By Dominic Chopping
STOCKHOLM--Ericsson AB on Wednesday backed its full-year group targets after feeling limited impact from Covid-19, with high activity levels in North East Asia and North America and profitable fifth-generation contracts in Mainland China.
The telecommunications equipment company reported third-quarter net profit attributable to shareholders of 5.35 billion Swedish kronor ($611.5 million) compared with a loss of SEK6.23 billion in the year-earlier period.
Sales ticked 0.6% higher to SEK57.47 billion.
Analysts polled by FactSet expected a net profit of SEK4.15 billion on sales of SEK57.16 billion.
Gross margin at Ericsson's networks unit rose to 46.5% from 41.6%, as underlying business fundamentals remain strong in North America, driven by the closing of the Sprint-T Mobile merger, pending spectrum auctions, and increased demand for 5G, it said.
The 5G contracts in Mainland China have developed according to plan, contributing positively to profits in the thrid quarter and are expected to improve further, it said.
Ericsson grew its business in Europe on several footprint gains.
"While the pandemic has hurt revenues for several of our customers, and in some cases this has led to a reduction of capex, we have not seen any negative impact on our business, largely due to footprint gains," Chief Executive Borje Ekholm said.
"However, the pandemic negatively impacted our sales in Latin America and Africa."
Ericsson said it still targets 2020 sales of between SEK230 billion and SEK240 billion with an operating margin excluding restructuring charges at more than 10% of sales. The 2022 margin target is 12%-14%, excluding restructuring charges.
Ericsson said the global radio access network equipment market is now estimated to grow by 8%, from 4% previously, in 2020.
Write to Dominic Chopping at email@example.com