Ericsson profits jump on strong network business

Profits at Swedish telecoms company Ericsson quadrupled in the third quarter thanks to strong business at its network unit.

The company reported net income of 3.6bn kronor ($540m; £344m) for the three months to 30 September, up from 0.8bn kronor a year ago.

Profit margins at its network unit rose from 3% to 14%, helped by cost cuts.

However, group revenues rose a sluggish 2% because of a supply chain bottleneck and the strong kronor.

As well as better sales in the network division, the company's results were helped by lower restructuring costs and improvements in operational profits.

Ericsson was also boosted by the fact that its joint venture mobile phone maker Sony Ericsson returned to profit.

However, Ericsson warned that it was still struggling with a global shortage of components.

"A key priority has been to mitigate the effects of industry-wide component shortage and supply chain bottlenecks," chief executive Hans Vestberg said."

"The situation has gradually improved during the quarter but it remains a challenge to fully meet the demand for mobile broadband.

"While the supply chain bottlenecks have been resolved the industry-wide component shortage remains," Mr Vestberg said.

Third-quarter sales took a hit of between 2.3bn kronor due to the component shortage, compared with a negative impact of between 3bn-4bn kronor in the second quarter.