The results of Ericsson’s earnings for fourth quarter of 2018 were issued January 25 from Stockholm, Sweden. The company beat fourth-quarter sales and profit margin forecasts, helped by cost cuts and better than expected demand from U.S. mobile operators for fifth-generation (5G) telecoms equipment.
The results topped expectations for the fourth straight quarter as the Swedish company said increased research and development spending was also strengthening its turnaround according to analysts at Yahoo Finance.
“Our R&D investments over the past two years have secured a highly competitive and industry-leading offering,” said Ericsson President/CEO, Börje Ekholm. “We will continue to invest in 5G, automation and AI to create both customer and shareholder value. Even though costs related to strategic contracts and 5G field trials will impact margins short term, they will help reaching our targets for 2020 and 2022 as well as strengthen our business in the long term.”
- Gross margin was 25.7 percent. Gross margin, excluding restructuring charges and other costs related to revised BSS strategy, improved to 36.3 percent, supported by cost reductions, the ramp-up of Ericsson Radio System (ERS) and the contract review in Managed Services.
- Operating margin was -2.9 percent. Operating margin, excluding restructuring charges and other costs related to revised BSS strategy, was 8.7 percent.
- Networks operating margin excluding restructuring charges was 17.5 percent. The increase was driven by cost reductions, the ERS ramp-up and reversal of provisions for impairment losses on trade receivables, partly offset by increased investments in R&D.
January 28, 2019