Ericsson Sales Hit by Currency Headwind

Ericsson Sales Hit by 'Currency Headwind'

The company said that without currency adjustment sales rose by 3% and operating margins continued to grow, to 8.1% compared to 6.7% in the same quarter last year.

STOCKHOLM -- Telecom-equipment maker Ericsson (IW 1000/127) reported a drop in third-quarter sales on Thursday, as activity in North America and Japan weakened and the company suffered from the strength of the local currency.

Ericsson share value fell by just over 6% on the Stockholm Stock Exchange in morning trading.

Net sales were down 3% from the same quarter a year ago to 53 billion kronor (US$8.3 billion) "primarily due to continued currency headwind," Ericsson chief executive Hans Vestberg said.

Net profits rose to 3.0 billion kronor, up 38% compared to the outcome in the same quarter a year ago. That fell short of the 3.2-billion-kronor forecast by economists surveyed by Dow Jones Newswires.

"We are currently seeing sales coming under pressure," Vestberg added.

"In addition to foreign exchange, the major drivers for this development are the two large mobile broadband coverage projects which peaked in North America in the first half of 2013."

He said the company also felt the impact from reduced activity in Japan "where we are getting closer to completion of a major project."

The company said that without currency adjustment sales rose by 3% and operating margins continued to grow, to 8.1% compared to 6.7% in the same quarter last year.

Chief executive Vestberg said that lower activity in telecom networks, the company's main business, was offset by strong growth in the service business which is still expanding in North America.

A sharp 28% drop in sales in northeast Asia was also offset, he said, by strong growth in several regions, including a 21% increase in western Europe, mainly due to new investments in fourth generation data networks.

Copyright Agence France-Presse, 2013

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