Ericsson to step up savings plan due to fall in first quarter
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The company said it expects a "choppy environment" after profits fell in the first quarter
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Ericsson headquarters in Stockholm, Sweden, January 24, 2020. (Reuters)
Ericsson, the Swedish telecommunications giant, announced on Tuesday that it is speeding up its cost-cutting drive in anticipation of a "choppy environment" this year, following a drop in earnings in the first quarter.
The telecom equipment manufacturer will now cut expenses by 11 billion Swedish kronor ($1.1 billion) in 2023, after discovering another two billion kronor in savings.
Ericsson said in February that it will cut 8,500 jobs worldwide, almost 8% of its 105,000 workforce, as the company aims to slash costs after disappointing returns in 2022.
The Swedish company is competing for 5G networks with Finland's Nokia and China's Huawei, although it has observed that its clients, mobile operators, have postponed the deployment of such equipment.
In its quarterly earnings statement, the company admitted that it continues to see a "choppy environment 2023 with poor visibility.'
In the January-March period, Ericsson's net earnings decreased 46 percent to 1.6 billion kronor.
Sales increased by 14%, but when adjusted for currency swaps and other factors, they remained level.
In the second quarter, Ericsson expects clients to "remain cautious" with their investments and to continue to modify their inventories.
Ericsson added that it expected the first quarter's slower growth to continue into the second quarter.
Shareholder trust in the corporation has also been affected after it announced it allocated nearly $220 million for possible fines in a corruption case in January.
