Ericsson earnings top forecast as 5G takes off

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Ericsson’s third-quarter earnings beat expectations

) beat quarterly earnings expectations on Thursday and lifted its market forecast for this year and its sales target for 2020, saying demand for superfast 5G networks was taking off more quickly than expected.

Sweden’s Ericsson, which together with Finland’s Nokia and Huawei sells the bulk of radio access network equipment that is key for 5G mobile services, said it was now targeting sales of 230-240 billion Swedish crowns in 2020, up from 210-220 billion previously. Ericsson shares jumped as much as 7.4% to a three month high of 89.94 crowns, pulling up Nokia’s shares in their wake.

The company said it expected 5G deployments in China, where it has invested to gain market share, to start “near term”, adding they were likely to have “challenging margins” initially.Activist investor Cevian Capital, Ericsson’s largest owner by shares and third largest by votes, said the targets were conservative and the company could deliver more.

Ericsson shares were up 6.7% at 0840 GMT, the biggest rise by a European blue-chip stock. But they are still down 1% since the firm’s second-quarter results in July, when it warned costs related to winning new contracts for its network business would likely hit profit margins in the second half of the year.

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