* Clear strategic agenda to build on the core assets and invest in targeted
areas to continue to further expand leadership position
* Outlook on growth for 2013-2017 for the projected total addressable market
of a CAGR of 3-5%, continued ambition to grow faster than the market fuelled
by growth in targeted areas
* Current company transformation uncovers opportunities to leveraging global
skills and scale to increase efficiencies and reduce cost by SEK 9 b., with
full effect during 2017, with a restructuring cost of SEK 3-4 b.
Ericsson (NASDAQ:ERIC) will today hold its Capital Markets Day in Stockholm. The
company will give an update on progress on its Networked Society strategy, with
focus on market development, growth agenda and profitability.
Hans Vestberg, President and CEO, says: "We are taking the next step in our
transformation to become a leading ICT player. The telecom, IT and media
industries are converging and we are confident in our choice of strategy to play
a key role in this new world. We will continue to build on our combined strength
of technology and services leadership to stay relevant to our customers in a
transforming industry."
Market development
Steady growth is expected across all areas with no major changes in main
compound annual growth rates (CAGR) compared with last year's projections.
Ericsson estimates that the total network equipment market during the years
2013-2017 will show a CAGR of 2-4%; the telecom services market is estimated to
show a CAGR of 4-6%; and the market for support solutions is forecasted to show
a CAGR of 7-9% in the same period.
With an annual average growth of 7% in constant currencies during 2010-2013,
Ericsson has met its target to grow faster than the market during this time
period. The ambition going forward is to continue to grow faster than the
projected total addressable market CAGR of 3-5% 2013-2017. Ericsson's growth
will be supported by a CAGR of approximately 10% in 2013-2017 in the targeted
areas.
Growth agenda
As the world becomes increasingly connected, ICT is starting to transform large
parts of society as well as virtually all industries with mobility as the key
driver. The networks are becoming more relevant not only to people using their
smartphones, but also to businesses and society at large. In light of this
development, both operators and vendors are making strategic choices based on
their respective assets.
Ericsson has set out a clear long-term strategic framework for becoming an
industry leader, driving transformation trough mobility, also in the changing
ICT industry. This framework includes the following key components:
* Excel in our core business - radio, core and transmission, and telecom
services
* Establish leadership in targeted areas - Cloud, IP networks, TV and media,
OSS and BSS, as well as in Industry & Society, addressing new customer
segments outside of the telecom operator domain
The targeted areas have been selected based on clear adjacency to the core
business, high degree of software and professional services, high degree of
recurrent business as well as higher market growth than the core business areas.
In addition, the targeted areas are less capital intensive than today's core
business.
Efficiency and cost reductions
There is good progress on strategy execution and earnings improvements in the
core business. However, the current company transformation is uncovering
opportunities to further leveraging global skills and scale to increase
efficiencies and reduce cost across the business. As a result, work is ongoing
to identify additional improvement activities and ways to accelerate cost
reductions to achieve savings of approximately SEK 9 b. with full effect during
2017.
As part of its continuous business transformation, Ericsson generates annual
restructuring charges of approximately SEK 2 b. To reach the targeted SEK 9 b.
savings, and with current visibility, it is estimated that the new and
accelerated activities will generate an additional total SEK 3-4 b. in
restructuring costs during the full duration of the three-year program. It is
estimated that half of the savings will reduce Ericsson's operating expenses
(OPEX) and the other half will impact cost of sales (CoS).
Accelerated efficiency measures will primarily relate to five key areas:
portfolio streamlining and ways of working in R&D; structural enhancements in
IS/IT; accelerated Service Delivery transformation; supply chain efficiencies;
as well as structural efficiency gains in G&A. Savings will include both
headcount reductions as well as savings in external costs.
Measures will include both new and already initiated actions, such as the
discontinuation of the modems operations and savings from establishment of
global ICT centers. Progress updates will be included in Ericsson's earnings
reports.
Jan Frykhammar, Chief Financial Officer, says "The key components of our profit
improvement plan is to strengthen core business, build strength in targeted
areas while at the same time continue to improve our cash flow. Although we
believe OPEX will peak in 2014, we believe we can do more to increase efficiency
and reduce cost."
Alongside Vestberg, several executive leadership team members will be presenting
at the Capital Markets Day, including: Jan Frykhammar, CFO; Johan Wibergh, Head
of Segment Networks; Magnus Mandersson, Head of Business Unit Global Services;
Per Borgklint, Head of Business Unit Support Solutions; and Rima Qureshi, Head
of Strategy. In addition, Charlotta Sund, Head of Region Northern Europe &
Central Asia will present at today's event, which takes place at Arlanda Airport
in Stockholm, Sweden.
NOTES TO EDITORS
Download high-resolution photos and broadcast-quality video at
www.ericsson.com/press
Ericsson is the driving force behind the Networked Society - a world leader in
communications technology and services. Our long-term relationships with every
major telecom operator in the world allow people, businesses and societies to
fulfill their potential and create a more sustainable future.
Our services, software and infrastructure - especially in mobility, broadband
and the cloud - are enabling the telecom industry and other sectors to do better
business, increase efficiency, improve the user experience and capture new
opportunities.
With more than 110,000 professionals and customers in 180 countries, we combine
global scale with technology and services leadership. We support networks that
connect more than 2.5 billion subscribers. Forty percent of the world's mobile
traffic is carried over Ericsson networks. And our investments in research and
development ensure that our solutions - and our customers - stay in front.
Founded in 1876, Ericsson has its headquarters in Stockholm, Sweden. Net sales
in 2013 were SEK 227.4 billion (USD 34.9 billion). Ericsson is listed on NASDAQ
OMX stock exchange in Stockholm and the NASDAQ in New York.
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FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Communications
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E-mail: media.relations@ericsson.com
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E-mail: investor.relations@ericsson.com
Ericsson discloses the information provided herein pursuant to the Securities
Markets Act and/or the Financial Instruments Trading Act. The information was
submitted for publication on November 13 at 08:00 CET.
[HUG#1871009]
