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Ericsson sums up quarterly forecasts as savings and 5G sales in

STOCKHOLM (Reuters) – Mobile telecom equipment manufacturer Ericsson beat third-quarter results in operating profit on Thursday, which increased by sales…

STOCKHOLM (Reuters) – Mobile telecom equipment manufacturer Ericsson beat third-quarter results in operating profit on Thursday, which increased by sales of next-generation 5G gear in North America and said it made good progress towards its long-term financial targets.

PHILOTTE: The Ericsson logo is viewed at Ericsson’s headquarters in Stockholm on June 1

4, 2018. REUTERS / Olof Swahnberg

Mark its third quarter following significant progress towards its financial targets for 2020 reported the company’s net sales increased 9 percent to 53, SEK 8 billion ($ 6 billion) thanks to strong growth in networking.

It was led by the early 5G sales in North America and the 4G upgrades in Europe and Latin America, contributing to boosting their shares by 5 percent higher in early Thursday.

Carl Mellander, Economics College told Reuters that, due to this strong result, sales growth for the fourth quarter would be “a few percentage points lower” than the typical growth rate of 17-18 percent compared with the third quarter, resulting in a North American network sales would be about flat quarter in the quarter.

Ericsson has promised to deliver a gross margin of 37-39 percent by 2020. It came almost there in the third quarter and amounted to 36.9 percent, excluding restructuring charges, to a top projection of 36.2 percent.

The quarterly operating margin rose to 6.0 percent from a negative 7.4 percent a year ago. CEO Borje Ekholm said he was convinced that Ericsson could produce an operating margin of at least 12 percent after 2020.

“There is strong momentum on the global 5G market with lead markets ahead,” says CEO Borje Ekholm in a statement . “However, there are still more jobs to get all parts of the business to a satisfactory level of performance.

More to do

Ericsson has responded to an industry-wide decline and major losses, as 4G network sales went up in the mid-decade with a strategy for focusing on profitability over growth, replacing most of its management, and cutting cost reductions.

Operating profit for the last quarter amounted to SEK 3.2 billion (356.5 million) from 3.7 billion losses under The same period last year, exceeding an average forecast of $ 800 million in a Reuters analysis of analysts.

Ericsson shares have risen almost 50 percent this year, encouraged by the development towards their financial targets after three years of steep decline in revenues.

Ericsson is now due to a potential new cycle of network upgrades, because after The 5G gear has begun to enter the United States and is expected to be followed by upgrades in North Asian markets in early 2019.

North America’s largest sales region, Ericsson, increased 10 percent in currency-adjusted terms, while Europe increased by 4 percent , which counteracts the weakness of its Middle East and North Asian markets.

The company said, however, that the company continued to invest heavily in 5G research and development, sealing successful service companies while at the same time needing to tighten costs after completing a restructuring plan that will lead to restructuring costs of 5-7 billion kronor this year.

As a result, many investors want to see more evidence of progress before investing in a sustainable 5G recovery. Ten out of 15 analysts reckoned by Reuters value the stock as “neutral” in terms of price increases.

As the world is the world’s largest provider of mobile communication equipment, Ericsson faces the loss of telecom operators, weakness in emerging emerging markets, and fierce competition from major China, Huawei [HWT.UL] and Nokia in Finland.

Reporting by Helena Söderpalm and Olof Swahnberg; Write by Eric Auchard; Editing Jason Neely and Mark Potter

Our Standards: Thomson Reuters Trust Principles.

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