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Ericsson Q2 sales disappoint, shares drop

Swedish telecom equipment maker Ericsson reported a surge in second-quarter profits, but a fall in sales disappointed investors as its shares dropped.

Ericsson Q2 sales disappoint, shares drop
CEO Hans Vestberg at Q2 results press conference

In the three months to June, Ericsson raised net profit from the equivalent

figure last year by 126 percent to 1.88 billion kronor ($258 million).

However, sales fell by 8 percent to 48 billion kronor, the group said, saying that sales had been held back by shortages of supplies and because customers were delaying orders.

Analysts, as polled by Dow Jones Newswires, had expected a net profit of 2.73 billion kronor and sales of 49.8 billion kronor.

The price of shares in the company, the biggest maker in the world of networks for mobile telephone operators, fell immediately by 5.5 percent to 84 kronor. The overall market here showed a fall of 0.7 percent.

CEO Hans Vestberg said that market conditions in the second half of 2009, when operators had moderated their orders, had continued in the first half of this year. In the second quarter, sales on a 12-month comparison had fallen in all regions except in North America.

However, compared with sales in the first quarter, the picture was less clear, with sales picking up in North America, northern Europe and in Mediterranean countries.

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SWEDEN AND UKRAINE

Ericsson suspends all Russia operations indefinitely

Swedish network equipment maker Ericsson said Monday that it was suspending all of its Russian operations over the war in Ukraine for the foreseeable future.

Ericsson suspends all Russia operations indefinitely

The telecom giant already announced in late February that it would stop all deliveries to Russia following Moscow’s February 24 invasion of Ukraine.

“In the light of recent events and of European Union sanctions, the company will now suspend its affected business with customers in Russia indefinitely,” Ericsson said in a statement.

The company added that it was “engaging with customers and partners regarding the indefinite suspension of the affected business.”

“The priority is to focus on the safety and well-being of Ericsson employees in Russia and they will be placed on paid leave,” it said.

READ ALSO: How has Sweden responded to Putin’s war in Ukraine so far?

Hundreds of Western firms ranging from Ikea to Coca-Cola, Goldman Sachs and McDonald’s have stopped operations in the country since the invasion, with French banking group Societe Generale announcing Monday it was selling its stake in Russia’s Rosbank.

Ericsson has around 600 employees in Russia, and is a “major supplier to the largest operator MTS and the fourth largest operator Tele2,” a company spokeswoman told AFP, adding that together with Ukraine, Russia accounts for less than two percent of revenue.

As a result, the equipment maker said it would record a provision for 900 million Swedish kronor ($95 million, 87 million euros) for the first quarter of 2022 for “impairment of assets and other exceptional costs,” though no staff redundancy costs were included.
Ericsson is due to publish its first quarter earnings on April 14.

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