Ericsson sales slow amid ‘currency headwind’

Swedish telecom-equipment maker Ericsson reported a drop in third-quarter sales on Thursday, as activity in North America and Japan weakened and the company suffered from the strength of the local currency.

Ericsson sales slow amid 'currency headwind'

Ericsson share value fell by just over 6.0 percent on the Stockholm Stock Exchange in morning trading.

Net sales were down three percent from the same quarter a year ago to 53 billion kronor ($8.3 billion) “primarily due to continued currency headwind,” Ericsson chief executive Hans Vestberg said in a statement.

Net profits rose to 3.0 billion kronor, up 38 percent compared to the outcome in the same quarter a year ago.

That fell short of the 3.2-billion-kronor forecast by economists surveyed by Dow Jones Newswires.

“We are currently seeing sales coming under pressure,” Vestberg added.

“In addition to foreign exchange, the major drivers for this development are the two large mobile broadband coverage projects which peaked in North America in the first half of 2013.”

He said the company also felt the impact from reduced activity in Japan “where we are getting closer to completion of a major project.”

The company said that without currency adjustment sales rose by 3.0 percent and operating margins continued to grow, to 8.1 percent compared to 6.7 percent in the same quarter last year.

Ericsson’s gross margin grew slower than expected, up 32 percent, compared to 30.4 last year and a forecast of 33.5 percent.

Chief executive Vestberg said that lower activity in telecom networks, the company’s main business, was offset by strong growth in the service business which is still expanding in North America.

A sharp 28-percent drop in sales in northeast Asia was also offset, he said, by strong growth in several regions, including a 21 percent increase in western Europe, mainly due to new investments in fourth generation data networks.

AFP/The Local/dl

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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.