Ericsson 2Q Weighed On by Lower Licensing Revenue and Higher Costs
July 14 2022 - 2:29AM
Dow Jones News
By Dominic Chopping
STOCKHOLM--Ericsson AB on Thursday posted a second-quarter net
profit that missed expectations, but said it continued to see
strong 5G sales momentum in North America and Europe.
The Swedish telecommunications-equipment company reported net
profit attributable to shareholders of 4.5 billion Swedish kronor
($426.3 million), compared with SEK3.68 billion a year earlier, as
sales rose 14% to SEK62.47 billion.
Analysts polled by FactSet had expected net profit of SEK5.27
billion on sales of SEK61.36 billion.
Overall sales of network equipment grew by 15% on the year,
though margins were weighed on by lower licensing revenue, with
several expiring patent license agreements pending renewal, the
company said. Increased component and logistics costs and proactive
investments in supply-chain resilience also negatively affected the
margin, it said.
With current contracts, licensing revenue is seen at SEK1.0
billion-SEK1.5 billion in the third quarter, it said.
The global supply-chain situation remains challenging and
inflationary pressures are strong, resulting in cost increases that
the company is working to mitigate as far as possible, including
adjusting pricing as contracts expire, it said.
"Fulfilling customer commitments under current challenging
conditions, comes at a cost which dilutes gross margin," Chief
Executive Borje Ekholm said.
"We expect a gradual reduction in inventory towards the end of
the year."
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
July 14, 2022 02:14 ET (06:14 GMT)
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