Earnings At Ericsson Fall Short Of Expectations As Costs Eat Into Margins

Ericsson, the Swedish telecom equipment maker, reported third-quarter core earnings that fell short of expectations for the second quarter in a row, as margins were dragged down by higher component and logistics costs.

According to Refinitiv data, the company’s quarterly adjusted operating earnings fell to 7.1 billion Swedish crowns ($633.05 million) from 8.8 billion crowns a year ago, missing analysts’ mean forecast of 8.73 billion.

However, Ericsson’s quarterly revenue increased to 68 billion crowns from 56.3 billion crowns a year ago, exceeding analysts’ average estimate of 66.25 billion.

Gross margin fell from 44.0 per cent to 41.4 per cent as a result of lower royalty revenue due to ongoing patent disputes.

Footprint gains from large-scale projects in their early stages tend to dilute gross margins, according to Chief Executive Borje Ekholm in a statement.

Aside from supply chain disruptions caused by the Russia-Ukraine war and chip shortages, the company has been the subject of bribery investigations in Iraq and investor ire for improper disclosure.

The US Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are looking into the company’s past behavior in Iraq. It had stated that it was working with both agencies and that the outcome could not yet be determined.

(Adapted from RTE.ie)


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