Ericsson shares fall despite profits hike

Swedish telecom firm Ericsson has reported a net profit of 2.16 billion kronor for the second quarter 2013, news which sent the firm's stock tumbling by almost 5 percent in early trading on Thursday.

Ericsson shares fall despite profits hike

“We are not satisfied with profitability, but it is gradually improving,” said Hans Vestberg, President and CEO of Ericsson in a statement.

Sales were flat at 55.3 billion kronor, unchanged from a year earlier. Operating profit excluding share of profit from joint ventures, was 2.5 billion kronor, compared with 3.3 billion in the corresponding period of 2012.

Despite the climb in profits, the result came in under analyst expectations who had predicted that operating profit would total 4.3 billion, according to Reuters. Analysts furthermore predicted sales of 56.3 billion kronor, more than a billion higher than the outcome.

Earnings were negatively impacted by non-recurring items for a total of 900 million, related to losses through divestitures and exits from telecom and power cable operations, the firm explained in its report.

The strong krona negatively impacted on sales results in some markets and adjusted for foreign exchange sales in fact climbed seven percent with Ericsson’s business reporting growth in most parts of the world.

“Six of the ten regions grew in this quarter. North America continued strong, Western Europe grew by ten percent and Southeast Asia grew. The areas where we did not grow, which are tough, were north-east Asia,” Vestberg said.

The reason behind the development is that 2G investments in China, previously important for the firm, are declining while 4G is yet to begin. The Japan market was beset by currency problems and South Korean 4G market suffered delays.

Ericsson reported that it is investing heavily in television and media and the firm plans to acquire two companies engaged in providing TV services, such as technology solutions for IPTV.

“Much of the consumption in the network is the TV and media. We see the merger of telecom, television and media, and there Ericsson wants to grab a number one position. We are number one in mobile infrastructure and would also like to have a strong position in television and media,” Hans Vestberg said.

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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.