In the First Quarter, Ericsson Reduced Losses and Costs

The Swedish equipment manufacturer for mobile networks, Ericsson, reported on Friday that it concluded the first quarter with significantly lower losses due to reduced costs and preparations for the new generation of mobile networks.

In the period from January to March, Ericsson operated with an operating loss of 300 million Swedish kronor (28.9 million euros), compared to 11.3 billion kronor in the same period last year.

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The net loss amounted to 700 million kronor, while in the first quarter of last year it was 10 billion kronor.

At the beginning of last year, Ericsson’s business results were pressured by write-offs, provisions, and restructuring costs. However, in the report published today, they highlight reduced costs, the development of the fifth-generation network platform, and amendments to contracts with clients in the services segment.

“Our efforts to improve efficiency in service delivery and in shared costs are beginning to yield results,” states CEO Borje Ekholm in the announcement.

The Swedish company eliminated more than 3,000 jobs in the first quarter, bringing the total number since July of last year to 18,000.

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By mid-year, they aim to reduce annual costs by at least 10 billion Swedish kronor, and Ekholm emphasized last month that they will achieve this goal within the expected timeframe.

Ericsson’s net revenues fell by nine percent in the first quarter of this year, to 43.4 billion kronor. Adjusted for exchange rates, they decreased by two percent.

In North America, Ericsson achieved six percent lower revenues. When excluding the impact of exchange rates, this item recorded the same percentage growth.

In Europe and Latin America, their revenues increased by seven percent, with the largest part of this jump occurring in Latin America, the company notes.

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In an interview with Reuters following the release of the business report, CFO Carl Mellander stated that Ericsson has increased its market share in Europe and North America, but this increase is not reflected in the recently published results due to the timelines of certain projects.

In the Northeast Asia region, their revenues plummeted by 39 percent, which the company attributes to reduced sales in China due to lower investments in fourth-generation networks.

Ericsson expects continued declines in sales in the Chinese market in the upcoming period, while still emphasizing positive momentum in the largest market, that of North America.

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The gross margin excluding restructuring costs was 35.9 percent in the period from January to March, compared to an adjusted 29.9 percent in the previous three months.

Mellander explains that half of this improvement was achieved through cost savings, and a third is related to the sale of the radio system (Ericsson Radio System), which is crucial for the modernization of networks in the future.

By 2020, the margin is expected to rise to 37 to 39 percent.