ERICSSON RINGS UP MODEST PROFIT

Earnings boosted by growing sales in North America

MOBILE telecom equipment maker Ericsson posted an unexpected swing to a modest operating profit, saying it was boosted by growing sales traction in North America, which gave it confidence in meeting longer-term financial targets.

Ericsson said yesterday it had completed an annual cost savings programme by saving more than 10 billion crowns (RM4.59 billion), which would increasingly be reflected in its earnings.

“We have good market traction in Networks, with sales growth of two per cent, particularly in North America, where all major operators are preparing for 5G,” said chief executive officer Borje Ekholm in a statement.

The Swedish mobile telecom gear maker has met an industrywide downturn and mounting losses by setting a new strategy to focus on profitability over growth, swapping out most of its management and making sweeping cost cuts.

Marking its second consecutive quarter of substantial progress toward hitting its 2020 financial goals, the Swedish firm posted an operating profit of 0.2 billion crowns, compared with a 0.5 billion crowns loss a year ago.

Analysts, on average, forecast a 0.1 billion crowns loss in a Reuters poll.

The company has pledged to deliver a gross margin of 37 to 39 per cent and an operating margin of 10 per cent by 2020. Its second quarter gross margin was 36.7 per cent, excluding restructuring charges, compared with 35.9 per cent in the first quarter.