The set of financials do show an improvement of 2017’s figures, as Ericsson proceeds with its cost reduction programme
Ericsson has revealed a 9 per cent drop in its annual sales revenue to SEK43.4 billion ($5.14 billion), as the company posted a challenging set of financials for the first quarter of 2018.
Ericsson has been implementing a programme of cost cutting measures to try and improve efficiencies within the business and boost profitability. Despite the drop in sales revenue, there was some good news for the Swedish kit maker, which saw its gross margins increase.
“We have continued to execute on our focused business strategy creating solutions that help our customers improve their business. Our efforts to improve efficiency in service delivery and common costs are starting to pay off. The gross margin1) improved to 36% (19%) in the quarter, tracking well towards our Group target of 37-39% by 2020,” said Börje Ekholm, president and CEO of Ericsson.
Ericsson pledged to continue its investment in research and development to act as a catalyst for its future operations, particularly regarding 5G.
A cornerstone in our strategy is to invest in R&D for both technology leadership and cost leadership, which will allow us to generate higher gross margins. We continue to increase our R&D investments in Networks to lead in 5G. In Digital Services we continue to increase investments into our new cloud-native portfolio as well as changing our ways of working for better R&D efficiency. In Managed Services we continue to focus on machine intelligence, automation and analytics to further enhance user experience, improve efficiency and better manage the increasingly complex networks of tomorrow,” added Ekholm.
Despite the challenging nature of Ericsson’s Q1 financial report, the company will take solace that it seems to have stopped the rot showing a marked improvement from its financial report for Q1 2017.
“The improvements in the quarter are encouraging. However, more work remains to be done. We have confidence in the strategic direction laid out and remain fully committed to our long-term targets. Looking ahead, we expect the rapidly increasing focus on 5G to continue, with initial business discussions focusing on enhanced mobile broadband. We continue to work closely with customers to define the optimal business models to enable them to tap into new revenue streams and capture the full value of 5G,” said Ekholm.