Alcatel-Lucent reported third-quarter revenues down 5 percent year-on-year to EUR 3.43 billion. Adjusted operating profit improved to EUR 212 million from EUR 170 million a year ago, as the company completed about 90 percent of the cost savings targeted under its 'Shift Plan'. The gross margin was up 50 basis points year-over-year to 34.5 percent, and the adjusted operating margin expanded 100 points to 6.2 percent. The net result was still a loss of EUR 206 million, widening from EUR 18 million a year ago due to a goodwill impairment charge of EUR 193 million on ASN. Operating cash flow moved to a positive EUR 83 million versus negative EUR 61 million a year earlier.
For 2015 as a whole, Aclatel-Lucent forecast Core Networking revenues of EUR 6.8-7.0 billion and an adjusted operating margin similar to 2014, owing to the dilutive contribution from ASN. The submarine networks division has suffered from delays in contractual implementation of awards and continued softness in some geographies, notably Japan, the company said. In Q3, Core Networking revenues were up 11 percent year-on-year, or 2 percent at constant currency rates, to EUR 1.608 billion. Adjusted operating profit rose to EUR 151 million from EUR 123 million a year ago, led by improved profitability in IP Platforms.
The Access division, after reaching record profitability in Q3, is expected to largely exceed the operating cash flow target of EUR 200 million for 2015, Alcatel-Lucent said. Adjusted operating profit at the division rose to EUR 83 million in Q3 from EUR 62 million a year ago, while revenues were flat at EUR 1.811 billion. Operating cash flow was a positive EUR 41 million.
Alcatel-Lucent also announced that about 26,000 retirees on its pension plan in the US have accepted the offer for a lump-sum pay-off. This is around 31 percent of those eligible, slightly better than the 30 percent targeted to accept the offer. The total pay-out of USD 5.3 billion will be funded entirely by the pension plan's assets. The decrease in pension liabilities is expected to outweigh the decrease in pension assets by nearly USD 500 million, the company said.
