Telefonaktiebolaget Lm Ericsson reports 87.3% Net Income decline and 6.2 pp EBITDA Margin decline from 13.0% to 6.8%
26 Jan 2017 • About Telefonaktiebolaget Lm Ericsson (
$0O87) • By InTwits
Telefonaktiebolaget Lm Ericsson reported 2016 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Telefonaktiebolaget Lm Ericsson has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.6%. At the same time it's in pair with industry average of 3.0%.
- CAPEX is quite volatile: 42,320 in 2016, 30,993 in 2015, 34,696 in 2014, 23,394 in 2013, 14,700 in 2012
- The company has potentially unprofitable business model: ROIC is at 3.9%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
Telefonaktiebolaget Lm Ericsson ($0O87) key annual financial indicators
| mln. SEK | 2012 | 2013 | 2014 | 2015 | 2016 | 2016/2015 |
|---|
P&L
|
|---|
| Revenue | 227,779 | 227,376 | 227,983 | 246,920 | 222,608 | -9.8% |
| Gross Profit | 72,080 | 76,371 | 82,427 | 85,819 | 66,365 | -22.7% |
| SG&A | 26,023 | 26,273 | 27,100 | 29,285 | 28,866 | -1.4% |
| EBITDA | 31,735 | 28,130 | 26,790 | 32,066 | 15,154 | -52.7% |
| Net Income | 5,775 | 12,005 | 11,568 | 13,549 | 1,716 | -87.3% |
Balance Sheet
|
|---|
| Cash | 30,358 | 28,618 | 29,650 | 22,431 | 25,577 | 14.0% |
| Short Term Debt | 4,769 | 7,388 | 2,281 | 2,376 | 8,033 | 238.1% |
| Long Term Debt | 23,898 | 22,067 | 21,864 | 22,744 | 18,653 | -18.0% |
Cash flow
|
|---|
| Capex | 5,429 | 4,503 | 5,322 | 8,338 | 6,129 | -26.5% |
Ratios
|
|---|
| Revenue growth | 0.4% | -0.2% | 0.3% | 8.3% | -9.8% | |
| EBITDA growth | 3.6% | -11.4% | -4.8% | 19.7% | -52.7% | |
| Gross Margin | 31.6% | 33.6% | 36.2% | 34.8% | 29.8% | -4.9% |
| EBITDA Margin | 13.9% | 12.4% | 11.8% | 13.0% | 6.8% | -6.2% |
| Net Income Margin | 2.5% | 5.3% | 5.1% | 5.5% | 0.8% | -4.7% |
| SG&A, % of revenue | 11.4% | 11.6% | 11.9% | 11.9% | 13.0% | 1.1% |
| CAPEX, % of revenue | 2.4% | 2.0% | 2.3% | 3.4% | 2.8% | -0.6% |
| ROIC | 13.7% | 11.1% | 10.3% | 13.5% | 3.9% | -9.5% |
| ROE | 4.1% | 8.7% | 8.1% | 9.3% | 1.2% | -8.1% |
| Net Debt/EBITDA | -0.1x | 0.0x | -0.2x | 0.1x | 0.1x | -0.0x |
Revenue and profitability
Telefonaktiebolaget Lm Ericsson's Revenue decreased on 9.8% in 2016. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased on 6.2 pp from 13.0% to 6.8% in 2016.
Gross Margin decreased on 4.9 pp from 34.8% to 29.8% in 2016. SG&A as a % of Revenue increased slightly on 1.1 pp from 11.9% to 13.0% in 2016.
Net Income marign decreased on 4.7 pp from 5.5% to 0.77% in 2016.
Capital expenditures (CAPEX) and working capital investments
The company's CAPEX/Revenue was 2.8% in 2016. The company's CAPEX/Revenue increased slightly on 0.77 pp from 2.0% in 2013 to 2.8% in 2016. It's average CAPEX/Revenue for the last three years was 2.8%.
Return on investment
The company operates at low ROIC (3.94%) and ROE (1.20%). ROIC decreased on 9.5 pp from 13.5% to 3.9% in 2016. ROE decreased on 8.1 pp from 9.3% to 1.2% in 2016.
Leverage (Debt)
Company's Net Debt / EBITDA is 0.1x and Debt / EBITDA is 1.8x. Net Debt / EBITDA decreased slightly on 0.011x from 0.1x to 0.1x in 2016. Debt increased on 6.2% in 2016 while cash surged on 14.0% in 2016.
Valuation
The company's trades at EV/EBITDA 0.1x and P/E 0.1x while industy averages are 15.6x and 19.1x. The company's EV/(EBITDA-CAPEX) is 0.1x with the industry average at 19.0x.
Appendix 1: Peers in Technology Hardware & Equipment
Below you can find Telefonaktiebolaget Lm Ericsson benchmarking vs. other companies in Technology Hardware & Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Trakm8 Holdings ($TRAK) | | -8.9% | 93.5% | 94.2% | 43.7% |
| Mti Wireless Edge ($MWE) | -13.5% | 5.6% | 6.8% | 36.5% | |
| Concurrent Technologies ($CNC) | -7.3% | -7.3% | 8.0% | 33.3% | |
| Toumaz Ld ($TMZ) | 279.7% | 150.3% | 19.5% | 22.1% | |
| Seeing Machines ($SEE) | | 66.3% | 43.3% | 13.3% | 76.8% |
| |
|---|
| Median (19 companies) | -1.3% | 3.4% | 3.4% | 0.2% | 2.7% |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | | -0.2% | 0.3% | 8.3% | -9.8% |
Top companies by Gross margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cml Microsystems ($CML) | 69.3% | 70.3% | 73.3% | 70.9% | 71.2% |
| Concurrent Technologies ($CNC) | 51.7% | 50.6% | 51.2% | 50.6% | |
| Trakm8 Holdings ($TRAK) | 63.8% | 71.9% | 57.2% | 45.2% | 48.3% |
| Vislink ($VLK) | 39.4% | 40.7% | 45.9% | 45.0% | |
| Seeing Machines ($SEE) | 61.4% | 64.1% | 59.8% | 44.9% | 81.3% |
| |
|---|
| Median (18 companies) | 34.5% | 35.2% | 36.8% | 38.9% | 48.3% |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | 31.6% | 33.6% | 36.2% | 34.8% | 29.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Cml Microsystems ($CML) | 28.7% | 33.1% | 35.1% | 29.9% | 30.0% |
| Concurrent Technologies ($CNC) | 29.3% | 23.3% | 27.1% | 28.6% | |
| Pure Wafer ($PUR) | 16.3% | 17.0% | 31.5% | 27.4% | |
| Samsung Electronics Co ($SMSN) | 22.2% | 23.3% | 20.9% | 23.6% | 24.7% |
| Trakm8 Holdings ($TRAK) | 7.1% | 6.8% | 12.9% | 14.0% | 15.8% |
| |
|---|
| Median (19 companies) | 3.8% | 6.8% | 5.6% | 5.3% | 7.0% |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | 13.9% | 12.4% | 11.8% | 13.0% | 6.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Samsung Electronics Co ($SMSN) | 11.4% | 10.1% | 10.7% | 12.9% | 12.0% |
| Pure Wafer ($PUR) | 0.5% | 3.5% | 23.3% | 8.5% | |
| Tatung Co ($TAT) | 6.1% | 4.3% | 4.3% | 6.7% | |
| Sunplus Technology Co Ltd ($SUPD) | 4.8% | 6.3% | 15.0% | 4.5% | |
| Seeing Machines ($SEE) | 0.3% | 2.2% | 1.0% | 3.9% | 1.6% |
| |
|---|
| Median (19 companies) | 2.1% | 2.0% | 1.9% | 1.8% | 1.7% |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | 2.4% | 2.0% | 2.3% | 3.4% | 2.8% |
Top companies by ROIC, %
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Trakm8 Holdings ($TRAK) | 3.8% | 1.9% | 18.7% | 22.5% | 20.8% |
| Concurrent Technologies ($CNC) | 14.6% | 8.2% | 14.1% | 20.9% | |
| Samsung Electronics Co ($SMSN) | 22.4% | 24.0% | 14.4% | 14.0% | 14.3% |
| Hon Hai Precision Industry ($HHPD) | 9.9% | 8.7% | 10.3% | 11.7% | |
| Cml Microsystems ($CML) | 17.4% | 26.1% | 23.0% | 10.3% | 10.1% |
| |
|---|
| Median (19 companies) | 0.6% | 5.8% | 5.7% | 3.4% | 1.8% |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | 13.7% | 11.1% | 10.3% | 13.5% | 3.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2012 | FY2013 | FY2014 | FY2015 | FY2016 |
|---|
| Tatung Co ($TAT) | 41.1x | 6.1x | 6.7x | 40.1x | |
| Vislink ($VLK) | -1.2x | -0.5x | -0.0x | 1.8x | |
| Mti Wireless Edge ($MWE) | -21.9x | 1.9x | -1.6x | 0.2x | |
| Samsung Electronics Co ($SMSN) | -0.1x | -0.1x | -0.1x | -0.2x | -0.3x |
| Trakm8 Holdings ($TRAK) | -2.3x | -3.8x | -0.5x | -0.2x | 0.3x |
| |
|---|
| Median (15 companies) | -1.1x | -0.8x | -1.4x | -1.4x | -0.3x |
|---|
| Telefonaktiebolaget Lm Ericsson ($0O87) | -0.1x | 0.0x | -0.2x | 0.1x | 0.1x |
