3G boost Ericsson profits

April 24, 2005

Ericsson has reported a rise in quarterly profits helped by the deployment of 3G networks. The telecom equipment maker reported better than expected first quarter profits of 6.7 billion kronor (£499 million), compared with 3.7 billion kronor last year.

Ericsson reported sales of 31.5 billion crowns compared to 28.1 billion a year earlier. Operating margin was 21% in the quarter, compared with 14% in the same period of 2004. The company said it had high orders in the fourth quarter of 2004, which analysts have said would spill over into business in the first quarter.

Ericsson forecasted slight growth for the mobile systems market this year and said it was unlikely to be able to maintain its 21% operating margin of the first quarter. However, it hoped to take market share from rivals.

Ericsson benefited from the deployment of 3G systems and upgrades of GSM networks in western Europe, where sales rose 26%. It also saw solid demand in emerging markets and expects to see a substantial pickup in sales in China in the second quarter

Ericsson president and chief executive, Carl-Henric Svanberg, said he was confident about his company's performance.

"Nokia is growing by 6%, while we are growing 17% in local currencies," said Svanberg.

Rival Nokia also reported better than expected profits the day before Ericsson's announcement.