Ericsson’s turnround task remains daunting as sales shrink in Q1

The scale of the task facing Borje Ekholm as chief executive of Ericsson was shown as the struggling Swedish telecoms equipment maker posted worse-than-expected profits and sales.

Revenues were down 11 per cent in the first quarter compared with a year earlier to SKr46.4bn ($5.25bn) due to weakness in the mobile broadband market and in north and Latin America as well as Europe. Analysts had forecast an average of SKr47.3bn.

Profits were hit by problems to certain contracts, writedowns, and restructuring charges that Ericsson announced last month. The operating loss was SKr12.3bn in the first quarter compared with a SKr3.5bn profit a year earlier and analysts’ expectations of a SKr12.1bn loss. Stripping out all the charges, adjusted operating profit was SKr1.1bn versus SKr4.1bn a year earlier.

Ericsson has been under pressure for some time and fired its chief executive and issued a big profit warning last year. Mr Ekholm, a former lieutenant for the Wallenberg family that helps control Ericsson, was brought in as chief executive starting in January.

“Our performance in the first quarter continued to be unsatisfactory…The immediate priority is to improve profitability while also taking action to revitalize technology and market leadership,” he said on Tuesday.