STOCKHOLM, SWEDEN – Swedish telecommunications giant Ericsson said Tuesday that it is stepping up its cost-cutting program as it expects a “choppy environment” this year after profits fell in the first quarter.
The telecom equipment maker will now reduce costs by US$1.1 billion (11 billion Swedish kronor) in 2023, saying it found an additional US$194 million (two billion kronor) in savings.
Ericsson announced in February that it would slash 8,500 jobs worldwide, or eight percent of its workforce.
The Swedish group is locked in a battle with Finnish rival Nokia and China’s Huawei for 5G networks, but it noted that its customers – mobile operators – have slowed the deployment of such equipment.
“We continue to see a choppy environment during 2023 with poor visibility,” Ericsson said in its quarterly earnings statement.
Ericsson’s net profit fell 46 percent to US$155 million (1.6 billion kronor) in the January-to-March period.
Sales rose 14 percent but they were flat when adjusting figures to take currency exchanges and other parameters into account.
Ericsson said it expects customers “to remain cautious” with investments and continue to adjust their inventories in the second quarter.
“We expect the slower growth we saw in Q1 (the first quarter), caused by the slower global economy, to continue in Q2,” Ericsson added.
Shareholder confidence in the company has also been shaken by graft allegations in Iraq.
Ericsson said last month that it would pay a $207-million fine for breaching a deal with US authorities by not disclosing an investigation relating to suspected bribes to the Islamic State group in Iraq.
