Alcatel-Lucent reduces losses by nearly 80% in Q1 2014

Company’s plan to return to profitability is making progress thanks to growth in Core Networking revenues, lower restructuring charges and a major reduction in net financial losses

Alcatel-Lucent reduces losses by nearly 80% in Q1 2014

Alcatel-Lucent managed to slash its Q1 net losses by almost 80% in Q1 2014 compared with the same quarter a year ago. It showed a net loss of Euro 73m (£59.6m) in Q1 2014 compared with a loss of Euro 369m (£301m).

The improvement of Euro 280m (£229m) was driven by the higher level of operating income, lower restructuring charges and a significant reduction in net financial losses.

Revenues for the first quarter of 2014 were Euro 2.9bn (£2.4bn) compared with Euro 3.0bn (£2.5bn) in Q1 2013. Revenues for the Group were up 3.9% year-on-year excluding Managed Services, which is to be sold this year to China Huaxin.

Core Networking revenues grew by 6.9% in Q1 2014 compared with Q1 2013, largely driven by 16% growth in IP Routing and, to a lesser extent, by IP Transport.

Excluding Managed Services, which decreased by half reflecting A-L’s strategy to terminate or restructure loss-making contracts, the Access segment grew 2.1% year-over-year.

Gross margin reached 32.3% of revenues in the quarter, improving by 410 basis points year-on-year. This improvement was driven essentially by favourable product mix and improved profitability in most business divisions, the company stated.

Fixed costs savings reached Euro 143m in Q1, bringing the total to date to Euro 478m when combined with Euro 335m in 2013.

Adjusted operating income returned to positive territory, reaching Euro 33m in the quarter or 1.1% of revenues, compared to a loss of Euro 179m in Q1 2013, or -5.8% of revenues. This turnaround was driven by a significant improvement in profitability in Core Networking and a sizeable reduction of losses in Access.

Commenting on the first quarter results, Michel Combes, CEO of Alcatel-Lucent, said: “We began 2014 as we ended 2013 — totally focused on driving implementation of The Shift Plan. Having put the Group in the right financial direction last year we are encouraged by the continued progress shown in the first quarter of 2014.

“This confirms the industrial logic of the strategic choices we have made and provides a good start on which to build during the rest of 2014 as we work towards our objective of bringing the Group as a whole back to positive free cash flow by 2015.”


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