News
Swedish equipment maker says profit hike driven by IPR revenues and lower opex.
Ericsson on Wednesday posted a strong set of financials for the fourth quarter of last year, buoyed by positive results in India, Indonesia and Mexico, and by 4G sales in China.
The Swedish equipment maker posted net sales of 73.6 billion kronor (€7.9 billion) in the three months to the end of December, up by 8% year-on-year.
Its operating income grew by 75% to SEK11 billion (€1.2 billion), while net income came in at SEK7 billion, an increase of 68% on Q4 2014.
"The major contributors to the profit improvement were higher IPR (intellectual property rights) licensing revenues and lower operating expenses, mainly in segment Networks," Ericsson CEO Hans Vestberg said, in a statement.
"The effort to restore Network Rollout to a sustainable profitable business is progressing well, with a break-even operating income, excluding restructuring charges, for the second half of 2015," he added.
In North America – Ericsson’s largest regional division, accounting for 23% of Q4 sales – mobile broadband investments from operators were slow in 2015 as a whole, but stabilised in the fourth quarter, the vendor said.
However, mobile broadband spending in Brazil continued to decline in Q4, but there were strong investments elsewhere in the Latin American region, especially in Mexico, the firm said.
Low mobile broadband investment levels in Russia weighed on Ericsson’s Northern Europe and Central Asia business, which saw sales fall by 30% in Q4.
"Emerging markets such as India, Indonesia and Mexico remained strong while markets such as Russia, Brazil and parts of the Middle East continued to be weak, mainly due to macro-economic developments," Vestberg said.
"Investments in Europe were driven by the transition from 3G to 4G and capacity enhancements," he added. "Operators increased their investments in telecom core networks, driven by deployment of new service offerings such as VoLTE."
Ericsson’s Western and Central Europe division saw Q4 sales fall by 13% to SEK5.3 billion, while its Mediterranean unit posted a sales decline of 7% to SEK7 billion.
North East Asia, which includes China and Japan, and is Ericsson’s second largest regional business, reported a 3% decline in sales to SEK8.9 billion. 4G deployments in China recovered after a weak third quarter, while operator investments in Japan increased sequentially but remain lower than in the same period in 2014, Ericsson said.
The vendor’s largest business segment, Networks, reported 9% growth in sales to SEK37.3 billion, while Global Services contributed SEK30.7 billion to the top line, up 3%.
Ericsson’s Support Solutions arm brought in SEK5.6 billion, a 40% increase on the year-ago quarter, driven by increased IPR licensing revenues and strong TV and media sales in North America.
