STOCKHOLM, Jan 30: Swedish telecom blue-chip LM Ericsson AB posted on Thusday record profits for 1997, proposed a one-for-one bonus stock issue and announced the appointment of a new chief executive officer (CEO). But the most nervously awaited result of the Swedish corporate reporting season had little impact on a share market that has come to expect exponential growth from its most-traded share.Pre-tax profits of 17.22 billion crowns represented a 70-per cent increase on the previous year, while order bookings surged 30 per cent to 179.77 billion crowns.
The company's most-traded B-series share moved little from levels of around 324 crowns seen ahead of the figures with the earnings figure in the range forecast by the market.
Even a proposed one-for-one bonus share issue scheduled for May, in addition to the 3.50 crown ordinary dividend, was expected to have only a psychological effect.
If the stock market took the results in its stride, CEO Lars Ramqvist was all the more ebullient.
The company'sperformance over the year had been "fantastically successful", he said.
"New records were set for order bookings, net sales, income and positive cash flow," Ramqvist said. "I would like to point out that Ericsson is very well consolidated, with a strong balance sheet."
Net sales for 1997 increased by 35 per cent to 167.74 billion crowns, and sales in the fourth quarter increased by 26 per cent over the same 1996 period for comparable units.
Ericsson's key mobile systems division continued to show strong growth, and Ramqvist told a news conference he expected subscriber growth of over 40 per cent in mobile systems subscribers in 1998.
Operating income from this business accounted for a substantial proportion of the group's total operating profit, Ericsson said. No figure for operating profit was given, but the division's sales came to 71.70 billion crowns last year.
One cloud on the horizon was Infocom Systems (fixed line and AXE exchange equipment), which, Ericsson said, continued to postunsatisfactory earnings due to price pressure in major product areas.
Mobile Phones and Terminals, on the other hand, reported very strong growth, with sales almost doubled in 1997 to 42.29 billion crowns.
Sales growth in Asia remained strong, Ericsson said, and an upturn in China could offset some of the impact of the Asian financial crisis.
"The trend in China was very positive, with a strong increase in both orders and sales even during the fourth quarter of 1997," it said.
Ramqvist, who can take his fair share of the credit for Ericsson's robust performance in recent years, is to be replaced at the company's annual general meeting on March 30.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
