Wednesday, April 17, 2019

Ericsson's Q1 sales rose 7% thanks to North America

Driven by strong sales growth in North America, Ericsson reported Q1 revenue of SEK 48.9 billion, up 7% compared to the same period last year with constant currency. Gross margin was 38.4% (34.2%) driven by improvements in Networks and Managed Services. Operating income was SEK 4.9 (-0.3) b. and operating margin was 10.0% (-0.7%).

Börje Ekholm, President and CEO of Ericsson, states: "5G services, including mobility, have been launched in South Korea and North America. While Switzerland has released spectrum allowing Swisscom to offer commercial 5G services, using our equipment, the development in other parts of Europe is considerably slower primarily due to lack of spectrum, poor investment climate and additional uncertainties related to future vendor market access.

Gross margin[2] improved to 38.5% (35.9%) YoY, driven by improvements in segments Networks and Managed Services, and also by the recently signed patent license agreement with OPPO.

Segment Networks had a strong quarter with an organic sales growth[1] of 10% YoY, driven by increased investments in North America. Networks gross margin[2] improved to 43.2% (40.4%) YoY, mainly due to higher hardware capacity sales and IPR revenues. In the quarter we announced our intent to acquire the German company Kathrein’s antenna and filters business. This will further expand our capabilities in the advanced active and passive antenna domains, which are growing in importance as 5G evolves.

In Managed Services, sales fell organically by -5% due to headwind from contract exits. In the quarter, our Operations Engine was launched with good response from our customers. Gross margin improved to 17.7% (9.1%) YoY, supported by efficiency gains and customer contract reviews. Excluding a non-recurrent positive effect of SEK 0.7 b. from a customer settlement, the operating margin was 8.6%, exceeding the higher range of our financial target for 2020."

https://www.ericsson.com/en/press-releases/2019/4/ericsson-reports-first-quarter-results-2019


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