Dividend doubles as Ericsson profit climbs

Swedish telecoms giant Ericsson has announced a pre-tax profit of 10.1 billion kronor for the fourth quarter of 2005. That compares with a profit of 8.7 billion kronor for the same period last year and shareholders are to see their dividend almost double to 45 öre per share.

Sales rose from 39.4 billion kronor to 45.7 billion kronor.

While the profit level is slightly below analysts’ expectations, sales are a little higher than predicted.

The pre-tax profit for the year as a whole was 33.3 billion kronor, a 27% rise on last year’s figure of 26.2 billion kronor.

The fourth quarter profit after tax was 8.5 billion kronor, compared to 5.6 billion kronor last year. The improvement was partly due to the fact that the overall tax rate for the year fell to 27%.

“We’ve had an extra boost thanks to the tax effects,” said Ericsson’s managing director Carl-Henric Svanberg, in an interview with TT after the publication of the report.

“Historically we’ve hovered around 30-32 percent, and now we’ve ended up a little lower. But we see that as a one-off.”

The Ericsson boss reckons the company has improved its market share, pointing to the fact that the company’s sales have increased by over 10% while the market as a whole has grown by a smaller amount.

Svanberg said that the world market will grow between 5% and 10% in the current year.

“And our ambition is to continue taking market share. We have reason to believe that we can do it,” he said.

He also said he is satisfied with the development of the service side of the business:

“This has been the breakthrough year for the service side, with orders both in Italy and the UK. We’re also expecting strong growth in services in 2006 – not least because we have already landed so many orders.”

But in China, growth has been more sluggish than expected.

“It’s a bit of a waiting period there – in expectation of a 3G decision. But we’re expecting it during the first half of the year and subscriber growth is still strong in China,” said Svanberg.