Update on cost and efficiency program
December 08 2016 - 02:30AM
- The intended reductions in Sweden announced on
Oct 4, 2016 are progressing ahead of plan. Voluntary program
finalized - no further forced workforce reduction currently planned
in Sweden.
- Total company restructuring cost for 2016
estimated to SEK 5.5-6.5 b., compared to previous estimate of SEK
4-5 b. due to faster implementation of the cost and efficiency
program in Sweden. Restructuring costs for 2017 are expected to
somewhat decrease, but will be communicated in conjunction with
Ericsson Q4 result in January 2017.
On October 4, 2016, Ericsson (NASDAQ:ERIC)
announced the intention to reduce 3,000 positions in Sweden as part
of the company's ongoing global cost and efficiency program. The
reduction was to be made through a combination of a voluntary
reduction program, reduction of production in Sweden, outsourcing
and natural attrition during 2016. The voluntary program in Sweden
has been successfully completed and 1,600 employees will leave
Ericsson through the program on December 31, 2016. Currently, no
further forced staff reductions are planned in Sweden beyond what
has already been announced relating to production sites.
This means that the reductions in Sweden are
progressing ahead of plan, resulting in an increase in estimated
restructuring costs for 2016 of SEK 5.5-6.5 b., compared to the
previously communicated estimate of SEK 4-5 b. This assumes that
all global reduction programs are executed according to
plan. Restructuring charges for 2017 are
expected to somewhat decrease as a consequence of faster
implementation of the Swedish reduction activities. Estimated full
year 2017 restructuring costs will be communicated in conjunction
with Ericsson Q4 result in January 2017. Cash outlays for the
voluntary program are expected 2017-2018.
The global cost and efficiency program is tracking
towards the previously communicated target to:
-
reduce the annual run rate of operating
expenses, excluding restructuring charges, to SEK 53 b. in the
second half of 2017.
-
make cost of sales reductions visible
in the gross margin in the second half of 2017, compared to full
year 2016.
NOTES TO EDITORS
Press release October 4, 2016 Ericsson announces
changes in operations in Sweden
For media kits, backgrounders and high-resolution
photos, please visit www.ericsson.com/press
Ericsson is the driving force
behind the Networked Society - a world leader in communications
technology and services. Our long-term relationships with every
major telecom operator in the world allow people, business and
society to fulfill their potential and create a more sustainable
future.
Our services, software and
infrastructure - especially in mobility, broadband and the
cloud - are enabling the telecom industry and
other sectors to do better business, increase efficiency, improve
the user experience and capture new opportunities.
With approximately 115,000
professionals and customers in 180 countries, we combine global scale with technology and services
leadership. We support networks that connect more than 2.5 billion
subscribers. Forty percent of the world's mobile traffic is carried
over Ericsson networks. And our investments in research and
development ensure that our solutions - and our customers - stay in
front.
Founded in 1876, Ericsson has its
headquarters in Stockholm, Sweden. Net sales in 2015 were SEK 246.9 billion (USD 29.4 billion). Ericsson is
listed on NASDAQ OMX stock exchange in Stockholm and the NASDAQ in
New York.
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FOR FURTHER INFORMATION, PLEASE CONTACT
Ericsson Corporate Communications
Phone: +46 10 719 69 92
E-mail: media.relations@ericsson.com
Ericsson Investor Relations
Phone: +46 10 719 00 00
E-mail: investor.relations@ericsson.com
Update Ericsson cost and efficiency
program Dec 8 2016
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Source: Ericsson via Globenewswire
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