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Ericsson sales surge as telecom giant cuts costs

Xinhua, July 18, 2015 Adjust font size:

Telecoms giant Ericsson reported a surge in global sales for the second quarter on Friday as the company executed its cost-savings program.

Sales in the second quarter totaled 60.7 billion SEK (7.05 billion U.S. dollars), an 11-percent increase on the same quarter last year, the company said in its earnings report.

"The mobile broadband business in North America stabilized in the quarter, but remained at a lower level than a year ago," CEO Hans Vestberg said in his statement to shareholders.

Sales in China's mainland, the Middle East and India "contributed positively" to Ericsson's sales growth, with earnings at 3.6 billion SEK for the second quarter, 11 percent lower than in 2014.

The company's stock surged on the Stockholm stock exchange after beating analysts' predictions, rising some 4 percent by the afternoon.

Costs related to the company's savings program knocked 2.7 billion SEK off its earnings and were expected to increase to 4 to 5 billion SEK over the course of the year. The increase was due to a "somewhat higher" pace of implementation of the program, the company said.

"Savings related to the activities will start to impact results towards the end of this year," Vestberg said.

Ericsson's gross margin dropped to 33.2 percent in the quarter, compared to 36.4 percent for the same period in 2014. (1 U.S. dollar = 8.61 SEK) Endit