STOCKHOLM, Jan 25 (Reuters) – Swedish telecoms equipment maker Ericsson reported higher-than-expected fourth-quarter adjusted operating profit on Tuesday, buoyed by higher telecoms equipment sales as 5G networks were rolled out, which compensated for the loss of market share in China.
Ericsson’s adjusted operating profit reached 11.9 billion crowns (1.13 billion euros) in the period, compared to 11 billion a year ago, beating the average analyst forecast of 10.3 billion , based on data from Refinitiv.
The group’s total revenue rose 2% in the quarter to 71.3 billion crowns, while analysts expected 68.33 billion.
Sales in mainland China, for their part, fell by 1.8 billion crowns. Excluding this market, Ericsson’s organic sales growth was 5%.
The resurgence of Ericsson’s big rival, Finnish equipment manufacturer Nokia, which is increasing competition in several markets, as well as the loss of telecommunications contracts in China following the exclusion of Chinese Huawei for the development of the 5G network by the Swedish government, weighed on the group’s turnover.
Ericsson’s share of revenue in China fell to about 3% from 10% to 11% before Huawei was excluded, the company said.
Ericsson’s network unit sales increased 3% and gross margin rose from 43.5% to 46.4% in the quarter.
In a bid to expand its 5G portfolio, Ericsson has spent more than $7 billion buying two companies, cloud communications specialist Vonage and wireless networking hardware maker Cradlepoint.
(Report Supantha Mukherjee in Stockholm, French version Diana Mandiá, edited by Blandine Hénault)