Ericsson reported first-quarter sales down 9 percent from a year earlier to SEK 47.5 billion. Revenues were impacted by a slowdown in two major mobile broadband contracts in North America, which peaked in H1 2013, and reduced business in Japan. This was partly offset by growth in China, the Middle East and Latin America. On a comparable basis, adjusted for currency, sales decreased 7 percent year-on-year and were down 28 percent compared to the fourth quarter.
The company still improved its operating margin, to 5.5 percent from 4.0 a year ago, thanks to more mobile broadband capacity sales and lower restructuring charges. Total operating profit rose to SEK 2.6 billion from SEK 2.1 billion, and net profit increased 41 percent to SEK 1.7 billion. Helped by its new licence agreement with Samsung, Ericsson increased operating cash flow to SEK 9.4 billion, compared to a negative SEK 3.0 billion a year ago.
Ericsson said it expects a number of key contract wins, such as LTE projects in China, Japan and Taiwan, to impact sales and the business mix in the second half of the year. However, the political uncertainty in parts of the Middle East and Africa is having a negative impact on sales. This could also spread to Ukraine and Russia, where Ericsson recorded SEK 5.9 billion in sales last year. The company said it had not yet seen an impact in Q1 in the two countries.
