Ericsson has made its first attempt to put a horrific 2017 behind it by improving upon its losses thanks to improving margins and a costs blitz in its first quarter.

While the Swedish vendor posted a net loss of SEK700 million, it marks an improvement on the SEK10 billion loss it recorded in the first quarter of last year.

[Read more: Ericsson searches for positives amid huge annual loss]

Gross margin substantially improved from 15.7 percent last year to 34.2 percent, which Ericsson said was due to a tight rein on costs and a greater focus on its radio business.

However, like for like sales slid nine percent to SEK43.4 billion as Ericsson brought in less business from Asia, Oceania and India.

Ericsson's Networks arm, the largest division of the company, saw like for like sales slide 10 percent to SEK28.6 billion although operating income increased 24 percent to SEK3.4 billion.

The vendor bemoaned lower LTE investments in China, as well as the completion of projects across Asia, Oceania and India.

However, it noted "strong" growth in Europe, Latin America, the Middle East and Africa.

Operating margin also increased in the division from 8.6 percent to 11.8 percent thanks to cost reductions and a shift to higher margin products.

However, it noted the radio access network equipment market will decline two percent in 2018, with a CAGR of two percent between 2018 and 2022.

The vendor also saw an improvement in its Digital Services division, improving a loss of SEK9.0 billion to a loss of SEK2.6 billion, with sales down nine percent to SEK7.7 billion.

It said the momentum was "strong" for 5G ready and cloud-native products but said it was being held back by declining sales in legacy products.

[Read more: Ericsson expands 5G portfolio but notes European telcos face "major challenges"]

In Managed Services, sales fell eight percent to SEK5.5 billion with the vendor reversing a SEK1.8 billion operating loss in 2017 to post a profit of SEK100 million.

Ericsson said the review of low-performing and non-strategic contracts led to the sales decline.

During the quarter, the vendor cut 3,000 jobs bringing the total number of staff leaving the business from July 2017 to 18,000.

It said it has made SEK8.5 billion in cost savings to date with the target of SEK10 billion by the middle of this year.

[Read more: Ericsson moves UK HQ, hires ex-Verizon legal eagle]

CEO Borje Ekholm hailed a more competitive performance in the Networks division, the positive news from the Managed Services arm but noted the "challenging" state of the Digital Services wing.

He added: "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."

Meanwhile, Ericsson expects to fully divest of its Media Solution arm by the end of September.

More News

Iliad enters content game in France, finally launches Italian mobile business Iliad enters content game in France, finally launches Italian mobile business Iliad has acquired football rights in France and launched its opco in Italy as it looks to reboot after a disappointing set of financial results. More detail
Three UK appoints new CCO, CFO Three UK appoints new CCO, CFO The departure of Three UK's Chief Commercial Officer after just 18 months in the job has triggered a shake-up of the mobile operator's top team. More detail
TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk to sell enterprise customer base to Daisy as it registers full-year loss TalkTalk has agreed to sell 80,000 business customers to rival Daisy Group in a £175 million deal. More detail
A1 Telekom Austria Group rebrand reaches Bulgaria A1 Telekom Austria Group rebrand reaches Bulgaria Bulgaria is the third A1 Telekom Austria Group opco to get rebranded as the telco looks to market itself as a provider of "advanced" IT, IoT, cloud and content services. More detail
Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services puts IoT to use on saving ships’ fuel costs Orange Business Services has expanded its work with Dobroflot by developing a customised IoT solution for the Russian fishing company. More detail
    

 

European Communications is now
Mobile Europe and European Communications

  

From June 2018, European Communications magazine 
has merged with its sister title Mobile Europe, into 
Mobile Europe and European Communications.

No more new content is being published on this site - 

for the latest news and features, please go to:
www.mobileeurope.co.uk 

 

@eurocomms