Mobile telecom equipment maker Ericsson has today beaten third-quarter operating profit forecasts, boosted by sales of next-generation 5G gear in North America.
The company said it was making solid progress towards its long-term financial goals.
Marking its third consecutive quarter of substantial progress towards its 2020 financial targets, it reported net sales rose 9% to 53.8 billion Swedish crowns ($6 billion) thanks to strong growth in its networks business.
That was led by early 5G sales in North America and 4G upgrades in Europe and Latin America, and helped to drive its shares 5% higher in early trading.
However, finance chief Carl Mellander told Reuters that, as a result of this strong performance, fourth quarter sales growth would be "a few percentage points lower" than the typical 17-18% growth compared to the third quarter.
He added that North American network sales would be roughly flat quarter-on-quarter.
"There is strong momentum in the global 5G market with lead markets moving forward," the company's chief executive Borje Ekholm said in a statement.
"More work remains, however, to get all parts of the business to a satisfactory performance level," he added.
Ericsson has responded to an industry-wide downturn and heavy losses since 4G network sales peaked in the middle of the decade with a strategy to focus on profitability over growth.
It has replaced most of its management and made sweeping cost cuts.
Operating profit for the latest quarter swung to 3.2 billion crowns ($356.5m) from a 3.7 billion loss in the same period last year, outpacing a mean forecast for an 800 million crown profit in a Reuters poll of analysts.
Shares in Ericsson have risen nearly 50% this year, buoyed by the progress towards its financial targets after three years of steep revenue declines.
Ericsson now sits on the cusp of a potential new cycle of network upgrades as demand for 5G gear has started to kick in in the US and is expected to be followed by upgrades in North Asian markets in early 2019.
Net sales in North America, Ericsson's biggest regional market, rose 10% in currency-adjusted terms, while Europe rose 4%, offsetting weakness in its Middle East and North Asian markets.
However, the company said it continued to invest heavily in 5G research and development, closely manage underperforming services businesses while keeping a tight rein on costs after completing a restructuring plan that will results in 5-7 billion crowns of restructuring charges this year.
As a result, many investors want to see more proof of progress before betting on a sustained 5G recovery.
Once the world's biggest supplier of mobile communications gear, Ericsson is facing falling spending by telecom operators, weakness in formerly fast-growing emerging markets and stiff competition from bigger rivals Huawei of China and Nokia of Finland.
