Ericsson provides long-term targets and strategy on 2022 Capital Markets Day

Ericsson is hosting a Capital Markets Day to share insights on the company’s strategic priorities. Ericsson’s strategy is to leverage leadership in mobile networks, drive focused expansion in enterprise, lead the industry with critical innovations, and capture strategic business opportunities. Ericsson’s Enterprise strategy is organized around two pillars: Enterprise Wireless Solutions and Global Network Platform. In Networks, Ericsson expects to expand its global footprint and enhance gross income through continued investments in technology. Ericsson is implementing a revised strategy for profitability in the segment Cloud Software and Services. The target is to reach break-even in full-year 2023 with gradual improvements towards long-term sustainable profitability. Overall RAN market is expected to be flat with growth of 11% p.a. in the 5G RAN market over the next 3 years. The 5G RAN market is expected to grow by over 11% per annum over the next three years. Ericsson remains committed to growing its 39% RAN market share outside of China by 1% per year and increasing gross profit. After record capex levels in North America in 2022, build-out is expected to normalize in 2023, beginning in Q4 of this year. At the same time, revenues from share gains in other markets are expected to accelerate during Q4 and into 2023. While these market share gains contribute to gross profit, they will be margin dilutive. Looking to 2024 and beyond, underlying traffic development is expected to continue developing favorably, giving confidence on the longer-term development of investments. Ericsson confirms long-term target of EBITA margin of 15%-18% and expects to reach the lower end by 2024. This will offset headwinds such as business mix changes and inflation. There is significant growth potential in IPR revenues over the coming 18-24 months. Aims at generating Free Cash Flow before M&A of 9%-12% of sales. Remains committed to be Net Zero within its own operations by 2030 and to reach Net Zero across the value chain by 2040. Ericsson is introducing near-term capital allocation priorities with a central focus on generating free cash flow in line with the target of 9-12% free cash flow before M&A over net sales, deploying our capital wisely for maximum value creation, while safeguarding balance sheet strength. M&A will be limited to bolt-on acquisitions with attractive returns and clear strategic fit. Further, Ericsson targets a stable to progressive dividend with a policy based on earnings, business outlook and financial position.