Ericsson's revenues rise in Q4

Profit squeezed by charge related to ST-Ericsson and tax changes
Hans Vestberg said that Ericsson saw growth in global services while networks presented a challenge.
Hans Vestberg said that Ericsson saw growth in global services while networks presented a challenge.


Swedish vendor Ericsson’s revenues grew by 5% year-on-year in the fourth quarter of 2012, to reach SEK 66.9 billion ($10.6bn).

Profits came under pressure owing to a non-cash charge related to ST-Ericsson and a reduction of deferred tax assets. Net income was SEK -6.3 billion compared to a profit of SEK 1.5 billion in the fourth quarter of 2011.

Sales in sub-Saharan Africa were particularly strong in Q4, with growth of 11% compared to Q4 2011. However, the Middle East saw a contraction of 3% in the same timeframe. Despite this, the Middle East saw a resurgence in Q4 on a sequential basis, with sales up 39% compared to Q3.

Ericsson attributed its flat sales in the Middle East to ongoing political unrest in some countries.

It attributed the sales increase in Africa to operator investments in Nigeria and South Africa. Ericsson stated that while 3G deployments are increasing in Africa, sales of 2G equipment accounted for the majority of sales. “Data traffic is growing across the region and LTE deployments have started with three networks launched in Southern Africa,” the vendor added.

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Ericsson ended the year with strong cash flow and a full-year cash conversion well above target, Hans Vestberg, CEO, Ericsson. The board of directors proposed a dividend for 2012 of SEK 2.75 (2.50) per share, an increase by 10%, he added.

Speaking about the results, the CEO said: "Our segments showed mixed developments during the year with strong growth in global services and support solutions, while networks had a more challenging year. Support solutions went from losses in 2011 into profitability and together with global services represented close to 50% of group sales in 2012, compared to 42% in 2011.

"During the year profitability was negatively impacted by operating losses in ST-Ericsson, the ongoing network modernisation projects in Europe as well as the underlying business mix, with a higher share of coverage projects than capacity projects,” he added.

“With present visibility of customer demand, and with the current global economic development, underlying business mix is expected to gradually shift towards more capacity projects during the second half of 2013.”

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