We deliver a strong quarterly report. We see continued good margin development and it is the result of the improvements we have made over several years, says Per Narvinger, vice CEO and head of the Networks business area, to TT.
In the report, Ericsson opens up to the possibility that there may be an increased dividend or a new program for repurchasing shares next year.
We have a very strong cash generation, a free cash flow. And we also have a strong net cash and it is further strengthened by the divestment we make of Iconectiv, says Narvinger.
The cash currently amounts to over 50 billion kronor. The divestment of Iconectiv brought in 7.6 billion kronor.
It is reasonable to assume that there is some room for return of capital to our owners. But as the board has previously said, it is very important that we have a strong net cash to handle research and development throughout the entire industry cycle, he adds.
”Large fluctuations”
Narvinger does not want to speculate on how large the dividend may be, but refers to the fact that the issue will be decided by the meeting next year.
The strong development of the krona means a currency shock when revenues from other countries are converted to kronor.
There are quite large fluctuations caused by the currency. We are of course working with the underlying efficiency so that we can handle the fluctuations that occur, says Narvinger.
The Trump administration's tariffs are another issue that Ericsson must handle.
We have invested heavily in our supply chain. That gives us flexibility. Then it is so that as a company, one would like to have long-term rules, because production is not something you move around on a monthly basis, says Narvinger.
Research and development
According to Narvinger, all important markets want Ericsson to be present with production, research, and development on site in their country.
And we have in the USA both research and development and also production, in the same way that we have recently announced that we will do research and development in Japan.
There are no announcements about new savings measures and staff cuts in the report. The lower personnel costs in the past year are a major explanation for the profit increase.
The number of employees always varies over time. As soon as we need to see that we need to make changes, we communicate them. We have nothing to communicate at present, says Narvinger.
Telecom equipment manufacturer Ericsson reports an operating profit of 15.2 billion kronor for the third quarter this year, compared with 5.8 billion for the same period last year.
The adjusted operating result more than doubled to 15.4 billion kronor.
Revenues in the third quarter fell 9 percent to 56.2 billion kronor from 61.8. Organically, sales decreased by 2 percent.
The telecom company expects a gross margin of 49 to 51 percent in the fourth quarter of the year. This can be compared to an average forecast of 49 percent, according to Bloomberg.
