Ericsson reports flat 2014 revenues

Ericsson has reported its last quarter and full year results for 2014, revealing flat annual revenue growth across all of its business segments, and lower than expected Q4 sales. The Swedish equipment vendor said revenue growth was restricted by lagging North America sales.

The vendor reported annual net sales of SEK228 billion, flat compared to SEK227.4 billion in 2013. 4^th quarter sales were SEK68 billion, representing 1% year-on-year growth. Annual net profit was flat at SEK11.1 billion compared to SEK12.2 billion in 2013. At SEK4.2 billion profits were down 35% year-on-year in the fourth quarter.

Growth was mainly driven by operations in the Middle East, Europe and Asia, offset by continuing decline in North America. “Sales in North America were mainly driven by operator investments in capacity and quality enhancements also this quarter, although at a slower pace,” Hans Vestberg, Ericsson President and CEO said.

“Business activity slowed further in the quarter as operators remained focused on cash flow optimization in order to finance major acquisitions and spectrum auctions. Consumer demand and mobile data traffic growth continues to be strong in North America. However, with current visibility, and for the reasons above, we anticipate the North American mobile broadband business to remain slow in the short-term.”

In terms of its business segments, all divisions were flat on revenues. The networking business had annual sales of SEK117.5 billion (SEK117.7 billion in 2013), the global services business had sales of SEK97.7 billion (SEK 97.4 billion in 2013), and support solutions annual sales came to SEK 12.7 billion (SEK 12.2 billion in 2013).

The best performer during the fourth quarter was the global services business, which grew 10% compared to the same period the previous year. Ericsson’s global services include managed services, systems integration and product related services such as network roll-out.

“Global Services showed stable growth with momentum for professional services driven by managed services and systems integration sales,” Vestberg said. “During the quarter, 17 new managed services contracts were signed, including a pan-India contract.”

The support services business on the other hand performed the worst in Q4 with a decline of  -21% year-on-year.

Amid the flat results, Ericsson was keen to emphasize it is operating within the parameters it set out late last year. “At the Capital Markets Day in November we outlined the progress on our Networked Society strategy, with focus on market development, growth agenda, transformation and profitability,” Vestberg said.

“In line with our strategy, we have invested into our targeted areas; IP networks, Cloud, TV & Media, Industry & Society and OSS & BSS. Sales in targeted areas showed a growth of more than 10% in 2014.”

Ericsson’s shares took a bit of a hit on the stock markets, falling 2.6% following the financial results announcement.