Strong 5G market boosts Ericsson earnings

STOCKHOLM-Reuters

Telecoms equipment maker Ericsson reported quarterly core earnings well ahead of market expectations on Thursday and lifted its 2020 sales target citing a stronger 5G market and currency effects.

The Swedish company, which together with Nokia and Huawei sells the bulk of the radio access network equipment that is key for next-generation 5G mobile services, said it was now targeting sales of 230-240 billion crowns ($23.5-24.5 billion) in 2020, up from 210-220 billion previously.

“We continue to see strong momentum in our business, based on the strategy to increase our investments for technology leadership, including 5G,” Ericsson Chief Executive Borje Ekholm said in a statement. “5G is taking off earlier than anticipated”.

Adjusted third-quarter operating earnings at the mobile network gear maker rose to 6.5 billion crowns ($664.74 million)from 3.8 billion a year earlier, corresponding to an 11.4 percent margin and beating the 5.2 billion mean forecast seen in a Refinitiv poll.

Ericsson kept its target for an operating margin of greater than 10 percent for 2020, citing the short-term dilutive impact from strategic contracts and an initially higher cost level for newly introduced 5G products.

It rejigged its 2022 target to 12-14 percent from more than 12 percent earlier.

The company said it now expected the Radio Access Network equipment market to increase by 5 percent in 2019, compared to 3 percent growth expected in July.