Alcatel-Lucent revenues in Europe increased 12% year-over-year (10% at constant rates), driven notably by strength in IP Routing and IP Transport. Other regions were not so strong, and it was pushed into deeper losses than last year because of a write-down in the underseas cable business.
Commenting on the results, Philippe Camus, Chairman and CEO of Alcatel-Lucent, said: “I am very pleased to report that our efforts to drive profitability and strengthen margins have continued to bear fruit in the third quarter, along with our strategy to refocus on next-generation technologies. We are also very satisfied with the progress being made on the proposed combination between Nokia and Alcatel-Lucent. The process is now moving into its final stages, and between the two companies, we are extremely confident of concluding it, as previously indicated, in the first quarter of next year - with a new and exciting global powerhouse in communications technology emerging as a result.”
Group revenues, excluding Managed Services and at constant perimeter, increased 7% year-on-year, with notable strength in next-generation revenues, which grew 23%. At constant exchange rates, Group revenues were down 5%, while next-generation revenues were up 11%. The weight of next-generation revenues continued to progress, representing 77% of revenues compared to 66% in the year-ago quarter.
Gross margin reached 34.5% of revenues, expanding 50 bps year-on-year, driven by a higher proportion of software sales, notably in IP Platforms, and improved profitability in certain businesses. Adjusted operating income totalled €212m, or 6.2% of revenues, compared to €170m in Q3 2014, or 5.2% of revenues. Profitability of the Core Networking segment improved 90 bps to reach an adjusted operating margin of 9.4% while the Access segment reached an adjusted operating margin of 4.6%, its highest level of profitability in any quarter since the launch of The Shift Plan.
As reported, the Group showed a net loss (Group share) of €206m in Q3 2015, compared to €18m in the year-ago period. The larger net loss compared to the year-ago quarter was mainly due to the impact of a non-cash goodwill impairment charge related to Alcatel-Lucent Submarine Networks.