Ericsson’s reported sales for Q4 2017 decreased by -12% to SEK 57.2 billion (US$7.26 billion). The figure was down 7% when adjusting for constant currency. Gross margin was 21.8%. Operating income was SEK -19.8 billion (-US$2.51 billion).
Ericsson attributed the weaker performance to lower LTE sales in China.
“During a challenging 2017, we have developed and started to execute on a focused strategy, strengthening our R&D while at the same time introducing robust measures to reduce cost and commercial risk. We have now laid the foundation for achieving our financial targets. The fourth quarter was in line with our overall expectation, with gradual improving performance in Networks and continued significant losses in Digital Services. The result is however far below our long-term ambition,” stated Börje Ekholm, President and CEO of Ericsson.
In its quarterly report, Ericsson noted that it has completed or exited 23 out of 42 under-performing managed service contracts, which should improve profitability.
In terms of market opportunity, Ericsson expects the Radio Access Network (RAN) equipment market to decline by -2% for full-year 2018. Geographically, Ericsson forecasts the Chinese market to continue to decline due to reduced LTE investments, while it sees positive momentum in North America.
Ericsson also announced the appointment of Åsa Tamsons as Senior Vice President and head of Business Area Emerging Business and member of Ericsson’s Executive Team. She joins Ericsson from McKinsey & Company where she has held the position as partner in McKinsey’s Stockholm office.
In addition, Ulf Ewaldsson, currently head of Business Area Digital Services, and Elaine Weidman, currently head of Group Function Sustainability & Public Affairs, will step down. Ewalsson will take on a role as advisor to the CEO, while Weidman-Grunewald has decided to leave the company to pursue other opportunities.
