FILE PHOTO: The Ericsson logo is seen at the Ericsson’s headquarters in Stockholm, Sweden June 14, 2018.REUTERS/Olof Swahnberg
STOCKHOLM (Reuters) – Mobile telecom equipment maker Ericsson beat first-quarter result forecasts on Wednesday due mainly to strong growth in North America as the company raised its full-year outlook for the global networks market.
The Swedish company has shown steady improvement in profitability after slashing costs and seeing increasing demand for 5G equipment as it rebounds from falling spending on networks by telecoms operators in the middle of the decade.
The mobile telecom equipment maker said it now expects the Radio Access Network (RAN) equipment market to grow by 3 percent this year, up from a previous forecast for 2 percent growth.
Excluding restructuring charges and one-off items, operating margin was 7.2 percent.
The company, which counts China’s Huawei and Finland’s Nokia as its main rivals, has pledged to deliver an operating margin, excluding restructuring costs, of more than 10 percent in 2020.
Ericsson also warned that ongoing investigations by the United States Securities and Exchange Commission (SEC) and the United States Department of Justice (DOJ) could result in “material financial and other measures”.
Quarterly operating profit swung to 4.9 billion crowns from a 312 million loss a year ago, well above a mean forecast for a 2.8 billion profit in a Reuters poll. Sales rose to 48.9 billion crowns from a-year-ago 43.4 billion, edging forecasts of 48.2 billion.
The firm has staked its recovery on rising demand for 5G equipment and some analysts think it could benefit from current turmoil surrounding market leader Huawei.
Reporting by Helena Soderpalm and Johannes Hellstrom; editing by Niklas Pollard and Michael Kahn