Ericsson reported first-quarter sales flat at SEK 49.8 billion. The company said underlying growth excluding changes in scope and currencies reached 10 percent, supported by market share gains at its Networks business. Operating profit (EBIT) jumped 22 percent to SEK 5.3 billion, and the company's margin improved to 10.6 percent from 8.7 a year ago thanks to its cost saving efforts.
Ericsson's net profit rose 39 percent year-on-year to SEK 3.2 billion. Underlying free cash flow, excluding M&A, totaled SEK 1.6 billion, down from SEK 2.3 billion a year ago due mainly to a drop in licensing revenues.
The core Networks division posted sales up 3 percent, or 15 percent higher on an organic basis, to SEK 36.3 billion. Ericsson said this reflected continued high activity in all market areas, except in the Middle East and Africa, as well as further increase in market share and strong order intake. The gross margin for Q1 improved to 46.0 percent from 44.6 percent a year ago, and the company said it was weathering the global semiconductors shortage situation without impact on customer deliveries.
Sales from Managed services were down 15 percent year-on-year to SEK 4.9 billion, impacted mainly by the Sprint-T-Mobile merger in the US. The Digital Services division showed a drop of 6 percent to SEK 6.9 billion, as forex effects outweighed growth in four of the five regions.
Ericsson expects the favourable market conditions to continue in 2021, with estimated 3 percent growth in the global RAN market. The company said it will continue to invest for market share gains and in supply chain resilience throughout this year. In addition to the momentum in 5G, it's investing in the enterprise market to lay a foundation for longer term growth.
