January 31, 2013 / 6:56 AM / 5 years ago

Ericsson Q4 tops forecast as margin pressure eases

STOCKHOLM (Reuters) - Ericsson (ERICb.ST) reported higher-than-expected fourth-quarter core profit and revenue growth on Thursday, raising hopes the world’s top mobile telecom gear maker is beginning to shake off the global downturn.

The telecom equipment industry is under stress from price pressure and slower spending by the operators that are their clients, even though increased smartphone surfing is driving demand for higher-capacity and higher-speed networks.

A focus on market share and a poor business mix of more hardware products and less software expertise has also squeezed Ericsson, but fourth-quarter results supported hopes of a turnaround.

Ericsson was hit by a huge charge for loss-making joint venture ST-Ericsson, which pushed it into a net loss of 6.3 billion crowns for the quarter.

    But earnings before interest and tax, excluding joint ventures and including restructuring charges, rose to 4.8 billion crowns from 4.1 billion to beat a mean forecast of 4.3 billion in a Reuters poll.

    The key network unit saw sales grow in the quarter, though the full year saw a decline of 11 percent. Overall sales reached 66.9 billion crowns, against a forecast 65.3 billion.

    The company is expecting the impact of lower-margin network contracts in Europe to wash out in 2013 and a shift broadly to more profitable contracts later in the year.

    “With present visibility of customer demand, and with the current global economic development, (the) underlying business mix is expected to gradually shift towards more capacity projects during the second half of 2013,” the company’s chief executive said.

    Editing by Patrick Lannin and David Holmes

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