Ericsson (Sweden) announced that restructuring has put the company well on track for the return to profitability. Book-to-bill was above one for the second consecutive quarter with order bookings increasing by 5% sequentially to SEK 28.3 (35.3). Net sales in the second quarter grew 7% sequentially to SEK 27.6 (38.5). Foreign currency exchange rate differences have had a negative effect of 9% year-over-year.
The adjusted gross margin improved sequentially by one percentage point to 35.1% (32.5%) as a result of ongoing restructuring. Operating expense reductions are well on track, reaching an annualized run-rate of SEK 42 (57). Adjusted income after financial items was SEK -0.2 (-3.1) compared to SEK -3.5 in the first quarter. Foreign currency exchange rate differences have had a negative effect of SEK 0.5 year-over-year.
Cash flow before financing was SEK 5.1 (-2.0) with major contributions from reductions in working capital and customer financing. The financial position continues to strengthen with a net of financial assets and liabilities of SEK 11. Payment readiness remains high at SEK 68.8 (33.5).
"We remain determined to return to profit during 2003. Over eight quarters we have more than halved our operating expenses and are approaching our earlier announced cost targets. I am impressed with how our employees are carrying out this dramatic downsizing in the middle of the ongoing launches of new technology. We are encouraged by a third quarter of positive cash flow and a strengthened financial position," stated Carl-Henric Svanberg, president and CEO of Ericsson.
