Ericsson has reported preliminary, unaudited third quarter results, saying it expects its business result to be “significantly” lower than company expectations on the back of continuing negative industry trends. These started in the first half and are now being felt, especially in Segment Networks. Revenues for the quarter fell 14 percent year-on-year to SEK 51.1 million, with revenues from Networks down 19 percent to SEK 23.3 million.
Sales decline in the quarter was mainly driven by markets with weak macro-economic environment such as Brazil, Russia and the Middle East, impacting both coverage and capacity sales in those markets. In addition, capacity sales in Europe were lower following completion of mobile broadband projects in 2015.
The gross profit slid 28 percent to SEK 14.5 million, with the gross margin lower at 28.3 percent from 33.9 percent. The operating profit sank 93 percent to SEK 0.3 million. At Networks, it decreased 109 percent to a loss of SEK 0.3 million. Excluding restructuring charges, the operating profit fell 73 percent to SEK 1.6 million.
CEO Jan Frykhammar said the end of the quarter was particularly weak end of the quarter and that continued progress in the company’s cost reduction programmes did not offset the lower sales and gross margin. The CEO expects current market trends to continue for the short-term. He said the company will continue with its cost-cutting programmes and implement further reductions in cost of sales to meet the lower sales volumes.
Ericsson reiterated it will announced its full report for the quarter on 21 October.
