Ericsson warns of an uncertain near-term outlook as profit disappoints

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By Dominic Chopping


STOCKHOLM–Ericsson AB on Friday posted lower-than-expected fourth-quarter net profit and cautioned that the near-term outlook is uncertain, with operators holding off placing new orders as they rebalance inventories and assess economic headwinds.

The Swedish telecommunications-equipment company said these trends started to hurt its key networks unit in the fourth quarter and that it expects them to continue at least during the first half of 2023.

Ericsson reported net profit attributable to shareholders of 6.07 billion Swedish kronor ($588.2 million) compared with SEK10.08 billion a year earlier, as sales rose 21% to SEK86.0 billion.

Analysts polled by FactSet had expected net profit of SEK7.05 billion on sales of SEK84.78 billion.

The company expects to start seeing the effect of its SEK9 billion cost-saving activities during the second quarter of 2023.

“We anticipate declining margins in networks during the first half of 2023 due to changing business mix,” Chief Executive Borje Ekholm said.

“In 1Q we expect the earnings before interest, tax and amortization for the group to be somewhat lower than Ebita last year.”

Overall sales of network equipment grew by 15% on the year, but margins were weighed by a switch to new growth markets in south east Asia, Oceania and India, from higher margin front-runner markets such as North America.


Write to Dominic Chopping at dominic.chopping@wsj.com


This article was originally published by Marketwatch.com. Read the original article here.

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