Ericsson Q1 sales jump 12 per cent

Ericsson president Carl-Henric Svanberg remains upbeat despite the downturn

Wireless phone network supplier Ericsson has announced that its first-quarter net sales increased by 12 per cent to SEK49.6bn (£4.2bn).

The Swedish company said its positive performance proved that the effects of the recession on the networking market are "so far limited".

However, Ericsson experienced a 30 per cent fall in profit to SEK1.8bn (£150,000) during the three months to 30 April, which it said was due to Sony Ericsson's drop in earnings.

Sony Ericsson reported a dip in profit of 82 per cent during its first quarter, and a 35 per cent fall in unit shipments to 14.5 million. After posting the results, Sony Ericsson announced that it would cull 2,000 jobs from its global workforce.

"Sales of network infrastructure are stable, and the demand for professional services is growing," said Carl-Henric Svanberg, Ericsson's president and chief executive.

Ecrisson's quarterly growth in sales was largely helped by rollouts in India and China, he said.

Svenberg also noted a postponement of investment from some operators in markets where local currencies have depreciated.

"Some operators are more cautious with longer-term investments in fixed networks, such as rollout of fibre networks," he said.

Ericsson's cost reduction activities are "running according to plan", said Svenberg. The programme, launched in January 2009, is hoping to realise annual savings of SEK10bn (£837m) by the second half of 2010, with an equal split between sales and operating expenses.

Restructuring charges are estimated to be around SEK6.5bn (£544m).