Ericsson profits slide by a third

Sweden's Ericsson, the world's leading mobile phone network equipment supplier, reported a 30 percent decline in first-quarter net profits on Thursday.

Ericsson profits slide by a third

In the period from January to March, the company posted a net profit of 1.8 billion kronor ($227 million), down from 2.6 billion kronor in the first quarter of 2008.

Ericsson’s operating profit fell 49 percent to 1.7 billion kronor, compared to 3.5 billion for the same period last year.

“The effects of the global economic recession on the global mobile network market are so far limited,” Ericsson’s chief executive Carl-Henric Svanberg said in a statement.

“It remains difficult to more precisely predict how operators will act in the current climate,” he added.

Despite the fall in profits Ericsson’s results were slightly better than analyst expectations of a net profit of around 2.1 billion kronor and a turnover of 50.2 billion.

“These are exceptional times. But if we look at Ericsson’s core operations, then profit has actually increased by 40 percent,” Svanberg pointed out.

Savings programs introduced by the firm are on track and Svanberg confirmed that no further cuts are currently planned.

“Unless the the nature of the crisis dramatically changes then there should not be any dramatic changes in the market,” he forecast.

Ericsson reported a gross operating margin of 36.3 percent in comparison with 38.6 percent for the corresponding period of last year. Operative cashflow was a negative 2.9 billion kronor in comparison to a positive 4.7 billion last year.

Ericsson’s stock fell around 5 percent as the Stockholm stock market opened on Thursday morning.

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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.