Ericsson reported on Tuesday its fourth-quarter earnings, which were above market estimates. The bottom line was pushed to new heights by a spike in telecom gear sales amid 5G rollouts across the globe. The push helped the Swedish company make up for the market share it lost in Mainland China.
China was a big market for Ericsson, but the company lost its Chinese telecom contracts after Sweden joined the US and many of its allies to ban the Chinese tech giant Huawei. Now, the contributions Ericsson credits to China have slid down to measly single digits.
Growth in the US, Europe, and Latin America
Carl Mellander, the Chief Financial Officer at Ericsson, said the company has seen North America continue to grow strongly, with a reported 16% growth in Q4 in constant currency. Nokia, which has made quite the comeback, is competing for the same markets, but Ericsson still reported growth in Europe and Latin America.
Meanwhile, the adjusted quarterly earnings went up to $11.9 billion Swedish crowns ($1.28B) from 11 billion crowns a year ago, exceeding the forecast, which expected 10.30 billion crowns. Without factoring in restructuring charges, operating earnings reached 12.3 billion crowns.
The highest ever quarterly cash flow
Ericsson sales in China went down by 1.8 billion crowns. The company also projects the total Q1 patent revenue will be in the region of 1-1.5 billion crowns, compared to 2.4 billion crowns in Q4.
Q4 saw the company’s highest-ever quarterly cash flow, which directly resulted from efforts to pad its 5G portfolio using acquisitions, spending more than $7 billion buying two companies.
Mellander confirmed that M&A is part of the company’s efforts to create value, adding that the company expects to continue the M&A activity for that purpose.