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B1 Segment information | 12 Months Ended
--- | ---
Dec. 31, 2021
Disclosure of operating segments [abstract] |
B1 Segment information |
|  | Segment information
Operating segments When determining Ericsson’s operating segments, consideration has been given to the financial reporting reviewed by the Chief Operating Decision Maker (CODM). Markets and what type of customers the products and services aim to attract has been considered, as well as the distribution channels they are sold through. Commonality regarding technology, research and development has also been taken into account. To best reflect the business focus and to facilitate comparability with peers, four operating segments are reported;
– |  | Networks
– |  | Digital Services
– |  | Managed Services
– |  | Emerging Business and Other.
Segment Networks offers a multi-technology capable Radio Access Network (RAN) solution for all network spectrum bands, including integrated high-performing hardware and software. The offering also includes a transport portfolio through own solutions and partnering, an integrated antenna solution and a complete service portfolio covering network deployment and support . 82% (82% in 2020 and 2019 respectively) of the IPR licensing revenues are reported as part of segment Networks. Segment Digital Services provides software-based solutions for business support (BSS), operational support (OSS) communication services, core networks, and cloud infrastructure. The focus is on cloud native and automation solutions supporting our customers’ 4G and growing 5G consumer and enterprise business. 18% (18% in 2020 and 2019 respectively) of the IPR licensing revenues are reported as part of segment Digital Services. Segment Managed Services provides Networks and IT Managed Services, Network Design and Optimization, and Application Development and Maintenance to telecom operators. Segment Emerging Business and Other supports enterprises by providing reliable and secure cellular solutions that are easy to use, adopt and scale for global and local needs. The segment includes:
– |  | Emerging Business, including IoT, iconectiv, Cradlepoint and New businesses
– |  | Media businesses, including Red Bee Media and a 49% ownership of MediaKind.
Market areas The market areas are the Company’s primary sales channel with the responsibility to sell and deliver customer solutions. The Company operates worldwide and reports its operations divided into five geographical market areas:
– |  | Europe and Latin America
– |  | Middle East and Africa
– |  | North America
– |  | North East Asia
– |  | South East Asia, Oceania and India.
In addition, IPR licensing revenues and the majority of segment Emerging Business and Other are externally reported as market area Other. Major customers The Company derives most of its sales from large, multi-year agreements with a limited number of significant customers. Out of a customer base of more than 500 customers, mainly consisting of network operators, the ten largest customers accounted for 49% (50% in 2020 and 49% in 2019) of net sales. The largest customer accounted for approximately 13% (13% in 2020 and 10% in 2019) and the second largest customer accounted for 9% (10% in 2020 and 8% in 2019) of net sales in 2021. These customers were reported under segment Networks, Digital Services and Managed Services.
Operating segments 2021 |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total Segments |  |  | Group |
Segment sales |  |  | 167,838 |  |  |  | 36,151 |  |  |  | 20,379 |  |  |  | 7,946 |  |  |  | 232,314 |  |  |  | 232,314 |
Net sales |  |  | 167,838 |  |  |  | 36,151 |  |  |  | 20,379 |  |  |  | 7,946 |  |  |  | 232,314 |  |  |  | 232,314 |
Gross income |  |  | 78,869 |  |  |  | 15,092 |  |  |  | 3,835 |  |  |  | 2,953 |  |  |  | 100,749 |  |  |  | 100,749 |
Gross margin (%) |  |  | 47.0% |  |  |  | 41.7% |  |  |  | 18.8% |  |  |  | 37.2% |  |  |  | 43.4% |  |  |  | 43.4% |
Earnings (loss) before financial items and income tax (EBIT) |  |  | 37,266 |  |  |  | (3,604) |  |  |  | 1,468 |  |  |  | (3,350) |  |  |  | 31,780 |  |  |  | 31,780 |
EBIT margin (%) |  |  | 22.2% |  |  |  | (10.0)% |  |  |  | 7.2% |  |  |  | (42.2)% |  |  |  | 13.7% |  |  |  | 13.7% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (2,530) |
Income after financial items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 29,250 |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (6,270) |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 22,980 |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  |  | 40 |  |  |  | 29 |  |  |  | 43 |  |  |  | (372) |  |  |  | (260) |  |  |  | (260) |
Amortizations |  |  | (1,169) |  |  |  | (490) |  |  |  | (18) |  |  |  | (830) |  |  |  | (2,507) |  |  |  | (2,507) |
Depreciations |  |  | (3,764) |  |  |  | (1,194) |  |  |  | (377) |  |  |  | (616) |  |  |  | (5,951) |  |  |  | (5,951) |
Impairment losses |  |  | (127) |  |  |  | (177) |  |  |  | (8) |  |  |  | (199) |  |  |  | (511) |  |  |  | (511) |
Restructuring charges |  |  | (262) |  |  |  | (130) |  |  |  | (124) |  |  |  | (33) |  |  |  | (549) |  |  |  | (549) |
Gains/losses on investments and sale of operations |  |  | 14 |  |  |  | — |  |  |  | (50) |  |  |  | 997 |  |  |  | 961 |  |  |  | 961 |
Operating segments 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total Segments |  |  | Group |
Segment sales |  |  | 165,978 |  |  |  | 37,324 |  |  |  | 22,600 |  |  |  | 6,488 |  |  |  | 232,390 |  |  |  | 232,390 |
Net sales |  |  | 165,978 |  |  |  | 37,324 |  |  |  | 22,600 |  |  |  | 6,488 |  |  |  | 232,390 |  |  |  | 232,390 |
Gross income |  |  | 72,413 |  |  |  | 15,637 |  |  |  | 4,012 |  |  |  | 1,662 |  |  |  | 93,724 |  |  |  | 93,724 |
Gross margin (%) |  |  | 43.6% |  |  |  | 41.9% |  |  |  | 17.8% |  |  |  | 25.6% |  |  |  | 40.3% |  |  |  | 40.3% |
Earnings (loss) before financial items and income tax (EBIT) |  |  | 30,851 |  |  |  | (2,206) |  |  |  | 1,563 |  |  |  | (2,400) |  |  |  | 27,808 |  |  |  | 27,808 |
EBIT margin (%) |  |  | 18.6% |  |  |  | (5.9%) |  |  |  | 6.9% |  |  |  | (37.0%) |  |  |  | 12.0% |  |  |  | 12.0% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (596) |
Income after financial items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 27,212 |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (9,589) |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 17,623 |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  |  | 37 |  |  |  | 28 |  |  |  | 5 |  |  |  | (368) |  |  |  | (298) |  |  |  | (298) |
Amortizations |  |  | (775) |  |  |  | (607) |  |  |  | (5) |  |  |  | (602) |  |  |  | (1,989) |  |  |  | (1,989) |
Depreciations |  |  | (3,764) |  |  |  | (1,252) |  |  |  | (386) |  |  |  | (587) |  |  |  | (5,989) |  |  |  | (5,989) |
Impairment losses |  |  | (494) |  |  |  | (119) |  |  |  | (25) |  |  |  | (58) |  |  |  | (696) |  |  |  | (696) |
Restructuring charges |  |  | (746) |  |  |  | (19) |  |  |  | (258) |  |  |  | (283) |  |  |  | (1,306) |  |  |  | (1,306) |
Gains/losses on investments and sale of operations |  |  | (129) |  |  |  | 12 |  |  |  | 5 |  |  |  | (29) |  |  |  | (141) |  |  |  | (141) |
Operating segments 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total Segments |  |  | Group |
Segment sales |  |  | 155,009 |  |  |  | 39,857 |  |  |  | 25,565 |  |  |  | 6,785 |  |  |  | 227,216 |  |  |  | 227,216 |
Net sales |  |  | 155,009 |  |  |  | 39,857 |  |  |  | 25,565 |  |  |  | 6,785 |  |  |  | 227,216 |  |  |  | 227,216 |
Gross income |  |  | 64,717 |  |  |  | 14,836 |  |  |  | 3,990 |  |  |  | 1,281 |  |  |  | 84,824 |  |  |  | 84,824 |
Gross margin (%) |  |  | 41.8% |  |  |  | 37.2% |  |  |  | 15.6% |  |  |  | 18.9% |  |  |  | 37.3% |  |  |  | 37.3% |
Earnings (loss) before financial items and income tax (EBIT) 1) |  |  | 24,767 |  |  |  | (4,027) |  |  |  | 2,309 |  |  |  | (12,485) |  |  |  | 10,564 |  |  |  | 10,564 |
EBIT margin (%) |  |  | 16.0% |  |  |  | (10.1%) |  |  |  | 9.0% |  |  |  | (184.0%) |  |  |  | 4.6% |  |  |  | 4.6% |
Financial income and expenses, net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (1,802) |
Income after financial items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,762 |
Income tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (6,922) |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,840 |
Other segment items |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Share in earnings of JV and associated companies |  |  | 26 |  |  |  | 41 |  |  |  | 3 |  |  |  | (405) |  |  |  | (335) |  |  |  | (335) |
Amortizations |  |  | (517) |  |  |  | (1,413) |  |  |  | (5) |  |  |  | (603) |  |  |  | (2,538) |  |  |  | (2,538) |
Depreciations |  |  | (3,604) |  |  |  | (1,478) |  |  |  | (413) |  |  |  | (566) |  |  |  | (6,061) |  |  |  | (6,061) |
Impairment losses |  |  | (295) |  |  |  | (128) |  |  |  | (24) |  |  |  | (43) |  |  |  | (490) |  |  |  | (490) |
Restructuring charges |  |  | (68) |  |  |  | (614) |  |  |  | (45) |  |  |  | (71) |  |  |  | (798) |  |  |  | (798) |
Gains/losses on investments and sale of operations |  |  | (225) |  |  |  | (2) |  |  |  | (12) |  |  |  | 936 |  |  |  | 697 |  |  |  | 697 |
1) Includes costs of SEK -10.7 billion in 2019 related to the resolution of the US SEC and DOJ resolution.
Products and Services by Segments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total Segments |
2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Products |  |  | 128,951 |  |  |  | 19,328 |  |  |  | 132 |  |  |  | 3,786 |  |  |  | 152,197 |
Services |  |  | 38,887 |  |  |  | 16,823 |  |  |  | 20,247 |  |  |  | 4,160 |  |  |  | 80,117 |
Total |  |  | 167,838 |  |  |  | 36,151 |  |  |  | 20,379 |  |  |  | 7,946 |  |  |  | 232,314 |
2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Products |  |  | 122,229 |  |  |  | 20,447 |  |  |  | 81 |  |  |  | 3,429 |  |  |  | 146,186 |
Services |  |  | 43,749 |  |  |  | 16,877 |  |  |  | 22,519 |  |  |  | 3,059 |  |  |  | 86,204 |
Total |  |  | 165,978 |  |  |  | 37,324 |  |  |  | 22,600 |  |  |  | 6,488 |  |  |  | 232,390 |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Products |  |  | 109,122 |  |  |  | 21,480 |  |  |  | 11 |  |  |  | 3,553 |  |  |  | 134,166 |
Services |  |  | 45,887 |  |  |  | 18,377 |  |  |  | 25,554 |  |  |  | 3,232 |  |  |  | 93,050 |
Total |  |  | 155,009 |  |  |  | 39,857 |  |  |  | 25,565 |  |  |  | 6,785 |  |  |  | 227,216 |
Market area 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4) |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total |  |  | Total |
South East Asia, Oceania and India |  |  | 20,299 |  |  |  | 4,235 |  |  |  | 4,258 |  |  |  | 37 |  |  |  | 28,829 |  |  |  | 1,010 |
North East Asia 3) |  |  | 24,464 |  |  |  | 3,605 |  |  |  | 800 |  |  |  | 252 |  |  |  | 29,121 |  |  |  | 2,700 |
North America 2) |  |  | 66,464 |  |  |  | 7,988 |  |  |  | 2,925 |  |  |  | 79 |  |  |  | 77,456 |  |  |  | 11,971 |
Europe and Latin America 1) |  |  | 38,671 |  |  |  | 12,381 |  |  |  | 8,804 |  |  |  | 416 |  |  |  | 60,272 |  |  |  | 52,141 |
Middle East and Africa |  |  | 10,743 |  |  |  | 6,436 |  |  |  | 3,592 |  |  |  | 14 |  |  |  | 20,785 |  |  |  | 209 |
Other 1) 2) 3) 5) |  |  | 7,197 |  |  |  | 1,506 |  |  |  | — |  |  |  | 7,148 |  |  |  | 15,851 |  |  |  | — |
Total |  |  | 167,838 |  |  |  | 36,151 |  |  |  | 20,379 |  |  |  | 7,946 |  |  |  | 232,314 |  |  |  | 68,031 |
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 31,307 |  |  |  | 50,428 |
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 2,349 |  |  |  | 45,997 |
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 79,896 |  |  |  | 10,749 |
3) Of which in Japan 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 13,678 |  |  |  | 261 |
3) Of which in China 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 10,078 |  |  |  | 2,202 |
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licencing revenue reported under Other Market area which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or services delivered.
Market area 2020 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4) |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total |  |  | Total |
South East Asia, Oceania and India |  |  | 21,464 |  |  |  | 4,329 |  |  |  | 4,219 |  |  |  | 36 |  |  |  | 30,048 |  |  |  | 812 |
North East Asia 3) |  |  | 27,120 |  |  |  | 5,124 |  |  |  | 831 |  |  |  | 259 |  |  |  | 33,334 |  |  |  | 2,648 |
North America 2) |  |  | 62,199 |  |  |  | 7,979 |  |  |  | 3,529 |  |  |  | 68 |  |  |  | 73,775 |  |  |  | 12,749 |
Europe and Latin America 1) |  |  | 33,257 |  |  |  | 11,954 |  |  |  | 10,167 |  |  |  | 367 |  |  |  | 55,745 |  |  |  | 49,895 |
Middle East and Africa |  |  | 13,281 |  |  |  | 6,144 |  |  |  | 3,854 |  |  |  | 19 |  |  |  | 23,298 |  |  |  | 140 |
Other 1) 2) 3) 5) |  |  | 8,657 |  |  |  | 1,794 |  |  |  | — |  |  |  | 5,739 |  |  |  | 16,190 |  |  |  | — |
Total |  |  | 165,978 |  |  |  | 37,324 |  |  |  | 22,600 |  |  |  | 6,488 |  |  |  | 232,390 |  |  |  | 66,244 |
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 29,501 |  |  |  | 48,133 |
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 1,123 |  |  |  | 43,627 |
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 77,835 |  |  |  | 11,533 |
3) Of which in Japan 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 12,150 |  |  |  | 272 |
3) Of which in China 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 18,745 |  |  |  | 2,136 |
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licencing revenue reported under Other Market area which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or services delivered.
Market area 2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|  | Net sales |  |  | Non-current assets 4) |
|  | Networks |  |  | Digital Services |  |  | Managed Services |  |  | Emerging Business and Other |  |  | Total |  |  | Total |
South East Asia, Oceania and India |  |  | 21,850 |  |  |  | 4,033 |  |  |  | 3,836 |  |  |  | 57 |  |  |  | 29,776 |  |  |  | 1,199 |
North East Asia 3) |  |  | 20,339 |  |  |  | 4,857 |  |  |  | 1,026 |  |  |  | 178 |  |  |  | 26,400 |  |  |  | 2,881 |
North America 2) |  |  | 55,808 |  |  |  | 9,646 |  |  |  | 4,673 |  |  |  | 96 |  |  |  | 70,223 |  |  |  | 11,570 |
Europe and Latin America 1) |  |  | 33,884 |  |  |  | 12,571 |  |  |  | 12,149 |  |  |  | 402 |  |  |  | 59,006 |  |  |  | 45,832 |
Middle East and Africa |  |  | 14,604 |  |  |  | 7,015 |  |  |  | 3,881 |  |  |  | 25 |  |  |  | 25,525 |  |  |  | 151 |
Other 1) 2) 3) 5) |  |  | 8,524 |  |  |  | 1,735 |  |  |  | — |  |  |  | 6,027 |  |  |  | 16,286 |  |  |  | — |
Total |  |  | 155,009 |  |  |  | 39,857 |  |  |  | 25,565 |  |  |  | 6,785 |  |  |  | 227,216 |  |  |  | 61,633 |
1) Of which in EU 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 35,729 |  |  |  | 44,306 |
Of which in Sweden 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 589 |  |  |  | 38,313 |
2) Of which in the United States 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 73,279 |  |  |  | 10,176 |
3) Of which in Japan 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 8,890 |  |  |  | 184 |
3) Of which in China 5) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 15,860 |  |  |  | 2,402 |
4) | Total non-current assets excluding financial instruments, deferred tax assets, and post-employment benefit assets.
5) | Including IPR licencing revenue reported under Other Market area which is allocated based on the country location of the customer. Other sales are attributed to countries based on the destination of products or services delivered.

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