Alcatel-Lucent grew revenues marginally to €2.963bn, growing 0.3% year-on-year at constant exchange rates and comparable business areas (Enterprise was a discontinued operation in Q1 2014). Revenues for the Group excluding Managed Services were up 3.9% year-on-year.
Core Networking revenues grew by 6.9% in Q1 2014 compared to Q1 2013, largely driven by 16% growth in IP Routing and, to a lesser extent, by IP Transport. This is excluding Managed Services, which decreased by half reflecting a 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.
Fixed costs savings reached €143m in Q1, bringing the total to date to €478m, when combined with €335m in 2013 (which exclude €28m attributable to Enterprise). In particular, SG&A expenses decreased by 20.8% compared to Q1 2013 and by 9.9% compared to Q4 2013.
As reported, the Group showed a net loss of €73m in Q1 2014, an improvement of €280m compared to Q1 2013, driven by the higher level of operating income, lower restructuring charges and a significant reduction in net financial losses.
As previously announced, it received in February 2014 a binding offer from China Huaxin for the acquisition of 85% of Alcatel-Lucent Enterprise. The proposed transaction has been submitted to the workers council of Alcatel-Lucent Enterprise for the required information and consultation procedure which is now completed. Closing of this transaction is subject to certain other conditions, including the approval of certain regulatory authorities, and is targeted to take place in the third quarter of 2014.
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."