Ericsson shared their fourth quarter and full-year highlights, showing a good Q4 and robust financial performance in 2021. The Swedish telecoms giant net profit soared in 2021, with a better-than-expected performance in the fourth quarter.
The full-year reported net profit was SEK 23.0 billion, having a 30% YoY growth, while the free cash flow before M&A amounted to SEK 32.1 billion, a 44% YoY increase and the net cash was SEK 65.8 billion, recording a 57% YoY change by end of the period. Moreover, the full-year reported sales were stable at SEK 232.3 billion.
In Q4 alone, Ericsson’s profit surged by 41%, amounting to SEK 10.1 billion, while sales rose by 3% at SEK 71.3 billion. The gross margin also improved to 43.5%, while the EBIT margin reached 17.3%.
For Networks sales in Q4, the gross margin improved to 46.4%. As highlighted by Ericsson president and CEO Börje Ekholm, the company strengthened its industry-leading portfolio during the year with ultra-light, energy-efficient massive MIMO radios for enhanced network performance and a new Cloud RAN portfolio for 5G mid-band.
“During 2021 we continued to invest in R&D, particularly for the cloud-native offerings and our portfolio is now substantially transformed compared with a few years ago. We will continue to increase investments in our 5G portfolio, including in our orchestration offerings, to further strengthen our long-term competitiveness and position us in an open world for future standards and technologies,” commented Ekholm with regards to the digital services segment.
For the emerging business segment, Ericsson is seeing increasing momentum for the 5G portfolio in dedicated networks and Cradlepoint. Ekholm also pointed out that based on the current business momentum, they expect “fundamentals to remain strong in our core mobile infrastructure business during 2022.” Despite this, over time, Ericsson’s enterprise segment would provide higher growth and profitability than its mobile infrastructure business.
The Group EBIT target for 2022 of 12-14% remains, excluding the Vonage-related segment, said Ekholm. Yet, their key focus is to accelerate the pace towards reaching the company’s long-term target of EBITA margin at 15-18%.
“2021 was a successful year for Ericsson and I want to take this opportunity to thank all my colleagues who relentlessly delivered on customer commitments while navigating through supply chain challenges and a raging pandemic. I am proud to be part of this team!,” concluded Ekholm.