Ericsson to reorganise, Q1 profit falls short

STOCKHOLM - Ericsson will reorganise its business to boost growth and efficiency, the mobile telecom gear maker on Thursday, after falling short of market expectations for first-quarter sales and operating profit.

Ericsson said its new structure would consist of business units focused on type of customer and type of business, adding it had started to take measures on top of an ongoing savings programme in the face of a slow mobile broadband market. "We are not satisfied with our overall growth and profitability development over past years," Chief Executive Hans Vestberg said in a statement.

Like-for-like sales dropped by 1 per cent. In 2015, group sales dropped 5 per cent on a comparable basis after declining 2 per cent in 2014.

Operating profit was 3.48 billion Swedish crowns (Sq1$576 million), up from 2.13 billion a year earlier but below a mean forecast of 4.37 billion in a Reuters poll of analysts.

Sales at the world's number one mobile network equipment maker were 52.2 billion crowns, below a forecast of 54.6 billion.

Growth in North America, mainland China and South East Asia was offset by weak development in Europe and some emerging markets, Ericsson said, adding restructuring charges for the year would be 4 to 5 billion crowns versus a previous forecast of 3 to 4 billion.

The gross margin was 33.3 per cent against a mean forecast of 35.4 per cent.