Ericsson reports sales down 25% quarter-on-quarter

20 April 2018 | Alan Burkitt-Gray

Swedish telecoms equipment vendor Ericsson’s sales are down 25% quarter-on-quarter, and 9% year-on-year.

In the company’s latest quarterly results, published today, Ericsson says its margin has increased from 15.7% in the first quarter of 2017 to 34.2% in the same quarter this year. This is “tracking well towards our group target of 37-39% by 2020”, said CEO Börje Ekholm in his commentary.

He continued: “In the quarter we reduced the total workforce by more than 3,000. Since the reduction activities were launched in July last year, we have reduced the total workforce by almost 18,000.”

Ericsson was once the unchallenged leader in the telecoms equipment market. According to some reckonings, the Chinese vendor Huawei has now passed it. Ericsson and Nokia, its sole leading Western rival in the equipment market, are both tipped to benefit from ZTE’s woes after the US Department of Commerce put it on the banned list this week.

The annual run-rate effect of cost savings was 8.5 billion kronor ($1 billion), compared with the company’s target for the middle of this year of 10 billion kronor ($1.18 billion).

“The run-rate reduction does not yet fully impact the quarterly results,” he said.

Sales for the quarter were 43.4 billion kronor ($5.14 billion), 25% down on the fourth quarter of last year. Even adjusting for currency changes, sales were 24% down, the company reported.

But Ekholm was positive: “We have continued to execute on our focused business strategy creating solutions that help our customers improve their business. Our efforts to improve efficiency in service delivery and common costs are starting to pay off.”

He said: “The improvements in the quarter are encouraging. However, more work remains to be done. We have confidence in the strategic direction laid out and remain fully committed to our long-term targets.”