Ericsson Q1 net profit up 220 per cent

Ericsson reported that its first-quarter sales rose by 17 per cent to SEK 53 billion (US$8.82 billion), with net profit jumping by 220 per cent to SEK 4.1 billion, compared to SEK 1.3 billion a year ago. The lower figure from 2010 was partly due to a SEK 2.2 billion restructuring charge.

Gross margin in the quarter was flat year-over-year at 38.5 per cent.

R&D expenses amounted to SEK 8 billion, an increase by 10 per cent year-over-year. The increase is a result of the planned higher investments in radio, such as TD-LTE and IP as well as the acquired LG-Ericsson operations.

The increase in group sales was driven by segment Networks where revenues grew 35 per cent year-over-year with an EBITA margin of 20 per cent. The strong demand for mobile broadband resulted in five out of ten regions showing growth year-over-year. Countries with especially strong growth were the US, India, Japan, Korea and Russia. China had continued good momentum for 2G.

The company’s supply chain of components is partly dependent on Japan and it estimates that there will be delays in delivery of certain products due to the impact of the earthquake and tsunami there.

"During 2010 we continued to gain market shares in 3G and at least maintained our market shares in 4G/LTE of more than 50%,” commented Hans Vestberg, president and CEO of Ericsson. “While GSM will continue to exist for many years, we will see the bulk of investments shifting to 3G/WCDMA and 4G/LTE. In services we increased the market share and we continue to be the leading provider in the industry," he added.