Ericsson financials

• Main article: Ericsson
• Business in Russia: Ericsson Russia

2023: Loss - $2.5 billion

At the end of 2023, Ericsson received revenue of 263.35 billion Swedish crowns (approximately $25.21 billion at the exchange rate as of January 23, 2024). This is 3% less than the result for 2022, when the figure was 271.55 billion crowns ($25.99 billion). The corresponding figures are given in the financial report published on January 23, 2024.

In 2023, Ericsson recorded a net loss of 26.1 billion Swedish crowns (about $2.5 billion). For comparison: a year earlier, the supplier of telecommunications equipment received a net profit of 19.1 billion crowns ($1.83 billion). The company attributes the losses to the impairment of goodwill of 31.9 billion Swedish crowns ($3.05 billion) and restructuring costs of approximately 6.5 billion crowns ($0.62 billion).

Ericsson earns revenue of SEK 263.35 billion

While the actions we have taken to improve financial performance are yielding results, we are not satisfied with our profitability and we still have a lot to do. In 2024, we expect a further decline in the market outside of China. At the same time, the uncertainty will be the same as in 2023, "says Börje Ekholm, President and CEO of Ericsson.

In cloud software and services, Ericsson met its targets and broke even at least in 2023, the report noted. In the segment of network equipment, the company's annual sales were at 171.4 billion Swedish crowns ($16.41 billion), which is 11% less than in 2022. Cloud software and services brought in 63.6 billion crowns ($6.09 billion) - plus 5% on an annualized basis. The corporate segment accounted for 25.7 billion kronor ($2.46 billion), and growth reached 76% year-on-year. All other areas provided 2.5 billion kronor ($0.24 billion) in revenue.^[1]

2021

Revenue - 232.3 billion kronor, profit - 23 billion kronor

According to the results of work in 2021, Ericsson raised 232.3 billion crowns (about $25.1 billion at the exchange rate at the time of publication of the statements - January 25, 2022), which almost exactly corresponds to the revenue in the previous year. Most of the turnover still falls on the telecommunications equipment division - in 2021, the turnover here amounted to 167.8 billion crowns, an increase of 1% on an annualized basis.

In the direction of digital services, Ericsson's revenue for the year fell by 3%, to 36.2 billion euros, largely due to a reduction in business in China. In the category of advanced technical support services (Managed Services; service model for servicing ICT infrastructure) revenues decreased even more - by 10%, to 20.4 billion crowns. The decline in demand for services, the revision of existing contracts and the rejection of some of them affected here.

Ericsson also said that in 2021, equipment sales accounted for 46% of Ericsson's revenue, compared to 41% a year earlier. The share of software solutions during this time fell from 22% to 20, and services - from 37% to 34%.

Ericsson's revenue in 2021 grew by 5%, to 77.5 billion kronor. In Europe and Latin America, it increased by 8% to 60.3 billion crowns.

Ericsson's net profit in 2021 was equal to 23 billion crowns, an increase of 30% compared to profit in 2020.

As of December 31, 2021, 101,322 people worked at Ericsson, while by the same period in 2020 - 102,203 employees. The number of employees of the company has decreased the decrease in the number of employees in China.

After falling its share of the Chinese telecommunications equipment market, Ericsson now needs fewer resources to implement 5G network development projects. The company is forced to optimize costs and change the balance of sales in order to maintain price competitiveness.^[2]

11th in the world among ICT developers by revenue

According to Synergy Research Group, the total revenue of the 13 largest manufacturers of software and ICT services for business, including telecom operators, reached $613 billion in this market in 2021, which is 10% more than a year earlier. Ericsson was ranked 11th on this list.

The world's largest manufacturers of ICT solutions for business

2020: Revenue growth by 2%, to $27.6 billion

In 2020, Ericsson's revenue reached 232.4 billion crowns (about $27.6 billion at the exchange rate as of February 2, 2021 calendar year), an increase of 2% compared to the previous year. This rise of the company is due to the fact that telecom operators in North America, Europe and Northeast Asia continue to actively purchase equipment for launching 5G networks.

In the division for the production of telecommunications equipment, turnover increased by 7%, to 166 billion crowns. Sales of digital services decreased by 6%, amounting to 37.3 billion crowns. On professional services provided to operators (Managed Services, this includes network management, administration, application hosting, etc.), the Swedish company earned 22.6 billion euros in 2020, which is 12% less than a year ago.

Ericsson revenue in 2020 increased 2%, to $27.6 billion

2020 turned out to be a difficult year for telecom. The pandemic comes at a time when operators around the world are investing in 5G equipment. There have been concerns that government restrictions could affect the implementation of such projects, while telcos will inevitably focus on ensuring their existing infrastructure can meet the additional demands placed on it. Despite this, Ericsson's revenue in 2020 showed growth.

By the beginning of 2021, Ericsson has more than 100 commercial contracts for the supply of products for 5G networks. Ericsson is a supplier to China Mobile, China Telecom and China Unicom, the three largest Chinese mobile operators.

Ericsson finished 2020 with a net profit of 17.6 billion kronor, almost 10 times the profit of a year ago. Restructuring costs rose from 0.8 billion to 1.3 billion crowns, primarily due to organizations changes in the merger of telecom operators in North America and the purchase of the antenna and filter business.

North America remains the largest market for Ericsson. In 2020, the company's revenue there reached 73.8 billion euros, an increase of 5% compared to 2019. In Europe and Latin America, revenues decreased by 6%, to 55.7 billion euros.^[3]

2018: Revenue growth of 3% to 210.84 billion kronor; losses - 6.3 billion kronor

In 2018, Ericsson's revenue amounted to 210.84 billion kronor ($23.22 billion), which is 3% more than a year earlier.

Revenue in the division specializing in the sale of equipment to telecom operators amounted to 138.7 billion crowns ($15.27 billion), which is 5% more than a year ago. In the direction of digital services, revenues decreased by 2% to 38.1 billion crowns ($4.2 billion).

Financial performance

Ericsson wrote off 6.1 billion crowns (about $671 million) for the restructuring of the Business Support System, BSS which is part of the digital division. In addition, the company allows additional expenses in the amount of 1.5 billion crowns ($165 million) to cut jobs.

Ericsson remains unprofitable, although in 2018 the company's cash losses decreased by more than five times and amounted to 6.3 billion crowns ($694 million). The losses are caused by investments in equipment for fifth generation (5G) networks.

Despite the fact that the costs associated with strategic contracts and pilot trials of 5G will affect profitability in the short term, they will help achieve our goals for 2020 and 2022, as well as strengthen our business in the long term, - said Ericsson CEO Borye Ekholm, whose words are quoted in a press release.

According to the head, the company's revenue growth is largely due to an increase in demand for 5G technology from North American mobile operators.

In North America, Ericsson's revenue jumped 13% in 2018 compared to 2017, which was the highest among all regions of the Swedish telecommunications equipment manufacturer's presence. At the same time, most of the vendor's revenue fell on the countries of Europe and Latin America, the indicators for which Ericsson cites in the report in one line. Sales of the company in Europe and Latin America increased by 6%.^[4]

2017: Losses of $4.4 billion

In 2017, Ericsson's revenue amounted to 201.3 billion Swedish crowns ($25.45 billion at the exchange rate as of February 5, 2018), which is 10% less than a year ago. Net profit of 1.9 billion crowns, which took place in 2016, was replaced by a net loss of 35.1 billion crowns ($4.4 billion) a year later.

The cash losses were in some ways expected but not acceptable... In 2017, the focus was on transforming the entire strategy and improving the structure and financial performance of the company. 2017 was also the year when 5G technology moved from concept to real business opportunities. At the same time, we were doing well with the portfolio of 4G solutions, - said Ericsson CEO Borje Ekholm at a conference on the publication of annual reports.

Ericsson suffers losses five quarters in a row

In 2017, Ericsson entered into new contracts for the supply of equipment for 4G- and 5G networks to Deutsche Telekom and Verizon. The latter plans to deploy fifth-generation networks in three to five American cities by the end of 2018, which will positively affect Ericsson's revenues.

According to Reuters, Ericsson has been suffering losses for five quarters in a row, which is due to restructuring costs, increased competition and lower demand in the telecommunications market.

Ericsson's cost-cutting measures resulted in the dismissal of thousands of people in 2017. The company reached annual savings of 6 billion crowns and planned to bring this figure to at least 10 billion crowns by mid-2018.

It follows from the Ericsson financial report that in 2017, revenue in the division specializing in the sale of equipment to telecom operators amounted to 128 billion crowns. The direction of digital services showed a turnover of 41 billion crowns.

Weak earnings sent Ericsson's share price down more than 9% on the day of its 2017 report. Over the previous three years, the securities of the Swedish company have more than doubled.^[5]

2016: 7-fold profit drop

On January 26, 2017, Ericsson published a report on the work in 2016. The Swedish telecoms maker's profit shrank more than sevenfold. Ericsson also announced a reduction in dividend payments for the first time in many years.

In 2016, Ericsson's net profit was SEK 1.9 billion ($214.6 million), compared to SEK 13.7 billion in profit a year earlier. This decline was primarily caused by lower costs for operators to build broadband networks, as well as a decrease in the company's licensing revenues.

Ericsson chief Borje Ekholm

One of Ericsson's main sources of profit in recent years has been global patent licensing agreements. One of these was concluded at the end of 2015: then Apple agreed to pay Ericsson royalties for the use of European partner technologies for seven years.

In 2016, Ericsson's revenue reached 222.6 billion kronor ($25.1 billion), which is 10% less than in 2015. In this downturn, the company blames weak demand for mobile network equipment, especially in markets with macroeconomic problems.

Ericsson sales in India fell the most - by 20% in 2016 compared to 2015. In Western and Central Europe, revenue decreased by 18%, in Latin America and the Middle East - by 16%. There is no data on Russia in the report.

Together with the publication of financial results, Ericsson announced a 73% reduction in annual dividends to 1 crown ($0.11). The last time before that, the company reduced payments to shareholders in 2008. In 2016, Ericsson fell 35%.

Commenting on the announced financial results and plans to reduce dividends, Ericsson CEO Borje Ekholm noted that investments will be concentrated in areas in which the company "can and should win."

This means that profitability is more priority than growth, but we will continue to actively work to improve efficiency and effectiveness in all areas, "he said.[6]

2015: Revenue growth of 8% with lower profitability

On January 27, 2016, Ericsson reported an increase in revenue facilitated by a strong dollar and a growing technology licensing business. At the same time, the profitability of the Swedish company is declining partly due to Russia, where the revenue of the telecommunications equipment manufacturer fell by 30%.

According to data released by Ericsson, in 2015 the company's revenue amounted to 246.9 billion Swedish crowns ($29 billion), which is 8% more than a year earlier. Adjusted sales, which do not take into account currency fluctuations and take into account the indicators of only comparable divisions, decreased by 5%. In 2015, Ericsson made a net profit of 13.7 billion kronor (1.6 billion) against 11.1 billion kronor ($1.3 billion) in 2014.

Ericsson reports revenue boost boosted by strong dollar and growing technology licensing business

One of the main stimulants of the vendor's income growth is global patent licensing agreements. One of these was concluded at the end of 2015: then Apple agreed to pay Ericsson royalties for the use of European partner technologies for seven years. The financial terms of that contract were not disclosed.

At the end of 2015, Ericsson's revenue from sales of intellectual property rights increased to 14.4 billion crowns ($1.68 billion) from 9.9 billion crowns ($1.2 billion) a year earlier. This is more than predicted in the company.

According to Bloomberg, although Ericsson's revenue and profits are increasing, the company's business profitability is falling, as it sells more low-profit equipment than more profitable software. This downturn cannot offset either rising patent revenues or dwindling restructuring costs. In 2015, Ericsson's gross margin decreased to 34.8% from 36.2% in 2014.

Ericsson notes that sales of telecommunications equipment in Russia, Brazil and some countries of the Middle East remain weak largely due to macroeconomic problems. The company's revenue in Northern Europe and Central Asia amounted to 10.6 billion crowns ($1.2 billion), which is 14% less than a year ago. In Russia, Ericsson sales were measured at 4.7 billion kronor ($550 million), while in 2014 they amounted to 6.7 billion kronor ($785 million).^[7]

2014: Weak year-end results as North American sales fall

On January 27, 2015, Ericsson announced the financial results of 2014. Sales of the Swedish company barely grew, which is the fault of the North American market, where local operators have reduced investment in the deployment of wireless networks.^[8]

In 2014, Ericsson's revenue amounted to 228 billion Swedish crowns (about $27.5 billion) against 227.4 billion crowns a year earlier. Net profit decreased by 8%, reaching 11.1 billion kronor ($1.3 billion). Operating profit fell slightly less - by 6% to 16.8 billion kronor ($2 billion). Operating profit margins declined year-on-year from 7.8% to 7.4%.

In 2014, Ericsson's revenue in Russia exceeded $800 million

At the end of 2014, Ericsson allocated 63.4 billion crowns ($7.5 billion) for operating expenses, which is 8% more than in 2013. 36.3 billion crowns ($4.3 billion) were spent on research and development, 27.1 billion crowns ($3.2 billion) on sales organization and various administrative costs.

Ericsson's weak financial performance is largely due to an 8 percent drop in North American sales, which brings the company about 19 percent in revenue. Cellular operators in this region have reduced infrastructure costs and began to spend more money on the purchase of third-party assets and frequencies, notes The Wall Street Journal.^[9]

Ericsson Chief Executive Officer Hans Vestberg expects continued weakness in the North American business in the short term. In this regard, the company relies on growing regions.

Ericsson's biggest sales rise (up 22%) in 2014 was in the Middle East. In Central and Western Europe, the telecom equipment manufacturer's revenue jumped 7%, in Northern Europe and Central Asia - 6%.

Ericsson includes Russia as the latest region, where the company has made good money due to the growing investment of operators in mobile broadband networks. In 2014, the Swedish vendor's revenue in Northern Europe and Central Asia was measured at 12.4 billion crowns ($1.5 billion), where the Russian market accounted for an income of just over $800 million.

2013: 2x increase in net profit as ST-Ericsson closes

Ericsson's net profit for the whole of 2013 doubled from 2012 to €1.38 billion (SEK 12.2 billion). The sharp increase in profit is due to the termination of the loss-making company ST-Ericsson - a joint venture between Ericsson and STMicroelectronics. The company's revenue for 2013 was €25.8 billion (SEK 227.4 billion), unchanged from 2012. Earnings per share doubled to 0.42 euros.

2010: Sales decline by 2%

Sales in 2010 decreased by 2% compared to 2009 to 203.3 billion SEK (about $31 billion). Operating profit (excluding profit of joint ventures) slightly decreased - 24.4 billion Swedish crowns ($3.7 billion) against 24.6 billion a year earlier. Net profit rose 172% to 11.2 billion Swedish kronor ($1.7 billion) versus 4.1 billion in 2009. Mainly, rapid profit growth is associated with an improvement in the performance of the joint venture Sony Ericsson and a decrease in restructuring costs.

Sales in the Networks (communication equipment) segment in 2010 decreased by 1% to 112.7 billion Swedish crowns ($17 billion). Despite the acquisition of Nortel assets, the company was unable to show positive dynamics due to the shortage of components that was observed throughout the year.

Sales in the Global Services segment (consulting services) increased by 1% to 80.1 billion crowns ($12.2 billion), in the Multimedia segment (solutions for content suppliers) - decreased by 21% to 10.5 billion crowns ($1.6 billion).

The largest market for Ericsson is North America. Compared to 2009, sales in this region increased by 107%. The second largest market is China and Northeast Asia. Sales in Northern Europe and Central Asia, which includes Russia, grew by 2% to 12.2 billion crowns ($1.9 billion).

In the fourth quarter of 2010, the company's sales increased by 8% compared to the same period in 2009 to 62.8 billion kronor ($9.5 billion), profit - more than 6 times (by 504%) to 4.4 billion kronor ($700 million). "This is mainly due to the rapid development of mobile broadband networks," said Hans Westberg, President and CEO of Ericsson. "Taking into account currency fluctuations and hedges, sales growth in comparable currencies amounted to 7% compared to the same period in 2009. One cannot fail to note the positive dynamics of the given cash flow indicator, which reached a value of 16.2 billion shv in the 4th quarter. kroner (compared to 13.6 billion sh. kronor a year earlier). " On an annualized basis, this figure amounted to 29.8 billion Sh. kroner (28.7 billion sh. kronor in 2009).

Sales in the Network segment grew 14% year-on-year and 40% year-on-year compared to Q3 2010 due to increased demand for mobile broadband solutions and the active deployment of 2G networks in China. While the component supply situation returned to normal during the quarter, we still cannot fully meet the increased market demand for some mobile broadband solutions.

Sales in the Professional Services segment decreased by -1% year-on-year and increased by 20% compared to the 3rd quarter of 2010. The slight decline in sales in the segment was due to factors such as a decrease in the number of deployed networks - due to the global shortage of components that swept the communications industry in 2010, as well as the strengthening of the Swedish crown. Sales in the field of Network Management Services (Managed Services) grew by 5% on an annualized basis, during 2010 Ericsson signed 54 network management outsourcing contracts, of which 26 agreements were concluded as part of the renewal of existing contracts.

Sales in the Multimedia segment also returned to positive dynamics, year-on-year growth was 3%, compared to the third quarter of 2010, sales increased by 50%, and revenue management solutions are developing especially successfully.

In the Northern Europe and Central Asia region, sales in the fourth quarter of 2010 were up 38% year-on-year and 104% quarter-on-quarter. Such dynamic growth was made possible by the expansion of 2G network capacities in the region, as well as the active deployment of mobile broadband networks in the eastern part of the region. Sales of Ericsson solutions in Russia have demonstrated especially rapid growth. In Scandinavia, projects to deploy 4G/LTE networks have made a significant contribution to the company's success. So, in the fourth quarter, Ericsson signed contracts for the deployment of LTE networks with TDC operators in Denmark and DNA in Finland. Thus, the number of Ericsson commercial 4G contracts in the region reached three. As for the priorities of operators, here the key areas of development remain the modernization and expansion of networks. Cost optimization and operational efficiency have become equally important, which forms the basis for growing demand for outsourcing/network management services.

In August 2010, Ericsson delivered a two million base station (worldwide); It took Ericsson about twenty years to, as announced in 2007, install 1 million base stations, and only three years to deliver another 1 million base stations. Ericsson achieved such a significant increase in deliveries thanks to the release of the RBS 6000, a multi-standard energy-saving base station that supports GSM/EDGE, WCDMA/HSPA and LTE technologies at the same time.

Notes