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.


Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.