Ericsson Stock Up On Higher Q4 Results, Dividend Growth, Positive Outlook

ericsson jan29 lt

Shares of Ericsson were gaining around 9 percent in the morning trading in Sweden and 10 percent in the pre-market activity on Nasdaq after the telecom equipment maker reported a surge in fourth-quarter profit, driven by strong sales growth. The company also proposed higher dividend for fiscal 2020.

Looking ahead, President and CEO Börje Ekholm said, "Long-term business fundamentals remain strong and we will continue to invest in further strengthening our portfolio and growing our global footprint. While we expect temporary negative impact during 2021 from IPR renewals, Cradlepoint and investments to strengthen our long-term business, we remain fully committed to the 2022 target as a milestone towards the long-term EBITA target of 15 percent-18 percent."

Ericsson said its Board of Directors will propose to the Annual General Meeting on March 30 a dividend to the shareholders of 2.00 Swedish kronor per share for the financial year 2020, compared to 1.50 kronor per share paid last year. The dividend is proposed to be paid in two installments, 1.00 kronor per share with the record date April 1, and 1.00 kronor per share with the record date October 1.

For the fourth quarter, net income attributable to owners of the parent company improved 60 percent to 7.52 billion kronor from last year's 4.43 billion kronor, driven by the stronger operating income.

Earnings per share climbed 70 percent to 2.26 kronor from 1.33 kronor a year ago.

Sequentially, attributable net income grew 29 percent from 5.6 billion kronor, and earnings per share climbed 40 percent from 1.61 kronor.

Operating income improved 80 percent to 11.0 billion kronor from 6.1 billion kronor in the previous year, mainly driven by Networks. Operating margin was 15.8 percent, higher than 9.2 percent last year. Gross margin margin improved to 40.6 percent from 36.8 percent a year ago.

Quarterly net sales grew 5 percent to 69.6 billion kronor from 66.4 billion kronor in the prior year. Sales adjusted for comparable units and currency grew by 13 percent year-over-year mainly driven by sales in North East Asia, Europe and North America.

Sequentially, net sales climbed 21 percent from 57.5 billion kronor.

In the fourth quarter, Networks sales increased 20 percent, adjusted for comparable units and currency.

In the year 2020, organic sales grew 5 percent, and operating margin reached 12.5 percent, up from 5 percent a year ago, exceeding 2020 target and reaching the 2022 Group target range two years early.

In Sweden, Ericsson shares were trading at 107.10 kronor, up 9.06 percent.

In pre-market activity on Nasdaq, the shares were trading at $12.81, up 10.15 percent.

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