Network rollout projects in Europe helped Ericsson to record an increase in sales during the first quarter of 2013, although the company could not avoid a dramatic drop in profit compared to a year earlier.

Hans Vestberg, president and CEO of the company, said that there was a “positive development” in sales for the period, despite “currency headwind”.

“The sales increase was primarily driven by Networks and rollout services, following high project activities primarily in Europe and North America,” he noted.

Net sales for the period were SEK52 billion ($7.83 billion), up 2 per cent year on year.

However, net income for the first quarter was SEK1.2 billion, down 86 per cent year on year from SEK8.8 billion in Q1 2012, with the prior-year period including a gain of SEK7.7 billion from the sale of Sony Ericsson.

It said that adjusted to take into account the Sony Ericsson gain and restrucuturing charges profitability improved, with higher sales in Networks and a continued reduction of operating expenses offset by an operating loss for its Network Rollout activities and negative financial impacts.

Ericsson completed job cuts in Sweden during the period, at a cost of SEK1.4 billion.

The company’s Networks division recorded net sales of SEK28.1 billion during the period, up 3 per cent year on year, while Global Services saw sales of SEK21.5 billion, up 4 per cent. Revenue for the Support Solutions division fell by 19 per cent to SEK2.4 billion.

North America generated sales growth of 23 per cent despite a decline in CDMA business. However, North East Asia was more challenging with lower sales in South Korea, continued structural decline in GSM investments in China, and foreign exchange challenges in Japan resulting in a 34 per cent decline in sales.

The company reported good momentum in Managed Services with 21 new contracts signed during the quarter and demand for BSS and OSS remaining strong.

Vestberg said the current global economic development and customer demand suggests there will be a shift away from coverage projects towards capacity projects in the latter half of 2013.

“While macroeconomic and political uncertainty continues in certain regions, the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market,” the Ericsson CEO said.

Ericsson and STMicroelectronics announced plans to wind down the loss-making ST-Ericsson JV in March with Ericsson taking on the wireless chip company’s design, development and sales of the LTE multimode thin modems. Ericsson also acquired Microsoft’s IPTV division, Mediaroom, during the reporting period.