Ericsson Cautions on Falling Sales in China
July 16 2021 - 2:08AM
Dow Jones News
By Dominic Chopping
STOCKHOLM--Ericsson AB on Friday announced an $8.3 billion
multiyear 5G deal from Verizon Communications Inc. as it posted a
second-quarter net profit that beat expectations, but cautioned
that delayed 5G deployments in mainland China weighed on sales.
The telecommunications-equipment company reported second-quarter
net profit attributable to shareholders of 3.68 billion kronor
($424.6 million) compared with SEK2.45 billion for the year-earlier
period.
Sales slipped 1.1% to SEK54.94 billion after sales in mainland
China fell by SEK2.5 billion in the quarter.
Analysts polled by FactSet had expected net profit of SEK3.58
billion on sales of SEK57.26 billion.
Ericsson previously warned that Sweden's ban on using certain
Chinese gear in the country could see the company face retaliation,
and it said Friday that it is now "prudent to forecast a materially
lower market share in mainland China for networks and digital
services."
Sales of network equipment rose 11% on year, on an adjusted
basis, with the company having continued high activity levels in
most markets, while gross margin at the unit rose to 47.9% from
40.5%.
The company said through proactive and continuous measures for
supply-chain resilience, it has accelerated production to meet
customer demand.
Ericsson said it now expects the global radio access network
equipment market to grow by 10% in 2021, from 3% previously.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
July 16, 2021 02:02 ET (06:02 GMT)
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