offset by reduced operating expenses, mainly as an effect of the ongoing cost and efficiency program. The work to improve profitability continued with significant headcount reductions and structural changes.

Restructuring charges amounted to SEK -4.0 (-2.8) b. and the negative effect from currency hedge contracts was SEK -0.7 (-0.9) b.

 

 

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GLOBAL SERVICES

 

LOGO

 

SEK b.

   Q4
2016
    Q4
2015
    YoY
change
    Q3
2016
    QoQ
change
    Full year
2016
    Full year
2015
 

Net sales

     29.4        30.7        -4     24.8        19     101.7        108.0   

Of which Professional Services

     21.5        23.1        -7     18.7        15     76.8        81.7   

Of which Managed Services

     6.9        8.2        -17     7.2        -4     28.7        31.8   

Of which Network Rollout

     8.0        7.6        5     6.1        31     24.9        26.3   

Sales growth adj. for comparable units and currency

     —          —          -7     —          15     -5     -2

Operating income

     0.2        2.5        -93     1.0        -81     3.3        8.2   

Of which Professional Services

     0.8        2.7        -69     1.4        -40     5.2        9.6   

Of which Network Rollout

     -0.7        -0.2        —          -0.4        61     -1.9        -1.4   

Operating margin

     1     8     —          4     —          3     8

for Professional Services

     4     12     —          7     —          7     12

for Network Rollout

     -8     -2     —          -7     —          -8     -5

Operating income excluding restructuring charges

     1.9        2.7        -30     1.6        20     6.3        9.9   

Operating margin excluding restructuring charges

     6     9     —          6     —          6     9

EBITA margin

     1     9     —          5     —          4     9

Restructuring charges

     -1.7        -0.2        —          -0.6        —          -3.0        -1.7   

FOURTH QUARTER COMMENTS

 

Net sales

Sales as reported declined by -4% YoY. Professional Services sales declined, mainly due to lower managed services business in North America where a contract has been renewed with reduced scope. In addition, CDMA sales continued to decline YoY. Network Rollout sales grew YoY, driven by increased activities in North America, the Middle East, Africa and India, partly offset by a sales decline in Europe.

Global Services sales, adjusted for comparable units and currency, decreased by -7% YoY.

Sales increased by 19% QoQ, driven by increased project completions in Network Rollout following a seasonally weaker Q3. Professional Services sequential sales growth was negatively impacted by the renewed managed services contract in North America with reduced scope.

Operating income and margin

Global Services operating income decreased YoY mainly due to increased restructuring charges. The work to increase efficiency in the service delivery organization further accelerated in the quarter, resulting in increased restructuring charges YoY and QoQ.

Professional Services operating margin, excluding restructuring charges of SEK -1.4 (-0.1) b., declined to 10% (12%) YoY, negatively impacted by a few systems integration projects and lower CDMA sales. Professional Services operating income declined QoQ due to increased restructuring charges. The operating margin, excluding restructuring charges, was flat QoQ.

Network Rollout operating margin, excluding restructuring charges of SEK -0.4 (-0.2) b., declined YoY to -4% (0%), mainly due to increased costs and negative effects from a few contracts in emerging markets. Network Rollout operating income declined QoQ, primarily due to increased restructuring charges. Operating margin, excluding restructuring charges, improved QoQ.

 

 

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FULL-YEAR COMMENTS

 

Net sales

Sales as reported decreased by -6% YoY. Professional Services sales declined due to lower managed services activities in North America where a contract has been renewed with reduced scope. CDMA sales declined YoY impacting Professional Services sales negatively. Network Rollout sales declined due to lower mobile broadband demand, primarily in Europe and Latin America.

Sales, adjusted for comparable units and currency, decreased by -5%.

Operating income and margin

Operating income decreased in Global Services YoY. Activities were performed to adapt the service delivery organization to lower business volumes and to increase the efficiency. Restructuring charges increased to SEK -3.0 (-1.7) b.

Professional Services operating income declined to SEK 5.2 (9.6) b. due to increased restructuring charges of SEK -2.3 (-0.7) b., lower sales and a negative impact from large projects in

systems integration transformation, where operators are looking to transform their IT environments to increase efficiency and prepare for 5G. Ericsson has been successful and won several IT transformation contracts. However, the short-term margin impact from these contracts is challenging as a consequence of investments in competence build-up and market share.

Network Rollout operating income declined to SEK -1.9 (-1.4) b. due to lower sales in combination with increased cost and negative effects from a few contracts in emerging markets. The effort to improve Network Rollout profitability continues through efficiency improvements including implementation of global methods and tools.

 

 

     Q4
2016
     Q3
2016
     Q2
2016
     Q1
2016
     Full year
2016
     Full year
2015
 

Number of signed Managed Services contracts

     20         15         20         21         76         101   

Number of signed significant consulting & systems integration contracts 1)

     19         19         18         13         69         66   

 

1) In the areas of OSS and BSS, IP, Service Delivery Platforms and data center build projects.

 

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SUPPORT SOLUTIONS

 

LOGO

 

SEK b.

   Q4
2016
    Q4
2015
    YoY
change
    Q3
2016
    QoQ
change
    Full year
2016
    Full year
2015
 

Net sales

     3.4        5.6        -39     2.9        16     12.5        15.0   

Sales growth adj. for comparable units and currency

     —          —          -42     —          10     -19     0

Operating income

     -0.4        1.7        -125     -0.4        19     -1.0        1.5   

Operating income excluding restructuring charges

     -0.1        1.9        -105     -0.3        -71     -0.5        2.0   

Operating margin

     -12     30            -12            -8     10

Operating margin excluding restructuring charges

     -3     34            -11            -4     13

EBITA margin

     -6     34            -4            0     16

Restructuring charges

     -0.3        -0.2        41     0.0               -0.4        -0.5   

 

FOURTH QUARTER COMMENTS

Net sales

Sales as reported decreased by -39% YoY, mainly due to lower IPR licensing revenues and lower sales in TV & Media. TV & Media sales were lower than expected, primarily due to a rapid decline of legacy products. The transition to next-generation platform is ongoing with several customer trials. However, efforts have not yet translated into sales.

Sales, adjusted for comparable units and currency, decreased by -42% YoY.

Sales increased by 16% QoQ, supported by currency exchange rates and seasonally stronger sales primarily in OSS and BSS. The transition from legacy to new products in OSS and BSS is ongoing but creates some short-term sales challenges.

Operating income and margin

Operating income and margin declined YoY, mainly due to lower IPR licensing revenues and higher restructuring charges.

Operating income declined slightly QoQ. Increased restructuring charges were partly offset by increased sales.

FULL-YEAR COMMENTS

Net sales

Sales as reported decreased by -17% YoY, partly due to lower IPR licensing revenues. OSS and BSS sales declined due to lower sales of legacy products and lower software sales in digital transformation projects where sales are mainly project milestone based. In addition, sales declined in markets with a weak macroeconomic environment.

Sales in TV & Media declined due to lower sales of legacy products primarily in North America. Customer trials on the next-generation TV & Media platform are ongoing, but have not yet translated into sales.

Operating income and margin

Operating income declined YoY mainly due to lower IPR licensing revenues and lower sales in both OSS and BSS as well as in TV & Media. Several activities in order to reduce cost and adjust the organization to lower business volumes are ongoing.

The overall transition of business models continues, from traditional telecom software licenses to recurrent license revenue deals.

 

 

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CASH FLOW

 

SEK b.

   Q4
2016
    Q4
2015
    Q3
2016
    Full year
2016
    Full year
2015
 

Net income reconciled to cash

     1.6        11.0        1.5        8.0        24.3   

Changes in operating net assets

     17.9        10.9        -3.8        6.0        -3.7   

Cash flow from operating activities

     19.4        21.9        -2.3        14.0        20.6   

Cash flow from investing activities

     -6.6        -12.8        -2.0        -8.3        -8.0   

Cash flow from financing activities

     -1.0        -0.7        -1.5        -11.7        -10.7   

Net change in cash and cash equivalents

     12.6        6.3        -4.5        -3.3        -0.8   

Cash conversion (%)

     1,247     200     -155     175     85

FOURTH QUARTER COMMENTS

 

Cash flow from operating activities was SEK 19.4 b. in the quarter, mainly driven by reduced operating assets. Inventory decreased sequentially following large deliveries of hardware and network rollout services. Despite increased sales, trade receivables were reduced, driven by good collection and higher sale of receivables. Trade payables increased QoQ mainly due to seasonally higher business activities.

Cash outlays related to restructuring charges were SEK -0.8 (-0.8) b. in the quarter.

Cash flow from investing activities was impacted by investments in property, plant and equipment of SEK -1.7 b., with continued investments in Global ICT centers. The capital expenditure level will continue to decline as the investments in the Global ICT

centers peaked in 2015. Sale of property, plant and equipment resulted in a cash flow effect of SEK 0.3 b. in the quarter. Development expenses of SEK -1.3 b. were capitalized. No large acquisition was made in the quarter.

Cash flow from financing activities amounted to SEK -1.0 b.

Net cash at the end of the quarter was SEK 31.2 b.

 

 

Working capital KPIs, number of days

   Jan-Dec
2016
     Jan-Sep
2016
     Jan-Jun
2016
     Jan-Mar
2016
     Jan-Dec
2015
 

Sales outstanding (target: <90)

     95         122         115         108         87   

Inventory (target: <65)

     69         79         81         80         64   

Payable (target: >60)

     56         56         59         58         53   

FULL-YEAR COMMENTS

 

Cash flow from operating activities was SEK 14.0 (20.6) b. The decline was mainly due to lower income and last year’s payment to Ericsson, related to the signed global patent license agreement with Apple. Operating net assets decreased by SEK 6.0 b, supported by reduced trade receivables. Inventory increased while trade payables increased supported by implementation of supply chain financing.

Cash outlays related to restructuring charges were SEK -2.4 (-2.8) b. during the year.

Cash flow from investing activities was impacted by investments in property, plant and equipment of SEK -6.1 (-8.3) b., with continued investments in the Global ICT centers. The capital expenditure level will continue to decline as the investments in the Global ICT centers peaked in 2015. In addition, SEK -4.5 b. (-3.3) b. of development expenses were capitalized. The capitalized development expenses refer to development of new product platforms like the new IPTV platform, Ericsson MediaFirst, and the new BSS platform, Ericsson Revenue Manager. The company invested SEK 0.6 (2.2) b. in acquisitions of smaller companies, such as Ericpol and NodePrime in 2016.

Cash flow from financing activities amounted to SEK -11.7 b., impacted by SEK -12.3 b. of dividend payouts.

Net cash amounted to SEK 31.2 b., a decrease by SEK -10.0 b. compared with 2015.

 

 

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FINANCIAL POSITION

 

SEK b.

   Dec 31
2016
    Sep 30
2016
    Jun 30
2016
    Mar 31
2016
    Dec 31
2015
 

+ Cash and cash equivalents

     37.0        24.4        28.9        35.9        40.2   

+ Interest-bearing securities, current

     13.3        18.7        19.8        25.1        26.0   

+ Interest-bearing securities, non-current

     7.6        0.5        —          —          —     

Gross cash

     57.9        43.6        48.8        61.0        66.3   

– Borrowings, current

     8.0        9.0        9.7        2.4        2.4   

– Borrowings, non-current

     18.7        18.3        18.2        22.1        22.7   

Net cash

     31.2        16.3        21.0        36.5        41.2   

Equity

     140.5        134.0        136.7        145.6        147.4   

Total assets

     283.3        275.7        277.4        280.3        284.4   

Capital turnover (times)

     1.2        1.1        1.1        1.1        1.3   

Return on capital employed (%)

     3.2     4.4     6.5     6.9     11.6

Equity ratio (%)

     49.6     48.6     49.3     52.0     51.8

Return on equity (%)

     1.2     3.2     5.0     5.4     9.3

FOURTH QUARTER COMMENTS

 

Net cash increased by SEK 14.9 b. in the quarter mainly as a result of decreased operating assets. The net cash position was SEK 31.2 b.

Post-employment benefits were SEK 23.7 b., compared with SEK 32.5 b. on Sep 30, 2016, mainly due to increased discount rates.

The company signed a new EUR 0.5 b. term loan facility in the quarter. The new facility has a tenure of two years with one extension option of one year. The facility serves for general corporate purposes and is unutilized.

In the quarter Standard & Poor’s downgraded Ericsson’s long-term rating from BBB+ with negative outlook to BBB with negative outlook. Moody’s downgraded Ericsson’s long-term rating twice in the quarter. In October, they downgraded Ericsson from Baa1, with negative outlook to Baa2 on review for further downgrade. In December, they downgraded Ericsson to Baa3 with negative outlook.

FULL-YEAR COMMENTS

Net cash decreased to SEK 31.2 (41.2) b. due to lower income and increased dividends. The decrease was partly offset by reduced operating assets.

Pension liabilities increased by SEK 1.1 b, due to decreased discount rates.

Standard & Poor’s and Moody´s downgraded Ericsson’s long-term rating from BBB+/Baa1 with stable outlook to BBB/Baa3 with negative outlook. The average maturity of long-term borrowings as of Dec 31, 2016, was 3.8 years, compared with 4.8 years 12 months earlier.

Ericsson has an unutilized Revolving Credit Facility of USD 2.0 b. The facility expires in 2021.

The company signed a new EUR 0.5 b. term loan facility in 2016. The new facility has a tenure of two years with one extension option of one year. The facility serves for general corporate purposes and is unutilized.

Debt maturity profile, Parent Company

SEK b.

 

LOGO

 

 

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PARENT COMPANY

 

Income after financial items was SEK 15.5 (16.8) b. The decrease was mainly due to lower recognized dividends from subsidiaries than last year.

At the end of the year, gross cash: cash, cash equivalents, short-term investments, and interest-bearing securities non-current amounted to SEK 42.9 (48.6) b.

The Parent Company has during the quarter recognized dividends from subsidiaries of SEK 1.1 b.

The Parent Company recognized dividends from subsidiaries of SEK 14.2 (15.2) b. for full-year 2016.

In accordance with the conditions of the long-term variable compensation program (LTV) for Ericsson employees, 3,645,085 shares from treasury stock were sold or distributed to employees during the fourth quarter. The holding of treasury stock at December 31, 2016, was 62,192,390 Class B shares.

 

 

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DIVIDEND, AGM

AND ANNUAL REPORT

 

Dividend proposal

The Board of Directors will propose to the Annual General Meeting to resolve on a dividend of SEK 1.00 (3.70) per share, representing some SEK 3.3 (12.1) b., and March 31, 2017, as the record date for payment of dividend. The dividend reflects this year’s earnings and balance sheet structure, as well as coming years’ business plans and expected economic development.

Ericsson Annual General Meeting

The Annual General Meeting of shareholders will be held on March 29, 2017, 15.00 (CET) at Kistamässan, Stockholm, Sweden.

Annual Report

The annual report will be made available on our website www.ericsson.com and at the Ericsson headquarters, Torshamnsgatan 21, Kista, Stockholm, Sweden, in the first week of March.

 

 

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OTHER INFORMATION

 

The rating for Ericsson was downgraded to Baa2 by Moody’s

On October 14, 2016, Moody’s announced that they had downgraded the senior unsecured debt ratings to Baa2 from Baa1 and the MTN program rating to Baa2 from Baa1. At the same time, the agency placed the company’s Baa2/Baa2 ratings on review for further downgrade.

The rating for Ericsson was downgraded to BBB by S&P

On October 17, 2016, Standard & Poor’s announced that they had downgraded the long-term corporate credit rating on Ericsson to BBB from BBB+, with a negative outlook.

Börje Ekholm appointed President and CEO

On October 26, 2016, Ericsson announced that its Board of Directors has appointed Börje Ekholm President and CEO, effective January 16, 2017. Börje Ekholm will also remain a member of the Board of Directors of Ericsson.

Ericsson Investor Update

On November 10, 2016, Ericsson held its annual Investor Update event in New York. The company gave an update on market development, how to improve profitability and the progress of strategy implementation for faster business execution based on its new company structure. In addition, the company provided high level, unaudited numbers for the new segments for full-year 2015.

Update on Cost and efficiency program

On December 8, 2016, Ericsson announced that total company restructuring charges for 2016 is estimated to SEK 5.5-6.5 b., compared to previous estimate of SEK 4-5 b. due to faster implementation of the cost and efficiency program in Sweden.

The rating for Ericsson was downgraded to Baa3 by Moody’s

On December 15, 2016, Moody’s announced that they had downgraded the senior unsecured debt ratings to Baa3 from Baa2 and the MTN program rating to Baa3 from Baa2. The outlook on the ratings is negative.

Litigations relating to Unwired Planet

Ericsson has since 2014 been involved in litigations in the UK and Germany brought by Unwired Planet against Google, Samsung, Huawei, HTC and LG for infringement of patents, some of which were purchased from Ericsson. Unwired Planet has settled some of the cases and all counterclaims against Ericsson from the defendants in the UK case have as from October 2016 been withdrawn. Ericsson remains as intervener in the German cases where an appealed court decision has rejected all allegations made by the defendants against Ericsson.

POST-CLOSING EVENTS

Börje Ekholm takes office as CEO and President

On January 16, 2017, Ericsson announced that in connection with Börje Ekholm assuming the position as President and CEO of Ericsson, Jan Frykhammar, who has temporarily held the position as President and CEO, remains a member of the Executive Leadership Team and is appointed Executive Vice President and Advisor to the CEO. Jan Frykhammar will support Börje Ekholm during a transition period and will focus on corporate governance and efficiency.

Magnus Mandersson remains Executive Vice President, Advisor to the CEO, focusing on customer relationships, and a member of the Executive Leadership Team. Mandersson also remains Chairperson of four out of Ericsson’s ten regions.

Carl Mellander remains acting Chief Financial Officer and a member of the Executive Leadership Team.

NEW FINANCIAL REPORTING STRUCTURE

The organizational structure that was effective as of July 1, 2016, aims to align company reporting with strategy execution in a simpler and more transparent way. As of Q1, 2017, financial reporting will be made according to this new organizational structure. Restated numbers will be presented in March 2017.

 

 

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RISK FACTORS

 

Ericsson’s operational and financial risk factors and uncertainties are described in our Annual Report 2015.

Risk factors and uncertainties in focus short term for the Parent Company and the Ericsson Group include, but are not limited to:

 

  Potential negative effects on operators’ willingness to invest in network development due to uncertainty in the financial markets and a weak economic business environment, or reduced consumer telecom spending, or increased pressure on us to provide financing, or delayed auctions of spectrums;

 

  Uncertainty regarding the financial stability of suppliers, for example due to lack of financing;

 

  Effects on gross margins and/or working capital of the business mix in the Networks segment between capacity sales and new coverage build-outs;

 

  Effects on gross margins of the business mix in the Global Services segment including proportion of new network buildouts and share of new managed services or digital transformation deals with initial transition costs;

 

  Effects of the ongoing industry consolidation among our customers as well as between our largest competitors, e.g. with postponed investments and intensified price competition as a consequence;

 

  New JV arrangements or partnerships which may not be successful and expose us to future costs;

 

  Changes in foreign exchange rates, in particular USD;

 

  Political unrest or instability in certain markets;

 

  Effects on production and sales from restrictions with respect to timely and adequate supply of materials, components and production capacity and other vital services on competitive terms;
  No guarantees that specific restructuring or cost-savings initiatives will be sufficient, successful or executed in time to deliver any improvements in short-term earnings;

 

  Various geopolitical forces may impact the global economy and our business;

 

  Cyber security incidents, which may have material negative impact.

Ericsson stringently monitors the compliance with all relevant trade regulations and trade embargos applicable to dealings with customers operating in countries where there are trade restrictions or trade restrictions are discussed. Ericsson operates globally in accordance with Group policies and directives for business ethics and conduct and has a dedicated anti-corruption program. However, in some of the countries where the company operates, corruption risks can be high and compliance failure could have a material adverse impact on our business, financial condition and brand.

Stockholm, January 26, 2017

Telefonaktiebolaget LM Ericsson

Board of Directors

Date for next report: April 25, 2017

 

 

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AUDITORS’ REVIEW REPORT

 

Introduction

We have reviewed the condensed interim financial information (interim report) of Telefonaktiebolaget LM Ericsson (publ.) as of December 31, 2016, and the twelve months period then ended. The board of directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Report Performed by the Independent Auditor of the Entity.

A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.

Stockholm, January 26, 2017

PricewaterhouseCoopers AB

Bo Hjalmarsson

Authorized Public Accountant

Auditor in Charge

Johan Engstam

Authorized Public Accountant

 

 

19      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

EDITOR’S NOTE

 

Ericsson invites media, investors and analysts to a press conference at the Ericsson Studio, Grönlandsgången 4, Stockholm, at 09.00 (CET), January 26, 2016. A financial analyst, investor and media conference call will begin at 14.00 (CET).

Live webcast of the press conference and conference call as well as supporting slides will be available at www.ericsson.com/press and www.ericsson.com/investors

Video material will be published during the day on www.ericsson.com/press

For further information, please contact:

Helena Norrman, Senior Vice President, Chief Marketing and Communications Officer

Phone: +46 10 719 34 72

E-mail: investor.relations@ericsson.com or

media.relations@ericsson.com

Telefonaktiebolaget LM Ericsson

Org. number: 556016-0680

Torshamnsgatan 21

SE-164 83 Stockholm

Phone: +46 10 719 00 00

www.ericsson.com

Investors
Peter Nyquist, Vice President,
Head of Investor Relations
Phone:    +46 10 714 64 49, +46 70 575 29 06
E-mail:    peter.nyquist@ericsson.com
Stefan Jelvin, Director,
Investor Relations
Phone:    +46 10 714 20 39, +46 70 986 02 27
E-mail:    stefan.jelvin@ericsson.com
Åsa Konnbjer, Director,
Investor Relations
Phone:    +46 10 713 39 28, +46 73 082 59 28
E-mail:    asa.konnbjer@ericsson.com
Rikard Tunedal, Director,
Investor Relations
Phone:    +46 10 714 54 00, +46 761 005 400
E-mail:    rikard.tunedal@ericsson.com
Media
Ola Rembe, Vice President,
Head of External Communications
Phone:    +46 10 719 97 27, +46 73 024 48 73
E-mail:    media.relations@ericsson.com
Corporate Communications
Phone:    +46 10 719 69 92
E-mail:    media.relations@ericsson.com
 

 

20      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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SAFE HARBOR STATEMENT

 

All statements made or incorporated by reference in this release, other than statements or characterizations of historical facts, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates and projections about our industry, management’s beliefs and certain assumptions made by us. Forward-looking statements can often be identified by words such as “anticipates”, “expects”, “intends”, “plans”, “predicts”, “believes”, “seeks”, “estimates”, “may”, “will”, “should”, “would”, “potential”, “continue”, and variations or negatives of these words, and include, among others, statements regarding: (i) strategies, outlook and growth prospects; (ii) positioning to deliver future plans and to realize potential for future growth; (iii) liquidity and capital resources and expenditure, and our credit ratings; (iv) growth in demand for our products and services; (v) our joint venture activities; (vi) economic outlook and industry trends; (vii) developments of our markets; (viii) the impact of regulatory initiatives; (ix) research and development expenditures; (x) the strength of our competitors; (xi) future cost savings; (xii) plans to launch new products and services; (xiii) assessments of risks; (xiv) integration of acquired businesses; (xv) compliance with rules and regulations and (xvi) infringements of intellectual property rights of others.

In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These forward-looking statements speak only as of the date hereof and are based upon the information available to us at this time. Such information is subject to change, and we will not necessarily inform you of such changes. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. Important factors that may cause such a difference for Ericsson include, but are not limited to: (i) material adverse changes in the markets in which we operate or in global economic conditions; (ii) increased product and price competition; (iii) reductions in capital expenditure by network operators; (iv) the cost of technological innovation and increased expenditure to improve quality of service; (v) significant changes in market share for our principal products and services; (vi) foreign exchange rate or interest rate fluctuations; and (vii) the successful implementation of our business and operational initiatives.

 

 

21      Ericsson  |  Fourth Quarter and Full-Year Report 2016


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FINANCIAL STATEMENTS AND

ADDITIONAL INFORMATION

 

Contents   

Financial statements

  

Consolidated income statement

     23   

Statement of comprehensive income

     23   

Consolidated balance sheet

     24   

Consolidated statement of cash flows

     25   

Consolidated statement of changes in equity

     26   

Consolidated income statement – isolated quarters

     26   

Consolidated statement of cash flows – isolated quarters

     27   

Parent Company income statement

     28   

Parent Company statement of comprehensive income

     28   

Parent Company balance sheet

     29   

Additional information

  

Accounting policies

     30   

Net sales by segment by quarter

     31   

Sales growth adjusted for comparable units and currency

     32   

Operating income by segment by quarter

     33   

Operating margin by segment by quarter

     33   

EBITA by segment by quarter

     34   

EBITA margin by segment by quarter

     34   

Net sales by region by quarter

     35   

Net sales by region by quarter (cont.)

     36   

Top 5 countries in sales

     36   

Net sales by region by segment

     37   

Provisions

     38   

Information on investments

     38   

Other information

     39   

Number of employees

     39   

Restructuring charges by function

     40   

Restructuring charges by segment

     40   

Reconciliation tables, non-IFRS measures

     41   
 

 

22      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

CONSOLIDATED INCOME STATEMENT

 

     Oct-Dec     Jan-Dec  

SEK million

   2016     2015     Change     2016     2015     Change  

Net sales

     65,215        73,568        -11     222,608        246,920        -10

Cost of sales

     -48,195        -46,899        3     -156,243        -161,101        -3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross income

     17,020        26,669        -36     66,365        85,819        -23

Gross margin (%)

     26.1     36.3       29.8     34.8  

Research and development expenses

     -8,890        -7,921        12     -31,635        -34,844        -9

Selling and administrative expenses

     -8,799        -7,996        10     -28,866        -29,285        -1
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     -17,689        -15,917        11     -60,501        -64,129        -6

Other operating income and expenses

     364        254          404        153     

Shares in earnings of JV and associated companies

     25        29          31        -38     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     -280        11,035        -103     6,299        21,805        -71

Financial income

     61        -109          -115        525     

Financial expenses

     -744        -619          -2,158        -2,458     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income after financial items

     -963        10,307        -109     4,026        19,872        -80

Taxes

     -634        -3,329          -2,131        -6,199     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     -1,597        6,978        -123     1,895        13,673        -86
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

            

Stockholders of the Parent Company

     -1,604        7,056          1,716        13,549     

Non-controlling interests

     7        -78          179        124     

Other information

            

Average number of shares, basic (million)

     3,268        3,254          3,263        3,249     

Earnings per share, basic (SEK) 1)

     -0.49        2.17          0.53        4.17     

Earnings per share, diluted (SEK) 1)

     -0.48        2.15          0.52        4.13     

 

1)  Based on Net income attributable to stockholders of the Parent Company.

STATEMENT OF COMPREHENSIVE INCOME

 

     Oct-Dec      Jan-Dec  

SEK million

   2016      2015      2016      2015  

Net income

     -1,597         6,978         1,895         13,673   

Other comprehensive income

           

Items that will not be reclassified to profit or loss

           

Remeasurements of defined benefits pension plans incl. asset ceiling

     8,024         3,860         -1,766         -2,026   

Tax on items that will not be reclassified to profit or loss

     -1,886         -797         520         721   

Items that may be reclassified to profit or loss

           

Available-for-sale financial assets

           

Gains/losses arising during the period

     -7         —           -7         —     

Revaluation of other investments in shares and participations

           

Fair value remeasurement

     2         216         -2         457   

Changes in cumulative translation adjustments

     1,867         -1,141         4,235         -604   

Share of other comprehensive income on JV and associated companies

     -7         —           -362         141   

Tax on items that may be reclassified to profit or loss

     1         —           1         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive income, net of tax

     7,994         2,138         2,619         -1,311   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income

     6,397         9,116         4,514         12,362   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income attributable to:

           

Stockholders of the Parent Company

     6,406         9,173         4,285         12,218   

Non-controlling interest

     -9         -57         229         144   

 

23      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

CONSOLIDATED BALANCE SHEET

 

SEK million

   Dec 31
2016
     Sep 30
2016
     Dec 31
2015
 

ASSETS

        

Non-current assets

        

Intangible assets

        

Capitalized development expenses

     8,076         7,437         5,493   

Goodwill

     43,387         41,976         41,087   

Intellectual property rights, brands and other intangible assets

     7,747         8,076         9,316   

Property, plant and equipment

     16,734         17,082         15,901   

Financial assets

        

Equity in JV and associated companies

     775         761         1,210   

Other investments in shares and participations

     1,179         1,188         1,275   

Customer finance, non-current

     2,128         1,989         1,739   

Interest–bearing securities, non-current

     7,586         540         —     

Other financial assets, non-current

     4,442         4,310         5,634   

Deferred tax assets

     15,522         17,383         13,183   
  

 

 

    

 

 

    

 

 

 
     107,576         100,742         94,838   

Current assets

        

Inventories

     30,307         34,140         28,436   

Trade receivables

     68,117         70,370         71,069   

Customer finance, current

     2,625         2,644         2,041   

Other current receivables

     24,431         24,758         21,709   

Interest-bearing securities, current

     13,325         18,663         26,046   

Cash and cash equivalents

     36,966         24,401         40,224   
  

 

 

    

 

 

    

 

 

 
     175,771         174,976         189,525   
  

 

 

    

 

 

    

 

 

 

Total assets

     283,347         275,718         284,363   
  

 

 

    

 

 

    

 

 

 

EQUITY AND LIABILITIES

        

Equity

        

Stockholders’ equity

     139,817         133,138         146,525   

Non-controlling interest in equity of subsidiaries

     675         874         841   
  

 

 

    

 

 

    

 

 

 
     140,492         134,012         147,366   

Non-current liabilities

        

Post-employment benefits

     23,723         32,463         22,664   

Provisions, non-current

     946         170         176   

Deferred tax liabilities

     2,147         2,052         2,472   

Borrowings, non-current

     18,653         18,283         22,744   

Other non-current liabilities

     2,621         2,127         1,851   
  

 

 

    

 

 

    

 

 

 
     48,090         55,095         49,907   

Current liabilities

        

Provisions, current

     5,411         3,075         3,662   

Borrowings, current

     8,033         9,007         2,376   

Trade payables

     25,318         21,633         22,389   

Other current liabilities

     56,003         52,896         58,663   
  

 

 

    

 

 

    

 

 

 
     94,765         86,611         87,090   
  

 

 

    

 

 

    

 

 

 

Total equity and liabilities

     283,347         275,718         284,363   
  

 

 

    

 

 

    

 

 

 

Of which interest-bearing liabilities

     26,686         27,290         25,120   

Assets pledged as collateral

     2,584         2,534         2,526   

Contingent liabilities

     1,186         1,146         922   

 

24      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

CONSOLIDATED STATEMENT

OF CASH FLOWS

 

     Oct-Dec      Jan-Dec  

SEK million

   2016      2015      2016      2015  

Operating activities

           

Net income

     -1,597         6,978         1,895         13,673   

Adjustments to reconcile net income to cash

           

Taxes

     -300         395         -6,200         -2,835   

Earnings/dividends in JV and associated companies

     -21         -33         58         130   

Depreciation, amortization and impairment losses

     2,610         2,521         9,119         10,206   

Other

     865         1,092         3,135         3,110   
  

 

 

    

 

 

    

 

 

    

 

 

 
     1,557         10,953         8,007         24,284   

Changes in operating net assets

           

Inventories

     4,286         3,496         -613         -366   

Customer finance, current and non-current

     -106         302         -950         824   

Trade receivables

     3,713         2,754         5,933         7,000   

Trade payables

     3,306         886         2,775         -2,676   

Provisions and post-employment benefits

     2,772         -673         3,106         544   

Other operating assets and liabilities, net

     3,884         4,141         -4,248         -9,013   
  

 

 

    

 

 

    

 

 

    

 

 

 
     17,855         10,906         6,003         -3,687   

Cash flow from operating activities

     19,412         21,859         14,010         20,597   

Investing activities

           

Investments in property, plant and equipment

     -1,699         -1,740         -6,129         -8,338   

Sales of property, plant and equipment

     277         92         482         1,301   

Acquisitions/divestments of subsidiaries and other operations, net

     -50         -945         -622         -2,200   

Product development

     -1,291         -1,183         -4,483         -3,302   

Other investing activities

     -2,341         -418         -3,004         -543   

Interest-bearing securities

     -1,505         -8,613         5,473         5,095   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     -6,609         -12,807         -8,283         -7,987   

Cash flow before financing activities

     12,803         9,052         5,727         12,610   

Financing activities

           

Dividends paid

     —           —           -12,263         -11,337   

Other financing activities

     -1,039         -669         521         627   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     -1,039         -669         -11,742         -10,710   

Effect of exchange rate changes on cash

     801         -2,109         2,757         -2,664   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net change in cash and cash equivalents

     12,565         6,274         -3,258         -764   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents, beginning of period

     24,401         33,950         40,224         40,988   
  

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents, end of period

     36,966         40,224         36,966         40,224   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

25      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

CONSOLIDATED STATEMENT

OF CHANGES IN EQUITY

 

     Jan-Dec  

SEK million

   2016      2015  

Opening balance

     147,366         145,309   

Total comprehensive income

     4,514         12,362   

Sale/repurchase of own shares

     -216         169   

Stock issue (net)

     131         —     

Stock purchase plan

     957         865   

Dividends paid

     -12,263         -11,337   

Transactions with non-controlling interests

     3         -2   
  

 

 

    

 

 

 

Closing balance

     140,492         147,366   
  

 

 

    

 

 

 

CONSOLIDATED INCOME STATEMENT

- ISOLATED QUARTERS

 

    2016     2015  

Isolated quarters, SEK million

  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Net sales

    65,215        51,076        54,108        52,209        73,568        59,161        60,671        53,520   

Cost of sales

    -48,195        -36,616        -36,613        -34,819        -46,899        -39,110        -40,536        -34,556   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross income

    17,020        14,460        17,495        17,390        26,669        20,051        20,135        18,964   

Gross margin (%)

    26.1     28.3     32.3     33.3     36.3     33.9     33.2     35.4

Research and development expenses

    -8,890        -7,855        -7,405        -7,485        -7,921        -8,540        -9,896        -8,487   

Selling and administrative expenses

    -8,799        -6,238        -7,109        -6,720        -7,996        -6,393        -7,765        -7,131   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

    -17,689        -14,093        -14,514        -14,205        -15,917        -14,933        -17,661        -15,618   

Other operating income and expenses

    364        -3        -230        273        254        80        1,059        -1,240   

Shares in earnings of JV and associated companies

    25        -23        12        17        29        -121        27        27   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    -280        341        2,763        3,475        11,035        5,077        3,560        2,133   

Financial income

    61        -226        139        -89        -109        188        -238        684   

Financial expenses

    -744        -371        -666        -377        -619        -809        -290        -740   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income after financial items

    -963        -256        2,236        3,009        10,307        4,456        3,032        2,077   

Taxes

    -634        76        -670        -903        -3,329        -1,338        -909        -623   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    -1,597        -180        1,566        2,106        6,978        3,118        2,123        1,454   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to:

               

Stockholders of the Parent Company

    -1,604        -233        1,587        1,966        7,056        3,080        2,094        1,319   

Non-controlling interests

    7        53        -21        140        -78        38        29        135   

Other information

               

Average number of shares, basic (million)

    3,268        3,264        3,261        3,258        3,254        3,251        3,247        3,244   

Earnings per share, basic (SEK) 1)

    -0.49        -0.07        0.49        0.60        2.17        0.95        0.64        0.41   

Earnings per share, diluted (SEK) 1)

    -0.48        -0.07        0.48        0.60        2.15        0.94        0.64        0.40   

 

1)  Based on Net income attributable to stockholders of the Parent Company.

 

26      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

CONSOLIDATED STATEMENT

OF CASH FLOWS - ISOLATED QUARTERS

 

     2016      2015  

Isolated quarters, SEK million

   Q4      Q3      Q2      Q1      Q4      Q3      Q2      Q1  

Operating activities

                       

Net income

     -1,597         -180         1,566         2,106         6,978         3,118         2,123         1,454   

Adjustments to reconcile net income to cash

                       

Taxes

     -300         -1,282         -3,410         -1,208         395         51         -1,360         -1,921   

Earnings/dividends in JV and associated companies

     -21         22         73         -16         -33         136         49         -22   

Depreciation, amortization and impairment losses

     2,610         2,308         2,104         2,097         2,521         2,425         2,579         2,681   

Other

     865         630         988         652         1,092         1,052         22         944   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     1,557         1,498         1,321         3,631         10,953         6,782         3,413         3,136   

Changes in operating net assets

                       

Inventories

     4,286         980         -1,667         -4,212         3,496         -226         383         -4,019   

Customer finance, current and non-current

     -106         223         -816         -251         302         375         405         -258   

Trade receivables

     3,713         -624         -564         3,408         2,754         -1,421         3,630         2,037   

Trade payables

     3,306         -2,371         2,457         -617         886         -494         -1,400         -1,668   

Provisions and post-employment benefits

     2,772         130         218         -14         -673         -302         1,685         -166   

Other operating assets and liabilities, net

     3,884         -2,153         -1,662         -4,317         4,141         -3,154         -5,038         -4,962   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     17,855         -3,815         -2,034         -6,003         10,906         -5,222         -335         -9,036   

Cash flow from operating activities

     19,412         -2,317         -713         -2,372         21,859         1,560         3,078         -5,900   

Investing activities

                       

Investments in property, plant and equipment

     -1,699         -1,384         -1,572         -1,474         -1,740         -1,807         -2,424         -2,367   

Sales of property, plant and equipment

     277         111         50         44         92         59         1,075         75   

Acquisitions/divestments of subsidiaries and other operations, net

     -50         16         -480         -108         -945         -1,028         -169         -58   

Product development

     -1,291         -885         -1,099         -1,208         -1,183         -982         -843         -294   

Other investing activities

     -2,341         -508         -890         735         -418         37         -280         118   

Interest-bearing securities

     -1,505         610         5,355         1,013         -8,613         3,631         9,678         399   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from investing activities

     -6,609         -2,040         1,364         -998         -12,807         -90         7,037         -2,127   

Cash flow before financing activities

     12,803         -4,357         651         -3,370         9,052         1,470         10,115         -8,027   

Financing activities

                       

Dividends paid

     —           -163         -12,067         -33         —           -277         -11,035         -25   

Other financing activities

     -1,039         -1,295         2,761         94         -669         -34         431         899   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash flow from financing activities

     -1,039         -1,458         -9,306         61         -669         -311         -10,604         874   

Effect of exchange rate changes on cash

     801         1,285         1,652         -981         -2,109         -171         -1,860         1,476   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Net change in cash and cash equivalents

     12,565         -4,530         -7,003         -4,290         6,274         988         -2,349         -5,677   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents, beginning of period

     24,401         28,931         35,934         40,224         33,950         32,962         35,311         40,988   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Cash and cash equivalents, end of period

     36,966         24,401         28,931         35,934         40,224         33,950         32,962         35,311   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

27      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

PARENT COMPANY INCOME STATEMENT

 

     Oct-Dec      Jan-Dec  

SEK million

   2016      2015      2016      2015  

Net sales

     —           —           —           —     

Cost of sales

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Gross income

     —           —           —           —     

Operating expenses

     -457         -425         -1,185         -1,040   

Other operating income and expenses

     838         729         2,698         2,889   
  

 

 

    

 

 

    

 

 

    

 

 

 

Operating income

     381         304         1,513         1,849   

Financial net

     1,072         6,447         14,032         14,952   
  

 

 

    

 

 

    

 

 

    

 

 

 

Income after financial items

     1,453         6,751         15,545         16,801   

Transfers to (-) / from untaxed reserves

     -1,100         -1,500         -1,100         -1,500   

Taxes

     43         158         -206         -208   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net income

     396         5,409         14,239         15,093   
  

 

 

    

 

 

    

 

 

    

 

 

 

PARENT COMPANY STATEMENT

OF COMPREHENSIVE INCOME

 

     Oct-Dec      Jan-Dec  

SEK million

   2016      2015      2016      2015  

Net income

     396         5,409         14,239         15,093   

Available-for-sale financial assets

           

Gains/losses arising during the period

     —           —           —           —     

Revaluation of other investments in shares and participations

           

Fair value remeasurement

     —           216         5         457   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other comprehensive income, net of tax

     —           216         5         457   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total comprehensive income

     396         5,625         14,244         15,550   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

28      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

PARENT COMPANY BALANCE SHEET

 

SEK million

   Dec 31
2016
     Dec 31
2015
 

ASSETS

     

Fixed assets

     

Intangible assets

     547         809   

Tangible assets

     396         456   

Financial assets*

     111,981         99,914   
  

 

 

    

 

 

 
     112,924         101,179   

Current assets

     

Inventories

     3         —     

Receivables

     38,476         25,692   

Short-term investments

     12,991         25,506   

Cash and cash equivalents

     22,311         23,118   
  

 

 

    

 

 

 
     73,781         74,316   
  

 

 

    

 

 

 

Total assets

     186,705         175,495   
  

 

 

    

 

 

 

STOCKHOLDERS’ EQUITY, PROVISIONS AND LIABILITIES

     

Equity

     

Restricted equity

     48,148         48,018   

Non-restricted equity

     44,753         42,578   
  

 

 

    

 

 

 
     92,901         90,596   

Provisions

     885         807   

Non-current liabilities

     50,428         46,457   

Current liabilities

     42,491         37,635   
  

 

 

    

 

 

 

Total stockholders’ equity, provisions and liabilities

     186,705         175,495   
  

 

 

    

 

 

 

*  Of which interest-bearing securities, non-current

     7,586         —     

 

29      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

ACCOUNTING POLICIES

THE GROUP

 

This interim report is prepared in accordance with IAS 34. The term “IFRS” used in this document refers to the application of IAS and IFRS as well as interpretations of these standards as issued by IASB’s Standards Interpretation Committee (SIC) and IFRS Interpretations Committee (IFRIC). The accounting policies adopted are consistent with those of the annual report for the year ended December 31, 2015, and should be read in conjunction with that annual report.

There is no significant difference between IFRS effective as per December 31, 2016 and IFRS as endorsed by the EU.

Amendments applied as from the first quarter of 2016*

Presentation in financial statements

In the Consolidated Balance Sheet, Interest-bearing securities, non-current has been added as a new line and Short term investments has been renamed Interest-bearing securities, current. On the Statement of Cash Flow, the line Short-term investments has been renamed Interest-bearing securities.

Accounting for bonds

Due to the conditions in the market for government and mortgage bonds in Sweden, Ericsson now intends to hold bonds purchased in its “Asset management” portfolio until maturity instead of intending to hold them for trading. Bonds purchased in this portfolio after January 1, 2016 are classified as available-for-sale. Bonds held as available-for-sale with a maturity longer than one year are included in Interest-bearing securities, non-current. Bonds held as available-for-sale with a maturity shorter than one year are included in Interest-bearing securities, current. Unrealized gains and losses are recognized in Other comprehensive income. When these securities are derecog-nized, the accumulated fair value adjustments will be included in financial income.

Net Cash

The definition of Net Cash has been adjusted in order to more clearly represent Ericsson’s ability to meet financial obligations. Post-employment benefits are no longer included in the calculation of Net Cash. Interest-bearing securities, non-current are now included in Net Cash and Gross Cash because these are liquid instruments with low credit risk. Net Cash for prior periods has been recalculated using the new definition. The revised definition is as follows:

Net Cash: Cash and cash equivalents plus interest-bearing securities (current and non-current) less interest-bearing liabilities (which include: non-current borrowings and current borrowings).

Gross Cash: Cash and cash equivalents plus interest-bearing securities (current and non-current).

 

* Updated in the third quarter of 2016 due to purchase of available-for-sale bond

Amendments applied as from the second quarter of 2016

APMs

As from the second quarter, Ericsson has applied the new guidelines issued by ESMA** on APMs (Alternative Performance Measures). In summary, an APM is understood as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in IFRS. The APMs presented in the interim report will be reconciled to the most directly reconcilable line items in the financial statements at the end of the interim report.

 

** European Securities and Markets Authority – a European supervisory authority
 

 

30      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

NET SALES BY SEGMENT BY QUARTER

 

    2016     2015  

Isolated quarters, SEK million

  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

    32,410        23,343        26,765        25,820        37,304        28,817        31,163        26,436   

Global Services

    29,419        24,804        24,481        23,018        30,670        27,055        26,392        23,901   

Of which Professional Services

    21,467        18,747        18,670        17,932        23,072        20,545        20,001        18,131   

Of which Managed Services

    6,853        7,153        7,330        7,352        8,214        7,976        8,150        7,501   

Of which Network Rollout

    7,952        6,057        5,811        5,086        7,598        6,510        6,391        5,770   

Support Solutions

    3,386        2,929        2,862        3,371        5,594        3,289        3,092        3,074   

Modems

    —          —          —          —          —          —          24        109   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    65,215        51,076        54,108        52,209        73,568        59,161        60,671        53,520   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2016     2015  

Sequential change, percent

  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

    39     -13     4     -31     29     -8     18     -22

Global Services

    19     1     6     -25     13     3     10     -20

Of which Professional Services

    15     0     4     -22     12     3     10     -15

Of which Managed Services

    -4     -2     0     -10     3     -2     9     -3

Of which Network Rollout

    31     4     14     -33     17     2     11     -31

Support Solutions

    16     2     -15     -40     70     6     1     -23

Modems

    —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    28     -6     4     -29     24     -2     13     -21
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2016     2015  

Year over year change, percent

  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

    -13     -19     -14     -2     9     -4     8     8

Global Services

    -4     -8     -7     -4     3     11     14     17

Of which Professional Services

    -7     -9     -7     -1     8     15     21     20

Of which Managed Services

    -17     -10     -10     -2     6     11     26     30

Of which Network Rollout

    5     -7     -9     -12     -9     -2     -2     9

Support Solutions

    -39     -11     -7     10     40     8     9     11

Modems

    —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    -11     -14     -11     -2     8     3     11     13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2016     2015  

Year to date, SEK million

  Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

    108,338        75,928        52,585        25,820        123,720        86,416        57,599        26,436   

Global Services

    101,722        72,303        47,499        23,018        108,018        77,348        50,293        23,901   

Of which Professional Services

    76,816        55,349        36,602        17,932        81,749        58,677        38,132        18,131   

Of which Managed Services

    28,688        21,835        14,682        7,352        31,841        23,627        15,651        7,501   

Of which Network Rollout

    24,906        16,954        10,897        5,086        26,269        18,671        12,161        5,770   

Support Solutions

    12,548        9,162        6,233        3,371        15,049        9,455        6,166        3,074   

Modems

    —          —          —          —          133        133        133        109   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    222,608        157,393        106,317        52,209        246,920        173,352        114,191        53,520   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    2016     2015  

Year to date, year over year change, percent

  Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

    -12     -12     -9     -2     5     4     8     8

Global Services

    -6     -7     -6     -4     11     14     16     17

Of which Professional Services

    -6     -6     -4     -1     15 %     19     21     20

Of which Managed Services

    -10     -8     -6     -2     17     22     28     30

Of which Network Rollout

    -5     -9     -10     -12     -2     1     3     9

Support Solutions

    -17     -3     1     10     19     9     10     11

Modems

    —          —          —          —          —          —          —          —     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    -10     -9     -7     -2     8     8     12     13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

31      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

SALES GROWTH ADJUSTED FOR

COMPARABLE UNITS AND CURRENCY

 

    2016     2015  

Sequential change, percent

  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

    33     -17     6     -30     30     -6     16     -28

Global Services

    15     -2     8     -23     17     2     10     -26

Support Solutions

    10     -2     -13     -39     70     7     -3     -31
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    23     -9     6     -28     26     -2     12     -28
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Isolated quarter, year over year change, percent

  2016     2015  
  Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

    -17     -20     -11     -3     0     -15     -9     -9

Global Services

    -7     -8     -3     0     -4     -2     -2     -2

Support Solutions

    -42     -13     -6     5     22     -8     -13     -11
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    -15     -14     -7     -1     -1     -9     -6     -6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Year to date, year over year change, percent

  2016     2015  
  Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

    -13     -11     -7     -3     -8     -11     -9     -9

Global Services

    -5     -4     -2     0     -2     -2     -2     -2

Support Solutions

    -19     -5     0     5     0     -10     -12     -11
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    -10     -8     -4     -1     -5     -7     -6     -6
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

32      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

OPERATING INCOME

BY SEGMENT BY QUARTER

 

     2016      2015  

Isolated quarters, SEK million

   Q4      Q3      Q2      Q1      Q4      Q3      Q2      Q1  

Networks

     661         -251         1,593         2,724         7,154         2,764         2,435         590   

Global Services

     187         993         1,484         644         2,530         2,364         1,640         1,681   

Of which Professional Services

     844         1,401         1,676         1,293         2,712         2,386         2,403         2,109   

Of which Network Rollout

     -657         -408         -192         -649         -182         -22         -763         -428   

Support Solutions

     -417         -351         -421         238         1,668         -6         -240         82   

Modems

     —           —           —           —           1         -1         7         0   

Unallocated 1)

     -711         -50         107         -131         -318         -44         -282         -220   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     -280         341         2,763         3,475         11,035         5,077         3,560         2,133   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2016      2015  

Year to date, SEK million

   Jan-Dec      Jan-Sep      Jan-Jun      Jan-Mar      Jan-Dec      Jan-Sep      Jan-Jun      Jan-Mar  

Networks

     4,727         4,066         4,317         2,724         12,943         5,789         3,025         590   

Global Services

     3,308         3,121         2,128         644         8,215         5,685         3,321         1,681   

Of which Professional Services

     5,214         4,370         2,969         1,293         9,610         6,898         4,512         2,109   

Of which Network Rollout

     -1,906         -1,249         -841         -649         -1,395         -1,213         -1,191         -428   

Support Solutions

     -951         -534         -183         238         1,504         -164         -158         82   

Modems

     —           —           —           —           7         6         7         0   

Unallocated 1)

     -785         -74         -24         -131         -864         -546         -502         -220   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     6,299         6,579         6,238         3,475         21,805         10,770         5,693         2,133   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

1) “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses.

OPERATING MARGIN

BY SEGMENT BY QUARTER

 

As percentage of net sales, isolated quarters

   2016     2015  
   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

     2     -1     6     11     19     10     8     2

Global Services

     1     4     6     3     8     9     6     7

Of which Professional Services

     4     7     9     7     12     12     12     12

Of which Network Rollout

     -8     -7     -3     -13     -2     0     -12     -7

Support Solutions

     -12     -12     -15     7     30     0     -8     3

Modems

     —          —          —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     0     1     5     7     15     9     6     4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     2016     2015  

As percentage of net sales, year to date

   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

     4     5     8     11     10     7     5     2

Global Services

     3     4     4     3     8     7     7     7

Of which Professional Services

     7     8     8     7     12     12     12     12

Of which Network Rollout

     -8     -7     -8     -13     -5     -6     -10     -7

Support Solutions

     -8     -6     -3     7     10     -2     -3     3

Modems

     —          —          —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     3     4     6     7     9     6     5     4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

33      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

EBITA

BY SEGMENT BY QUARTER

 

     2016      2015  

Isolated quarters, SEK million

   Q4      Q3      Q2      Q1      Q4      Q3      Q2      Q1  

Networks

     864         -56         1,784         2,956         7,668         3,233         3,014         1,218   

Global Services

     397         1,253         1,691         837         2,770         2,604         1,918         1,952   

Of which Professional Services

     1,115         1,619         1,849         1,459         2,915         2,605         2,635         2,344   

Of which Network Rollout

     -718         -366         -158         -622         -145         -1         -717         -392   

Support Solutions

     -191         -116         -184         496         1,892         226         -4         308   

Modems

     —           —           —           —           1         -1         7         0   

Unallocated 1)

     -710         -49         107         -130         -317         -44         -281         -220   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     360         1,032         3,398         4,159         12,014         6,018         4,654         3,258   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     2016      2015  

Year to date, SEK million

   Jan-Dec      Jan-Sep      Jan-Jun      Jan-Mar      Jan-Dec      Jan-Sep      Jan-Jun      Jan-Mar  

Networks

     5,548         4,684         4,740         2,956         15,133         7,465         4,232         1,218   

Global Services

     4,178         3,781         2,528         837         9,244         6,474         3,870         1,952   

Of which Professional Services

     6,042         4,927         3,308         1,459         10,499         7,584         4,979         2,344   

Of which Network Rollout

     -1,864         -1,146         -780         -622         -1,255         -1,110         -1,109         -392   

Support Solutions

     5         196         312         496         2,422         530         304         308   

Modems

     —           —           —           —           7         6         7         0   

Unallocated 1)

     -782         -72         -23         -130         -862         -545         -501         -220   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     8,949         8,589         7,557         4,159         25,944         13,930         7,912         3,258   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

1)  “Unallocated” consists mainly of costs for corporate staff, non-operational capital gains and losses.

EBITA MARGIN

BY SEGMENT BY QUARTER

 

As percentage of net sales, isolated quarters

   2016     2015  
   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

Networks

     3     0     7     11     21     11     10     5

Global Services

     1     5     7     4     9     10     7     8

Of which Professional Services

     5     9     10     8     13     13     13     13

Of which Network Rollout

     -9     -6     -3     -12     -2     0     -11     -7

Support Solutions

     -6     -4     -6     15     34     7     0     10

Modems

     —          —          —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1     2     6     8     16     10     8     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As percentage of net sales, year to date

   2016     2015  
   Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar     Jan-Dec     Jan-Sep     Jan-Jun     Jan-Mar  

Networks

     5     6     9     11     12     9     7     5

Global Services

     4     5     5     4     9     8     8     8

Of which Professional Services

     8     9     9     8     13     13     13     13

Of which Network Rollout

     -7     -7     -7     -12     -5     -6     -9     -7

Support Solutions

     0     2     5     15     16     6     5     10

Modems

     —          —          —          —          —          —          —          —     
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     4     5     7     8     11     8     7     6
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

34      Ericsson  |  Fourth Quarter and Full-Year Report 2016


Table of Contents

NET SALES

BY REGION BY QUARTER

 

     2016     2015  

Isolated quarters, SEK million

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

North America

     14,915        13,224        13,426        13,182        17,082        14,355        14,578        12,246   

Latin America

     4,970        4,381        4,542        4,040        6,106        5,610        5,067        4,574   

Northern Europe & Central Asia 1) 2)

     2,711        2,043        2,093        2,222        2,847        2,520        2,556        2,726   

Western & Central Europe 2)

     4,226        3,565        4,466        3,953        5,320        4,540        5,131        4,741   

Mediterranean 2)

     6,639        4,543        5,427        4,296        6,971        5,470        5,887        4,982   

Middle East

     6,388        4,280        4,921        3,567        6,089        5,728        6,515        4,517   

Sub Saharan Africa

     2,732        2,012        2,313        2,120        2,847        2,691        2,653        2,158   

India

     3,042        2,597        2,426        2,683        3,172        3,629        3,049        3,531   

North East Asia

     9,623        6,122        6,041        5,579        8,916        6,348        6,943        6,030   

South East Asia & Oceania

     6,655        5,054        5,272        5,199        5,329        4,750        4,897        4,259   

Other 1) 2)

     3,314        3,255        3,181        5,368        8,889        3,520        3,395        3,756   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     65,215        51,076        54,108        52,209        73,568        59,161        60,671        53,520   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which in Sweden

     843        690        477        1,113        972        1,135        598        1,091   

2) Of which in EU

     11,154        8,507        9,635        9,229        12,644        10,584        11,453        10,904   
     2016     2015  

Sequential change, percent

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

North America

     13     -2     2     -23     19     -2     19     -6

Latin America

     13     -4     12     -34     9     11     11     -30

Northern Europe & Central Asia 1) 2)

     33     -2     -6     -22     13     -1     -6     -33

Western & Central Europe 2)

     19     -20     13     -26     17     -12     8     -22

Mediterranean 2)

     46     -16     26     -38     27     -7     18     -34

Middle East

     49     -13     38     -41     6     -12     44     -34

Sub Saharan Africa

     36     -13     9     -26     6     1     23     -17

India

     17     7     -10     -15     -13     19     -14     49

North East Asia

     57     1     8     -37     40     -9     15     -35

South East Asia & Oceania

     32     -4     1     -2     12     -3     15     -14

Other 1) 2)

     2     2     -41     -40     153     4     -10     -19
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     28     -6     4     -29     24     -2     13     -21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which in Sweden

     22     45     -57     15     -14     90     -45     4

2) Of which in EU

     31     -12     4     -27     19     -8     5     -24
     2016     2015  

Year-over-year change, percent

   Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1  

North America

     -13     -8     -8     8     31     2     -4     0

Latin America

     -19     -22     -10     -12     -7     -5     -6     -3

Northern Europe & Central Asia 1) 2)

     -5     -19     -18     -18     -30     -20     -6     12

Western & Central Europe 2)

     -21     -21     -13     -17     -13     -2     12     8

Mediterranean 2)

     -5     -17     -8     -14     -7     5     7     4

Middle East

     5     -25     -24     -21     -11     -5     44     17

Sub Saharan Africa

     -4     -25     -13     -2     9     10     41     19

India

     -4     -28     -20     -24     34     81     85     108

North East Asia

     8     -4     -13     -7     -3     -10     8     23

South East Asia & Oceania

     25     6     8     22     8     25     34     24

Other 1) 2)

     -63     -8     -6     43     91     4     1     15
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     -11     -14     -11     -2     8     3     11     13
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

1) Of which in Sweden

     -13     -39     -20     2     -7     4     -41     9

2) Of which in EU

     -12     -20   &n