Ericsson reported improving margins and profits in the third quarter, as its efficiency programme helped offset weak sales. Revenues increased 3 percent year-on-year to SEK 59.2 billion, but were down 9 percent on an organic basis due to lower sales in Networks. This was partly offset by sales growth in Professional Services.
A higher share of services in the revenue mix led to a drop in the adjusted gross margin, to 34.5 percent from 35.5 a year ago. The operating margin, excluding restructuring costs, improved though, to 10 percent from 7 percent a year earlier, thanks to lower costs. Ericsson said its Network Rollout business, within Global Services, also reached breakeven. Net profit rose to SEK 3.1 billion from SEK 2.6 billion in Q3 2014, and operating cash flow returned to a positive SEK 1.6 billion after a negative SEK 1.4 billion a year ago. Ericsson said its efficiency programme to save SEK 9 billion by 2017 was progressing as planned.
Ericsson said sales growth remained strong in India, as well as South East Asia and Oceania compared to the same period last year, while sales declined in North East Asia, Northern Europe and Central Asia. The mobile broadband business in North America was stable compared to Q2, but at a lower level compared to the same period last year. The company noted a slowdown in 4G deployments in mainland China, as well as a somewhat slower pace of mobile broadband investments in markets such as Russia, Brazil and parts of the Middle East, due to weak macroeconomic development.
