SECOND QUARTER 2015 - EricssonSECOND QUARTER 2015 July 17, 2015 This presentation contains forward-looking statements. Such statements are based on our current expectations and are

SECOND QUARTER 2015

July 17, 2015

HELENA NORRMAN Senior Vice President Communications

SECOND QUARTER 2015

July 17, 2015

This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

HANS VESTBERG

President and CEO

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© Telefonaktiebolaget LM Ericsson 2015 | SECOND QUARTER REPORT 2015 | JULY 17, 2015 | Page 5

key developments

Market › Strong focus on 5G and digitalization of industries

› Consolidation continues – customers and vendors

› Continued currency movements

› Ericsson Mobility Report released in June

– 55% growth in data traffic Q114 to Q115

– Smartphone subscriptions to double by 2020

– 3.7 billion LTE subscriptions by 2020

Ericsson › North America business stabilized in the quarter

› Continued fast pace of 4G deployments in Mainland China

› Further steps taken in IPR litigation process

› Networks profitability recovered

› Company transformation accelerates – Good growth in targeted areas, especially OSS & BSS

– Global cost and efficiency program – according to plan

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4%

8%

14%

6%7% 7%

9%

4%6%

0

2

4

6

8

10

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b.

Tu

sen

tal

Operating income and margin

0%-3%

0%

-9%

-1%

9%

1%

13%11%

0

20

40

60

80

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b. Net sales and sales development

Net sales

Sales change, YoY

Operating income

Operating margin

Ericsson q2 2015

› Reported sales up 11% YoY

› Organic FX adjusted sales down 6% YoY

– North America and Japan at lower levels

– Growth in Mainland China, Middle East, India

and South East Asia

› Organic FX adjusted sales up 12% QoQ

– Mobile broadband business in North America

stabilized

– Mainland China and the Middle East developed

strongly

– Sales declined in India and Japan

› Operating income, excluding restructuring

charges improved to SEK 6.3 (4.2) b.

– Improved in all segments

– Networks margin recovered from Q1

– Supported by increased sales and FX

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Regional sales Q2 YoY

SEK 54.8 b. -6% -6% 1%

7% 8%

12% 41%

34%

85%

44%

Growth driven by currency – adjusted sales down 6%

-4%

SEK 60.7 b.

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Regional sales Q2 qoq

SEK 53.5 b.

SEK 60.7 b.

-14% -10%

-6% 8% 11%

23% 15%

18%

15%

44%

19%

Growth in North America – partly offset by India and Japan

JAN FRYKHAMMAR CFO and Executive Vice President

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32.4% 32.0%32.9%

36.5% 36.4%35.2%

36.6%35.4%

33.2%

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2014 2015

Gross margin

14.4 13.5

16.114.7 15.6 15.3

17.815.6

17.7

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b. Operating expenses

second quarter

› Restructuring SEK 2.7 (0.2) b.

– Mainly related to activities in Sweden

› Gross margin, excluding restructuring, 35.1% (36.6%)

– Lower capacity business and continued coverage deployments

– Lower IPR revenues and higher share of services

› Gross margin decreased QoQ

– Lower IPR revenues and increased share of hardware sales

› Operating income, excluding restructuring, improved

YoY to SEK 6.3 (4.2) b.

– Operating margin of 10.4% (7.7%)

– Positive currency effect, hedge impact SEK 0.6 (-0.5) b.

– Capital gain of SEK 0.3 b.

› Operating expenses, excluding restructuring, increased

YoY to SEK 16.1 (15.5) b.

– Excluding currency effects, operating expenses were slightly

down

Q4 2013 Excluding Samsung agreement, SEK 4.2 b.

2013

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Operating Income YoY

7.3% 5.9%

Improved operating income despite more China business and lower IPR revenue

7.7%

10.4%

SEK b.

Mainly

North America

&

China

development

4.0 4.2

6.3

3.6

Q214 Reported Excl restr. Hedge impact Volume IPR Business Mix Expenses Other Excl restr. Q215 Reported

Efficiencies

Capital gain

Q2 2014 Q2 2015

Sales increase

+11% YoY

Lower IPR

revenues

Due to FX.

FX adjusted

expenses

down YoY

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Operating Income QoQ

4.0%

5.9%

Improved operating income driven by volume leverage

5.1%

10.4%

SEK b.

Increased HW

share sales

2.12.7

6.3

3.6

Q115 Reported Excl restr. Hedge impact Volume IPR Business Mix Expenses Other Excl restr. Q215 Reported

Capital gain

Q1 2015 Q2 2015

Sales

increase

+13% QoQ

Lower IPR

revenues

+4% QoQ

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0%

-3%

0%

-9%

-1%

9%

1%

13%11%

7%

3%4%

-7%

-1%

3%

-2%

-6% -6%

0

20

40

60

80

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b.

Net sales Sales growth (YoY) Sales growth (adj for FX & Hedge)

Sales growth – FX impact

Currency continues to be a major driver

Sales YoY change, Q2 2015

Reported Organic and FX adj.

Networks 8% -9%

Global Services 14% -2%

Support Solutions 9% -13%

Group 11% -6%

Changed method for translating FX exposure into

SEK for income statement items.

For details on method and currency rates, see

ericsson.com/thecompany/investors




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66.1

+3.4

+0.1 -0.5-2.4 -0.5 +0.4

-11.0-1.9

53.8

40

50

60

70

80

Gross cash1503A

Net incomereconciled to

cash

Change Netoperating

assets

Restructuring CAPEX Acquisitions,divestments &

other

Other financingactivities

Dividend FX on cash Gross cash1506A

Change in gross cash SEK -12.3 b

Change in gross cash Q2

1Excluding Short term investments

Change in net cash SEK -12.1 b. (from SEK 15.6 to 3.5 b.)

Cash flow recovered after a weak quarter – Full year cash conversion target remains

Operating cash flow

+3.1 b

Investing1

-2.9 b

Financing

-10.6 b

FX on cash

-1.9 b

SEK b.

HANS VESTBERG

President and CEO

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5%

10%

17%

10%12%

11%13%

2%

8%

0

2

4

6

8

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b.

Tu

sen

tal


1%-1% -1%

-13%

3%

13%

-2%

8% 8%

0

10

20

30

40

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b. Net sales and sales developmentNetworks



– Lower business activity in North America and Japan

– Strong sales in Mainland China, the Middle East and India


– Stabilized mobile broadband business in North America

– Increased sales in Mainland China and the Middle East

– Sales declined in India

› Operating income, excluding restructuring, SEK 4.3

(3.7) b.

› Operating margin, excluding restructuring, improved

sequentially to 14% from 3%

– Higher sales and positive currency effects

– Somewhat increased operating expenses and lower IPR

Operating income

Operating margin

Net sales

Sales change, YoY

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6%8% 8%

5%6% 7% 7% 7%

6%

14% 14% 14%13% 13%

12% 12% 12% 12%

0.0

0.5

1.0

1.5

2.0

2.5

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b.Operating income and margin

-10%

0%

10%

20%

30%

0

10

20

30

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015




– Network rollout continued to decline

› Professional Services good momentum

– 26% growth in Managed Services – 30 contracts signed

– OSS & BSS drives Consulting and Systems Integration


– Good growth in Consulting and Systems Integration

› Operating income, excluding restructuring, improved

YoY to SEK 2.3 (1.6) b.

– Stable margin in Professional Services

– Reduced losses in Network Rollout

Global services

Global Services

operating income Professional Services

operating margin Global Services

operating margin

Global Services

sales

Global Services

sales change, YoY

Professional Services

sales change, YoY

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-12%

-5%

37%

0%

-13%-4%

11%

3%

-8%

-0.5

0.0

0.5

1.0

1.5

2.0

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015

SEK b.

Tu

se

nta

l


-33% -29%

40%

13%21%

30%

-21%

11% 9%

0

1

2

3

4

5

6

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2013 2014 2015


Support solutions



– Continued good development in OSS & BSS

– TV & Media declined

› Organic FX adjusted sales down 3% QoQ

› Operating income, excluding restructuring,

improved YoY to SEK 0.0 (-0.3) b.

– Driven by sales growth in OSS & BSS

– Partly offset by lower IPR sales

Net sales

Sales change, YoY

Operating income

Operating margin

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› North America business stabilized, but at

lower level than last year

› Continued 4G coverage deployments in

Mainland China

› Strong demand for Professional Services –

Sales growth across all regions

› Lower IPR revenues

› Full year 2015 restructuring is expected to be

SEK 4-5 b.

› High pace in company transformation

Closing remarks

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SECOND QUARTER 2015

July 17, 2015

This presentation contains forward-looking statements. Such statements are based on our current expectations and are subject to certain risks and uncertainties that could negatively affect our business. Please read our earnings reports and our most recent annual report for a better understanding of these risks and uncertainties.

SECOND QUARTER 2015 - EricssonSECOND QUARTER 2015 July 17, 2015 This presentation contains forward-looking statements. Such statements are based on our current expectations and are

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