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Ericsson Q2 profit beats forecasts as Networks margin shines

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Cristina Arias | Cover | Getty Images

Shares of Ericsson jumped 5.7 percent to the top of the pan-European STOXX 600 index after the mobile telecom equipment maker posted second-quarter sales and operating profit above market expectations on Friday.

It said its North American mobile broadband business had stabilized, with a boost to its Networks business.

Data traffic growth in telecom operator networks helped sales and profits pick up in its biggest market after a sluggish start of the year, though business activity was still lower there than a year ago, Ericsson said.

Ericsson also pointed to a fast pace of rollouts of 4G networks in China as well as strong sales growth in the Middle East and India.

Operating profit was 3.6 billion Swedish crowns ($422 million) compared to 4.0 billion in the year-ago quarter and above a mean forecast of 2.8 billion crowns in a Reuters poll of analysts.

Operating margin in its key Networks unit, which accounted for just over half of sales last year, hit 8 percent, from just 2 percent in the first quarter.

Sales at Ericsson, the world number one mobile network equipment maker, were 60.7 billion crowns, above a forecast of 58.6 billion. The gross margin was 33.2 percent against a mean forecast of 34.7 percent.

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