Ericsson says financial crisis not a factor

Ericsson, the world leader in mobile phone network equipment, today reported a 28% drop in third-quarter net profits, but insisted it remained largely unscathed by financial turmoil.

For the months from July to September, Ericsson saw its net profit tumble to 2.8 billion kronor (€281m) from 4 billion 12 months earlier, largely due to a massive ongoing restructuring programme.

The company's sales, meanwhile, grew 13% year-on-year to 49.2 billion kronor, with the numbers growing everywhere except in Western Europe, where they were down 6% from a year earlier.

'Our business in the quarter has not been impacted by the financial turmoil. Our customers are generally financially strong,' CEO Carl-Henric Svanberg said in the earnings statement.

'In addition, networks are loaded and traffic shows strong increase,' he said but cautioned that 'in the present financial turmoil, it is however hard to predict how operators will act and to what extent consumer telecom spending will be affected.'

'We have a positive longer-term view for our industry, however, as we look into 2009, we continue to plan for a flattish market, and we have measures in place also for tougher conditions,' he said.

Since 2007, Ericsson has experienced rapid growth in emerging markets with new rollouts but the group has lower margins in these markets due to rising competition and because launches cost more and bring in less money than expansions of existing networks.

Meanwhile, in mature markets such as Western Europe are declining, prompting one of Sweden's biggest industrial groups, which employs almost 20,000 people here, to launch a radical restructuring programme at the end of last year in a bid to improve cash flow and cut expenses by 4 billion kronor a year starting in 2009.