Alcatel-Lucent reports successful turnaround in 2014

French Alcatel-Lucent has reported its 4th quarter and full year results showing improved profit margin for 2014 following the infrastructure vendor’s cost-saving plan dubbed the Shift Plan.

Alcatel-Lucent said through its fixed cost savings of €30 million in the final quarter, €16 million net in reinvestments in market segments and channels, as well as accelerated R&D it managed to save €675 million, representing over 70% of the Shift Plan target.

Fourth quarter operating profit (excluding some items) came to €284 million, 7.7% of revenues, and full year operating profit totalled €623 million or 4.7% of revenues.

“Our fourth quarter and full year 2014 results underline the success of our turnaround,” Michel Combes, CEO of Alcatel-Lucent, said. “Through the execution of The Shift Plan, we have improved our underlying profitability and free cash flow profile while we have solidified the entire organization.”

Regionally, the kit maker’s 4th quarter North American revenues declined 11% year-on-year where the firm said ‘notable’ growth in IP routing (up 15% in Q4) and transport was offset by lower sales from IP platforms and the access business. T

The company also saw IP routing and transport growth in Europe, offset by declines attributed to managed services. Excluding the managed services impact, the vendor reported flat growth of 1% for Q4 compared to the same period in 2013.

Within the core networking segment quarter four revenues came to €1.8 billion, up 1% compared to Q4 in 2013. For the full year, networking revenues came to €5.97 billion, down 2% compared to 2013, apparently due to IP platforms.

Fixed access revenues totalled €1.86 billion in Q4, representing a 3% decrease year-on-year, while full year revenues came to €2.05 billion, down 1%. Wireless access revenues for the last quarter came to €1.2 billion, down 9% year-over-year, and €47 billion for the full year, up 4%.

Looking ahead, the firm said it is on track to achieve its targets for this year. “Entering 2015, we are in a strong position to capitalize on profitable growth opportunities and will focus on operational excellence and quality of service. The achievements we have made in our product portfolio and operational transformation make us confident we will reach our positive free cash flow target in 2015.”

Alcatel-Lucent hasn’t been achieving very well in profits since its creation in 2006 due to being up against larger rivals Nokia and Ericsson in the mobile sector. While Ericsson also posted declining sales in North America for the last quarter of 2014, Nokia reported gains in the market.

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