Ericsson NZ edges back into profit in 2009, cuts labour costs by 28%

Friday 18th June 2010

Ericsson Communications returned to profit last year after cutting labour costs by more than a quarter.

The Auckland-based company reported a net profit of $268,000, or 0.13 cents a share, in calendar 2009, compared to a loss of $1.6 million, or 0.82 cents, a year earlier. The company trimmed labour costs 28% to $5.5 million, only paying $158,000 in redundancy expenses compared to $605,000 in 2008, the company said in its annual report.

Revenue slumped 39% to $28.5 million, though the cost of sales came down at a faster pace, falling 44% to $22.6 million. This wasn’t isolated to New Zealand, with the parent company’s South East Asia & Oceania business reporting soft sales through 2009, and into the first quarter of 2010.

The region reported net sales of 3.52 billion Swedish krona ($647.1 million), almost a third below the same period in 2009. For the third year in a row the New Zealand unit decided against paying a dividend to its shareholder, Telefonaktiebolaget LM Ericsson.

Ericsson NZ threw its weight behind the Vector Ltd.-led Regional Fibre Group last year, providing advice to the group’s members on inter-operability and technical standards. The company has provided submissions on the government’s ultra-fast broadband proposal and its rural broadband initiative, calling for greater integration between the two projects.

The company raised concerns in its October submission on the rural initiative, saying that the government was at risk of creating a divide between urban and rural areas.

Ericsson said “the premise that building broadband services to rural schools will ‘spill over’ into broadly-based broadband service for rural areas is, we believe, highly optimistic.”

Businesswire.co.nz

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