Ericsson said it is maintaining the revenue and profit targets for 2020 and 2022 despite the spread of coronavirus epidemic.
“We remain positive on the longer-term outlook, but the second quarter is likely to be a tad softer than normal due to timing of strategic contracts and uncertainty induced by Covid-19,” Ericsson CEO Borje Ekholm said.
“Predicting when the restrictions to curb the pandemic will be lifted and how the recovery will look is impossible. However, with current visibility we maintain the targets for 2020 and 2022,” Borje Ekholm said.
Huawei, the main rival of Ericsson, yesterday did not give any proper guidance for 2020. The China-based Huawei also did not reveal its revenue from the telecom network business in the first quarter of 2020.
Analysys Mason, leading research firm, earlier indicated a drop in the capital expenditure of telecom operators. Research firm IDC yesterday said it is not expecting any growth in spending on telecom services in 2020 by individual customers and businesses.
Ericsson said its revenue dropped 2 percent to SEK 49.8 billion in Q1 2020 as compared with 48.9 billion in Q1 2019.
Ericsson said the Covid-19 pandemic had limited impact on operating income and cash flow in the quarter. Gross margin excluding restructuring charges improved to 40.4 percent (38.5 percent).
Operating income excluding restructuring charges was SEK 4.6 billion with 9.3 percent operating margin.
India is not one of the top five markets for Ericsson. United States, which contributes 38 percent sales, Japan 4 percent, China 4 percent, Saudi Arabia 4 percent and Australia 3 percent are the top five telecom markets, Ericsson said.
# Ericsson has 29 5G live networks and 86 agreements with unique operators
# Business momentum in North America continued
# Sales in the Middle East and Africa were driven by 4G/5G deployments
# Networks sales continued to grow in Europe
# Sale in India, South East Asia and Oceania dropped 4% y-o-y and 36% q-o-q
The drop in sales was 25 percent as compared with SEK 66.4 billion achieved during the fourth quarter of 2019.
Ericsson generated SEK 35.1 billion (+5 percent) from Networks, SEK 7.3 billion (–6 percent) from Digital services and SEK 5.7 billion (–2 percent) from Managed services during the first quarter.