Ericsson AB: Smaller-than-Expected Net Loss in Q2

Stockholm-based telecommunications-equipment company, Ericsson AB, has reported a smaller-than-expected net loss for the second quarter of this year. The company also stated that trends and market mix are likely to be similar in the upcoming third quarter.

Sales in Ericsson’s networks unit experienced an 8% decline compared to the previous year. However, strong sales in India helped partially offset a significant 50% drop in sales in North America. This decline can be attributed to reduced spending and inventory from customers following high investment levels in 2021 and 2022.

In terms of financials, Ericsson reported a net loss attributable to shareholders of 686 million Swedish kronor ($67.2 million), contrasting with a profit of SEK4.5 billion in the same period last year. Sales, on the other hand, experienced a 3% increase to reach SEK64.44 billion.

According to analysts polled by FactSet, the projected net loss was SEK1.27 billion, with expected sales of SEK63.94 billion. Ericsson’s actual performance surpassed these estimates.

Restructuring charges of SEK3.1 billion, primarily stemming from redundancy expenses related to ongoing cost-cutting measures, weighed on the company’s earnings. Consequently, the earnings before interest, tax, and amortisation margin that excluded restructuring dropped to 5.7% from 12.0%, aligning with Ericsson’s mid-single-digit level guidance.

Ericsson expects the third-quarter earnings before interest, tax, and amortisation margin excluding restructuring charges to be in line with or slightly higher than that of the second quarter. Additionally, they anticipate a seasonally stronger fourth quarter.

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