Cost savings to include headcount reduction -CFOon Friday missed fourth-quarter core earnings expectations as sales of 5G equipment slowed in high-margin markets such as the United States.tightening their purse strings, Ericsson is hoping newer markets such as India provide some growth.That will involve reducing consultants, real estate and also employee headcount, Chief Financial Officer Carl Mellander said in an interview.
"It's different from geography to geography, some are starting now, and we'll take it unit by unit, considering the labour laws of different countries," Mellander said. He declined to say if the headcount reduction would be similar to 2017 when Ericsson laid off thousands of employees and focused on research to return the company to profitability.
Ericsson expects a margin fall seen in its Networks business to persist through the first half of 2023 but the effect of cost savings to emerge in the second quarter."The fourth quarter shows once again that the U.S. has a big impact on Ericsson's margins," said Inge Heydorn, partner and fund manager at investment firm GP Bullhound.
The company's fourth-quarter adjusted operating earnings excluding restructuring charges fell to 9.3 billion Swedish crowns from 12.8 billion a year earlier.Net sales rose 21% to 86 billion crowns, beating estimates of 84.2 billion.last month resulted in revenue of 6 billion crowns, but Ericsson also took 4 billion crowns in charges, including a provision for a potential fine from U.S. regulators and divestments.