D1 Provisions

12 Months Ended

Dec. 31, 2024


		Provisions


	Restructuring		Customer related		Supplier related		Warranty		Share-based payments		Other		Total
2024

Opening balance		3,720		2,857		954		956		1,584		1,635		11,706
Additions		4,498		686		324		389		2,209		1,239		9,345
Reversal of excess amounts		–252		–485		–399		–209		–101		–313		–1,759
Charged to income statement														7,586
Utilization		–4,175		–748		–230		–376		–820		–941		–7,290
Reclassifications		–3		–632		83		–		–		73		–479
Translation differences		84		82		11		6		120		–111		192
Closing balance		3,872		1,760		743		766		2,992		1,582		11,715

of which current provisions		2,993		1,648		274		560		1,633		1,096		8,204
of which non-current provisions		879		112		469		206		1,359		486		3,511

2023

Opening balance		669		3,093		722		678		985		5,441		11,588
Additions		6,082		481		849		831		1,410		824		10,477
Reversal of excess amounts		–112		–131		–416		–		–60		–821		–1,540
Charged to income statement														8,937
Utilization		–2,866		–541		–138		–547		–682		–3,792		–8,566
Reclassifications		–14		–		–57		–		–		7		–64
Translation differences		–39		–45		–6		–6		–69		–24		–189
Closing balance		3,720		2,857		954		956		1,584		1,635		11,706

of which current provisions		2,865		984		346		705		902		977		6,779
of which non-current provisions		855		1,873		608		251		682		658		4,927

Provisions will fluctuate over time depending on the business mix, market mix and technology shifts. Risk assessment in the ongoing business is performed monthly to identify the need for new additions and reversals of excess amounts. Management uses its best judgment to estimate provisions based on this assessment. Under certain circumstances, provisions are no longer required due to outcomes being more favorable than anticipated, which affect the provision balance as a reversal. In other cases, the outcome can be negative, and if so, a charge is recorded in the income statement.

For 2024, the total provision value is SEK 11.7 (11.7) billion, of which SEK 3.5 (4.9) billion is classified as non-current. The significant restructuring provision additions of SEK 4.5 (6.1) billion and utilization of SEK 4.2 (2.9) billion is due to cost-reduction activities and utilization of prior year provisions. For more information, see note A1 “Material accounting policies” and note A2 “Judgments and critical accounting estimates” for key estimation uncertainty regarding timing and amount.

Restructuring provisions

Restructuring provisions relate to structural efficiency programs that are planned and controlled by management and have a material impact on either the scope of the business undertaken or the manner in which the business is conducted. Restructuring provisions in 2024 relate to the cost-reduction activities that have resulted in fundamental reorganizations of the impacted units. The scope of the structural efficiency measures involves service delivery, supply and manufacturing, R&D, and selling and administration expenses. Restructuring provisions are recognized based on the expected costs of the respective restructuring programs and primarily consist of personnel costs. Estimation uncertainty exists regarding the execution of the restructuring programs, which may impact the expected timing and realization of costs. Restructuring provisions are reviewed and adjusted regularly based on management’s best estimate. The expected timing and amount of outflows are dependent on whether the plan execution is in line with management’s assessment. The majority of the restructuring provision will be utilized within 1 year. For more information about the restructuring charges booked in the income statement, see note B3 “Expenses by nature.”

Customer-related provisions

Customer-related provisions mainly consist of provisions for losses on customer contracts. To measure the customer-related provisions, management estimates the unavoidable costs to fulfill the obligations under the customer contract. If the exit penalty is lower than the estimated costs to fulfill the contract, then the provision value is limited to the exit penalty value. The unavoidable costs to fulfill the contract sometimes differ from management’s estimates. Provisions raised for loss-making customer contracts are therefore regularly reviewed and adjusted based on the latest information available considering the realization of the costs estimated. The expected timing and amount of outflows are dependent on whether the customer contract execution is in line with management’s assessment. The majority of the customer- related provisions will be utilized within 1 year.

Supplier-related provisions

Supplier-related provisions are for supplier claims/guarantees based on the contractual commitments mostly relating to inventory. The provision is calculated by comparing the committed purchase obligations with the expected usage based on forecasted sales volumes, and any excess is provided for based on an assessment of the risk of obsolescence. If the committed purchase obligations are not required to be purchased, but a fee is chargeable by the vendor due to the failure to meet the committed volumes, then the provision is based on the expected fee to be incurred. Estimation uncertainty exists regarding the expected usage and sales volumes forecast and, if applicable, the assessment of the risk of obsolescence, as these are based on

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gement’s expectations. If applicable, when the committed inventory is purchased, the provision is reclassified from provisions to inventory allowances. The expected timing and amount of outflows are dependent on the actual outcome of the supplier claims and guarantees. The majority of the supplier-related provisions will be utilized over 2 years.

Warranty provisions

Warranty provisions are based on historic quality rates for established products as well as estimates regarding quality rates for new products and costs to remedy the various types of faults predicted. Uncertainty exists regarding

the timing and amount as management utilizes the historical trends to estimate the warranty provisions as well as the cost to repair or replace, which may differ from the actual outcomes. New product warranty provisions require further estimation since historical information is not available. These provisions do not include costs for service in additions within customer contracts that are accounted for as separate performance obligations. The expected timing and amount of outflows are dependent on the actual product faults which may occur. The majority of the warranty provisions are expected to be utilized within 1 year.

Share-based payments provisions

Share-based payments provisions relate to cash-settled share-based programs and are based on the present period’s best estimate of the eventual pay-outs, see note G3 “Share-based compensation” for more information. The uncertainty regarding outflows is relating to the fair value of the underlying instrument during the service period and expected fulfilment of the service conditions. Share-based payment provisions will be utilized according to the awards’ vesting dates and will be utilized over a period of 3 years.

Other provisions

Other provisions mostly relate to litigation and patent infringement disputes. Management regularly assesses the likelihood of any adverse outcomes relating to ongoing litigations and disputes, and if deemed probable then a provision is raised based on the best estimate of the expenditure required to settle with the counterpart. There is uncertainty in the final outcome and settlement, therefore management reviews the estimation regularly. Outflows relating to litigations are inherently uncertain regarding timing and amount, and therefore the majority of the provisions are classified as current, but outflows may happen over a number of years depending on when settlement is reached.