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Ericsson’s quarterly operating profit declines, beats expectations

by Staff GBAF Publications Ltd
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Ericsson’s quarterly operating profit declines, beats expectations

By Martin Coulter

LONDON (Reuters) – Sweden’s Ericsson reported a 62% fall in second-quarter adjusted operating profit on Friday, slightly beating market expectations.

The Swedish telecom equipment maker’s operating profits, excluding restructuring charges, fell to 2.8 billion Swedish crowns ($271 million), compared with 7.4 billion the previous year.

“Building on our strong position and despite challenging market conditions we delivered a solid quarter – meeting expectations,” said Börje Ekholm, president and CEO of Ericsson. “We continue to execute with discipline and focus without losing sight of the long term.”

Citing increasing demand for 5G, Ekholm predicted the market would undergo a “gradual recovery” in late 2023, and improve in 2024.

In recent months, Ericsson has cut costs to mitigate lower spending among its telecom operator customers, announcing plans to layoff 8,500 employees in February. It expects to save another 2 billion crowns ($193 million) in costs.

On Friday, the company said the impact from such cost-cutting activities would be “increasingly visible” over coming quarters.

Net sales rose to 64.4 billion Swedish crowns, above analysts’ mean forecast of 63.9 billion Swedish crowns, according to Refinitiv data.

Ericsson’s reported gross margin for the second quarter fell to 37.4% from 38.6% the previous quarter.

($1 = 10.3374 Swedish crowns)

 

(Reporting by Martin Coulter; Editing by Krishna Chandra Eluri and Tom Hogue)