Most of the cuts will take place in the first half of this year, with about 1,400 cuts in Sweden as part of a global cost reduction plan, with the rest in 2024, Ericsson said. Previously, Ericsson also planned to reduce costs by reducing the number of consultants, reducing office space and improving process efficiency.
It is reported that by the end of 2022, Ericsson will have about 105,000 employees worldwide.
According to public information, Ericsson was founded in Sweden in 1876 and has grown into the world's largest mobile communication equipment manufacturer. Ericsson's business covers more than 180 countries and regions around the world, and it is the world's leading provider of end-to-end comprehensive communication solutions and professional services.
According to Ericsson's financial report for the fourth quarter of 2022 and the full year of 2022 announced last month, revenue in the fourth quarter of last year was lower than expected due to a slowdown in sales of 5G equipment in markets such as the United States. Although Ericsson did not disclose which region is most affected, it predicts that North America may be most affected, while growth markets such as India are least affected.
For the whole year, Ericsson's net sales in 2022 will reach SEK 271.5 billion, a year-on-year increase of 17%, but net profit will only be SEK 19.1 billion, a decrease of 17% compared to the previous year. From a regional perspective, although Ericsson's network business has grown significantly in India, it still cannot fully compensate for the decline in demand in other markets, including North America.
Ericsson President and CEO Paul Ekorn said that although supply chain challenges eased in the fourth quarter of 2022, an inflationary environment remains. Companies still need to focus on overcoming the recent economic downturn through commercial actions and improving the company's cost-effectiveness. It is expected that the company's SEK 9 billion cost-saving actions will start to take effect in the second quarter of 2023, and the profit margin of the network business will decline in the first half of 2023 due to changes in the business mix.
In fact, Ericsson has experienced multiple rounds of layoffs, the most recent in August last year.
In August 2022, Ericsson announced that it would close its representative office in Russia before the end of the year and lay off all employees, including those who provide technical support for the networks of communication equipment manufacturers. "Kommersant" quoted sources as saying that Ericsson's parent company notified the Russian branch on August 22 that it will close before the end of the year, and all employees, including those who provide technical support for the operator's network equipment, will be fired. . Some of Ericsson's technical support staff will be transferred to a new company set up by top Russian executives. Earlier in April, Finnish telecommunications equipment maker Nokia had announced its withdrawal from the Russian market.
In addition, in March 2019, Ericsson also announced a cost reduction plan. As part of the 9 billion Swedish kronor (approximately RMB 6 billion) cost reduction plan, the company will lay off thousands of employees in Sweden. In March 2015, Ericsson had laid off 2,200 employees in Sweden, with the greatest impact on R&D personnel and supply personnel.
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