Ericsson reports third quarter 2014

Third quarter highlights

• Sales in the quarter were SEK 57.6 (53.0) b., a growth of 9% YoY and 5% QoQ. Sales for comparable units, adjusted for currency, grew by 3% YoY and 2% QoQ
• The sales growth YoY, mainly driven by growth in the Middle East, China, India and Russia was partly offset by sales decline in North America

Gross margin increased YoY to 35.2% (32.0%), driven by improved business mix, higher IPR revenues and lower restructuring charges

Profitability showed stable improvement across all segments

Operating income amounted to SEK 3.9 (4.2) b. The decline was mainly driven by revaluation of unrealized hedge contracts of SEK -1.0 (0.8) b.

Cash flow from operating activities was SEK -1.4 (1.5) b.

SEK b.	Q3 2014	Q3 2013	YoY change	Q2 2014	QoQ change	9 months 2014	9 months 2013
Net sales	57.6	53.0	9%	54.8	5%	160.0	160.3
Sales growth adj. for comparable units and currency	-	-	3%	-	2%	-2%	5%
Gross margin	35.2%	32.0%	-	36.4%	-	36.0%	32.1%
Operating income	3.9	4.2	-8%	4.0	-3%	10.5	8.8
Operating margin	6.7%	8.0%	-	7.3%	-	6.6%	5.5%
Net income	2.6	3.0	-13%	2.7	-1%	7.0	5.7
EPS diluted, SEK	0.81	0.90	-10%	0.79	3%	2.25	1.72
EPS (Non-IFRS), SEK 1)	1.11	1.31	-15%	1.07	4%	3.08	3.19
Cash flow from operating activities	-1.4	1.5	-193%	2.1	-166%	10.1	2.8
Net cash, end of period	29.4	24.7	19%	32.5	-9%	29.4	24.7
1) EPS, diluted, excl. amortizations and write-downs of acquired intangible assets, and restructuring

Comments from Hans Vestberg, President and CEO of Ericsson (NASDAQ:ERIC):

Reported sales increased by 9% year-over-year and sales for comparable units, adjusted for currency, grew by 3% with stable operating income.

The sales growth year-over-year was mainly driven by the Middle East, China, India and Russia, but was partly offset by lower sales in North America.

Mobile broadband sales increased both year-over-year and quarter-over-quarter as we have started to deliver on previously communicated key contracts. We are executing on 4G/LTE contracts in Mainland China and Taiwan and improving sales in Japan. Furthermore, the investment climate in India continues to improve. Sales in parts of Europe, mainly UK and Germany, showed growth year-over-year while the development in southern Europe continued to be weak.