Ericsson sees sales stabilising, shares spark

(Sharecast News) - Shares in Ericsson rallied on Tuesday, after the Swedish telecoms group posted above-forecast quarterly numbers and said it expected sales to stabilise in the second half. Operating profits excluding restructuring charges rose 7% in the first three months of the year, to 4.3bn crowns (£315.7m). Analysts had expected profits to fall to 1.7bn crowns.

Profits were boosted by a one-off 1.9bn crowns profit following the resolution of a commercial dispute.

Gross margin also came in at 42.7% compared to 39.8% a year earlier.

Organic sales declined 14% year-on-year, to 53.3bn crowns, driven predominantly by a 19% slide in revenues in the Networks division.

Ericsson said Network customers continued to be "cautious" about investments.

However, it struck a more upbeat tone looking forward, with group sales on course to stabilise by the end of the year.

Borje Ekholm, chief executive, said: "If further trends persist, we expect our sales to stabilise during the second half, benefiting from recent contract wins and the normalisation of customer inventory levels in North America.

"Our margins should benefit from improved business mix.

"We also remain highly focused on delivering stronger cashflow, based on our operating discipline.

"While the near-term dynamics are challenging, we remain fully committed to our long-term targets."

As at noon BST, shares in the Stockholm-listed stock were trading 7% higher.