Ericsson to lay off 1,600 staff in Sweden by December 31, 2016

As part of its voluntary retirement program in Sweden, 1,600 employees are set to leave Ericsson through the program on December 31, 2016.

In a statement issued today, the firm stated that “no further forced staff reductions are planned in Sweden beyond what has already been announced relating to production sites.”

The current development is a followup to the October 4, 2016 announcement when Ericsson made public its intention to reduce 3,000 positions in Sweden as part of the company’s ongoing global cost and efficiency program. The reduction was to be made through a combination of a voluntary reduction program, reduction of production in Sweden, outsourcing and natural attrition during 2016.

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 billion, compared to the previously communicated estimate of SEK 4-5 billion. This assumes that all global reduction programs are executed according to plan.  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.

The global cost and efficiency program is tracking towards the previously communicated target through which the firm aims to reduce the annual run rate of operating expenses, excluding restructuring charges, to SEK 53 billion in the second half of 2017 and also make cost of sales reductions visible in the gross margin in the second half of 2017, compared to full year 2016.

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