STOCKHOLM: Mobile telecom equipment maker Ericsson said on Tuesday it would cut costs further to adapt to a weaker market as it reported second-quarter operating profit and sales below market expectations and said conditions had worsened.
Like-for-like sales dropped by 7 percent in the quarter, the seventh quarter in a row with declining underlying sales. In 2015, group sales dropped 5 percent on a comparable basis after declining 2 percent in 2014.
"The current sales trends and business mix are expected to prevail for the second half of the year," Ericsson said in a statement, adding that negative industry trends pushing down demand seen in the first quarter had grown worse.
Operating profit was 2.8 billion Swedish crowns ($327 million) compared with 3.6 billion in the year-ago quarter, weighed down by its networks divisions and below a mean forecast of 3.0 billion crowns in a Reuters poll of analysts.
Ericsson said it now aimed to cut operating expenses by twice as much as previously planned, ending up with an annual rate of 53 billion crowns in operating costs by the second half of 2017, compared to 63 billion in 2014. The company had flagged further cuts were underway in its first-quarter report.
Sales at Ericsson, the world number one mobile network equipment maker, were 54.1 billion crowns, below a forecast of 55.3 billion. The gross margin was 32.3 percent, matching the mean forecast.
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