Ericsson Q2 revenue falls, but profitability remains strong

Ericsson reported a stronger-than-expected second-quarter performance, with improved margins and profitability helping offset a decline in sales amid continued weakness in telecom network spending.

Ericsson posted reported sales of SEK 52.7 billion for the April–June quarter, down from SEK 56.1 billion a year earlier.

The company’s adjusted gross margin improved to 48.4 percent, up from 48.0 percent a year ago. Adjusted gross income stood at SEK 25.5 billion, compared with SEK 27.0 billion in the year-ago period.

Ericsson reported adjusted EBITA of SEK 6.9 billion, compared with SEK 7.4 billion a year earlier, resulting in a margin of 13.1 percent.

Reported EBITA came in at SEK 6.3 billion with an 11.9 percent margin.

Net income for the quarter totaled SEK 4.076 billion, down from SEK 4.6 billion a year ago.

Despite the softer revenue performance, Ericsson maintained a strong balance sheet and returned SEK 8.2 billion to shareholders during the quarter, including SEK 3.2 billion through share repurchases.

Börje Ekholm, President and CEO said, “Our Q2 results underscore the strength of our portfolio and disciplined execution. Adjusted gross margin was 48%, up by 2 percentage points after normalizing for the one-off benefit of the IPR settlement last year. In Q2, we took action to mitigate component cost inflation. As the impact builds in the coming quarters, we will continue to pursue internal measures and pricing actions to help offset the effect. We also expect some pressure on Networks adjusted gross margin in Q3 due to higher volumes of network rollout projects.”

He said, “Ericsson enters the next phase from a position of strength. Over recent years, we have strengthened our portfolio to capture the next wave of AI-driven connectivity. Building on our technology leadership in mobile networks, we have expanded into attractive growth areas, positioning Ericsson to capitalize as AI increasingly moves into the physical world.”

CT Bureau