Telecom tech giant Ericsson reported its fourth quarter earnings on Friday. In a statement, the telecom said long-term business fundamentals remained strong and the company will continue to invest in further strengthening their portfolio and growing its global footprint. The company expects temporary negative impact during 2021 from intellectual property rights renewals.
“The pandemic has fast forwarded the digitalization of societies, including remote working, by months if not years,’” said Ericsson President/CEO Börje Ekholm. “A resilient digital infrastructure is critical. We see more signs that countries and enterprises see 5G as a key access technology, with increasing deployment speed in Australia, the Middle East, North East Asia and the U.S. The pandemic has exposed the digital divide and rapid deployment of 5G is a fast way to bridge the divide,” he said.
Ekholm said the Swedish telecom regulator’s decision to exclude Chinese vendors from 5G networks may create exposure for the operations in China. Its business in 180 markets, he said, has been built on free trade and open, competitive markets and ensured the development of a single global standard for mobile communication.
“It is critical that responses to the geopolitical situation safeguard the extraordinary value associated with those operating standards for 5G and beyond,” Ekholm said. “During 2020 we further reinforced our strong commitment to ethics and compliance. We increased the investment with the recruitment of additional dedicated resources and the deployment of new or revised processes and controls. As a vital cornerstone, we put focus on establishing a durable ethical culture that is built on individual accountability for responsible business practices. The ongoing independent monitorship is providing valuable contributions to achieving our ambition.”
Fourth quarter highlights included:
- Sales adjusted for comparable units and currency grew by 13 percent YoY mainly driven by sales in North East Asia, Europe and North America.
- Reported sales were U.S.$66.4B
- Gross margin excluding restructuring charges improved to 40.6 percent with margin improvements in all segments. Reported gross margin improved to 40.6 percent.
- Operating income excluding restructuring charges improved to SEK 11.0 b. (15.8 percent operating margin) from US$6.5B mainly driven by Networks. Reported operating income was U.S.$6.1B.
- Networks sales increased by 20 percent. YoY, adjusted for comparable units and currency.
- Operating margin excluding restructuring charges was 21.5 percent.
- Reported net income was U.S.$4.5B
- Free cash flow before M&A was U.S.$-1.9B.
- Q4 2019 included a payment of SEK 10.1 b. related to the resolution of the U.S. SEC and DOJ investigations. Net cash December 31, 2020, was U.S.$34.5B
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