Company restructuring is ahead of schedule: Ericsson

NEW DELHI: Sweden-based telecom equipment maker Ericsson said that its cost reduction plan that aims to save SEK 9 billion ($1.1 billion) during 2017, is progressing ahead of schedule.

Currently, company has approximately 16,000 people in its home country. That figure will be reduced by approximately 1,000 positions in production, approximately 800 in R&D, and approximately 1,200 in other operations.

While this means that no further layoffs are planned for the company’s workers in Sweden, it will result in higher restructuring costs in 2016.

The company said that total restructuring costs for 2016 are estimated to be between $606 million and $717 million (5.5-6.5 billion Swedish crowns ) compared to the previous estimates of $440 million to $550 million (4-5billion Swedish crowns ).

Ericsson also announced this past July an initiative to reduce annual operating expenses, excluding restructuring charges, to SEK 53 billion ($6.18 billion) in the second half of 2017. The company said its expenses for full-year 2014 were SEK 63 billion ($7.34 billion).

"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," the company said in a statement.

"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," it said.

However, in 2017 the restructuring costs will decrease. Exactly how much the costs will decrease will not be revealed until the company’s fourth quarter results are released in January.

The company founded in 1876 as a maker of telegraph equipment, Ericsson is one of Sweden's biggest employers with a global staff of 115,000 in 180 countries.