Ericsson warns sales are 'under pressure' even as Q3 net profit jumps 34 pct

STOCKHOLM – Swedish wireless equipment company Ericsson AB warned Thursday that its sales are under pressure as big projects in the U.S. and Japan come on stream.

The warning came as Ericsson reported a 34 per cent increase in third quarter net profit to 2.92 billion Swedish kronor ($458 million), compared with 2.18 billion kronor a year earlier. Sales in the quarter dropped by 3 per cent to 52.98 billion kronor amid negative currency effects and lower sales in North East Asia and India.

“We are currently seeing sales coming under some pressure,” Ericsson CEO Hans Vestberg said.

In addition to negative currency effects, the comparable sales figure was hurt by the completion of two large mobile broadband coverage projects in North America, Vestberg said.

“We also saw impact from reduced activity in Japan where we are getting closer to completion of a major project,” Vestberg said.

The indication that the company was facing a tougher time ahead weighed on Ericsson’s share price, which fell 5.6 per cent to 79.5 kronor in early trading Thursday on the Stockholm stock exchange.

The Stockholm-based manufacturer of telecommunications infrastructure, the world’s largest, is struggling in an increasingly competitive environment and has cuts thousands of jobs in Sweden over the past year to slash costs.

Vestberg said Thursday uncertainty still remains in certain parts of the world, although the macroeconomic climate has stabilized in many markets and the “long-term fundamentals in the industry remain attractive.”

“Ericsson now sees growth in several European markets and margins are also improving as the network modernization projects gradually come to an end and we engage more in new capacity and LTE business,” he said, referring to the high-speed data standard for mobile phones.