Ericsson 1Q sales SEK 52.0 bn, down 19 percent QoQ

Ericsson sales in the first quarter were SEK 52.0 bn, an increase of 7 percent year on year (YoY) and 19 percent decline quarter on quarter (QoQ).

The company's operating income inclusive of Joint venture was SEK 2.1 billion with an operating margin of 4 percent. Excluding the restructuring charges related to the reduction of operations in Sweden of SEK 1.4 billion, the margin amounted to 6.7 percent. Last year's margin of 17.8 percent was positively impacted by a gain of SEK 7.7 billion from the divestment of Sony Ericsson. Net income for the company stood at Sek 1.2 billion.

Net cash decreased by SEK -6.3 billion QoQ to SEK 32.2 billion mainly due to negative operating cash flow and reclassification of Swedish special payroll taxes of SEK 1.8 b. from Other current liabilities to Pension liabilities.

Commenting on the result Hans Vestberg, president and CEO said "Sales showed positive development in the quarter with a growth of 2 percent YoY, despite currency headwind. Sales for comparable units, adjusted for FX and hedging, grew 7 percent.

"The sales increase was primarily driven by Networks and rollout services, following high project activities primarily in Europe and North America. North America remained the strongest region and showed a growth of 23% despite the decline in CDMA. North East Asia had a challenging quarter with lower sales in South Korea, which remains one of the most advanced LTE markets but without parallel 3G deployments as in Q112, continued structural decline in GSM investments in China and FX effects in Japan," added Hans Vestberg, President and CEO of Ericsson.

Looking at the areas of portfolio momentum, the comoany saw continued good development in Managed Services with 21 new contracts signed during the quarter. Within the mobile broadband area, the vendor selection processes for 4G/LTE in Russia and China have been initiated. We also see continued momentum for our SSR routing platform with 12 new contracts in the quarter and continued to be strong in OSS and BSS demand.

The improvement is mainly due to higher sales in Networks and a continued reduction in operating expenses, offset by negative operating income in Network Rollout and negative FX effects.

The underlying business mix, with a higher share of coverage projects than capacity projects, continued as anticipated during the quarter. With present visibility of customer demand, and current global economic development, we continue to believe that the underlying business mix will start to gradually shift towards more capacity projects during the second half of 2013.

We continue to execute on our strategy. During the quarter we announced the way forward for our JV ST-Ericsson and in April 2013 we announced our intention to acquire Microsoft's Mediaroom to strengthen our media position.

While macroeconomic and political uncertainty continues in certain regions, the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market," concludes Vestberg.