Ericsson Continues Growth on 5G Momentum
Foto: Dražen Tomić - Tomich Productions
Ericsson had an organic sales uplift of 10% during the first quarter of 2021. It was primarily driven by growth of its Networks unit. Sales for comparable units and currency grew 10% year-on-year to SEK49.8 billion ($5.9 billion), with net income rising 39% to SEK3.2 billion. On a constant currency basis, the sales figure was flat.
Ericsson explained it achieved organic growth despite a SEK1.6 billion hit to licensing revenue related to a patent fight with Samsung, as four out of five business areas made double-digit gains. Network sales grew 15% to SEK36.3 billion, with high activity levels in all regions except Middle East and Africa, as the company continued to grow market share with strong 5G order intake.
Digital Services sales grew 3% to SEK6.9 billion, driven by packet core sales in Europe and North America. Managed Services revenue fell 8% to SEK4.9 billion, mainly due to lower variable sales in US contracts following the merger of T-Mobile US and Sprint. Revenue from the Emerging Business and Other segment grew 9% to SEK1.7 billion. R&D costs amounted to SEK9.6 billion compared with SEK9.1 billion in the same period last year.
"The ongoing global pandemic has fast-forwarded the digitalization of societies, placing a significant economic and social premium on high-quality network connectivity. We see positive signs of governments and enterprises increasingly recognizing 5G as a preferred choice for connectivity with accelerating deployment," said Ericsson CEO Borje Ekholm.
"There is strong momentum in the global 5G demand with lead markets moving forward at high pace, creating opportunities for us to grow our core business. To that end we continue to invest in further strengthening our portfolio and growing our global footprint. With the investments we are making in our business in 2021, we are creating a strong platform for the long term with strengthened competitiveness in the core business as well as in Enterprise applications," concluded Ekholm.