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Ericsson thrives in North America

Swedish telecoms equipment vendor Ericsson has posted a SEK 5.9bn (US$ 940mn) net profit for 2012, down substantially from SEK 12.6bn one year earlier, due to one-off items including a hefty non-cash charge related to the joint venture it runs with chip vendor STMicroelectronics.

Sales were flat in 2012 to reach SEK 227.8bn, with an 11% fall in revenues from its Networks division compensated for by a 16% gain from its Global Services division and a 26% improvement from its Support Solutions business.

“Our segments showed mixed developments during the year with strong growth in Global Services and Support Solutions, while Networks had a more challenging year,” said Hans Vestberg, President and CEO of Ericsson.

“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.

“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.”

North America was Ericsson’s strongest market throughout 2012, driven by continued mobile broadband investments and demand for services. However, regions such as South East Asia and Oceania and Sub-Saharan Africa gradually improved during the year.

Vestberg added that his priorities for 2013 will include improving profitability, reducing costs and working capital. Ericsson expects to finalise its ongoing redundancy process in Sweden by March 2013.

“While the 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.

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