Sweden’s Ericsson posts massive profits hike

Swedish telecom giant Ericsson reported a whopping 224 percent rise in profits on Wednesday, surprising analysts and sending its stock up almost 7 percent in early trading.

Sweden's Ericsson posts massive profits hike

From January to March, the company recorded group net profits of 4.1 billion kronor ($675 million), up from 1.26 billion kronor for the same period in 2010.

The figure was higher than the three billion kronor which analysts consulted by Dow Jones Newswires had expected.

“Group sales in the quarter increased by 17 percent year-over-year driven by continued strong demand for mobile broadband and especially for the multi-standard radio base station RBS 6000,” said Hans Vestberg, president and chief executive officer of Ericsson.

Turnover was helped by a 39 percent increase in sales in North America; a 46 percent rise in Central Asia and northern Europe; and a 74 percent rise in China and North East Asia.

“Sales in the first quarter were not impacted by the devastating earthquake and tsunami in Japan,” Vestberg said.

The company’s supply chain of components had been partly dependent on Japan, which had caused some delays, he said.

“We have taken a number of actions to mitigate the effects to secure that we limit the impact on our customers,” he added.

These measures include finding and integrating alternative components in our products as well as increasing volumes with second source suppliers, the firm advised.

The firm continued to claim market share within 3G networks and maintained its control of over 50 percent of the market for 4G/LTE.

Ericsson’s mobile phone joint venture with Japan’s Sony meanwhile saw its first-quarter sales, reported earlier this month, fall 19 percent to 1.1 billion kronor and was “experiencing some disruptions in its supply chain from the earthquake in Japan.”

And its other joint venture, wireless technology company ST-Ericsson, saw its sales plunge 27 percent during the quarter to 444 million kronor, which was a steeper drop than expected.

The decline was expected to continue in the second quarter, “due to the ongoing decline in legacy products,” as ST-Ericsson continues its shift to new products, Ericsson said, adding it was “committed to financially support ST-Ericsson’s execution of their new portfolio.”

Ericsson’s normally sedate stock responded positively to the report on Wednesday, climbing 9.38 percent by 2pm.

At the end of March, Ericsson counted 91,546 employees and remained the market leader in mobile network equipment ahead of Finnish-German giant Nokia Siemens, French-based telecom equipment maker Alcatel-Lucent and China’s Huawei.

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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.