Ericsson, the Swedish telecoms company which employs 1,500 staff in Dublin and Athlone, reported better-than-expected results yesterday and signalled it would make a profit this year.
The surprise recovery during the second quarter prompted by cost-cutting at the firm, sent Ericsson's shares soaring by more than 25 per cent in early trading.
The firm also pledged a return to profit after 11 quarters of losses.
"We can conclude that we have the financial crisis now behind us. We are on steady ground," said Ericsson's chief executive, Mr Carl-Henric Svanberg. "[The market\] will probably not deteriorate further."
Mr Svanberg also signalled that order inflow was stabilising.
Like other firms in the telecoms equipment sector, Ericsson has slashed thousands of jobs to cope with a major downturn in orders by telecoms operators. It has more than halved its workforce to around 50,000, sold off non-core units and changed management four times in five years.
Ericsson cut its pre-tax loss to 200 million Swedish krona (€21.6 million), adjusted for one-off items, in the April-June period compared with a SKr3.1 billion loss a year ago and a consensus forecast of a SKr2 billion loss. The better-than-expected result was due to cost-cutting ahead of plan, Mr Svanberg said.
"We remain determined to return to profit during 2003," Mr Svanberg added.
Ericsson's main systems unit returned to the black with a SKr600 million adjusted operating profit, after five quarters in the red and despite a 30 per cent year-on-year plunge in mobile network sales, as cost-cutting started to take effect.
Ericsson sales fell 28 per cent year-on-year to SKr27.6 billion, better than a consensus of SKr27.3 billion, with about one-third of the decline a result of the weak dollar.
Evidence that sales have seen the bottom was reflected by the seven per cent increase in revenues versus the first quarter.
Further improvements could come from new orders of SKr28.3 billion - also up, by five per cent, from the first quarter.
Meanwhile, the firm's Irish operations have shed more than 500 jobs in three years, which are reflected in redundancy costs of €13 million, which are recorded in the 2001 accounts for Ericsson Holdings and its subsidiaries.
The accounts, which were filed in March 2003, show Ericsson's Irish operations made a pre-tax profit of €49.9 million, up from €47.1 million in the previous year. Turnover during the 12 months to the end of December 2001 was €350.2 million, down from €393.2 million.
Ericsson's Irish operations have benefited from Government grants worth €5 million. - (Additional reporting Reuters)
