Sweden’s Ericsson surprises with net profit in third quarter

Sweden's Ericsson surprises with net profit in third quarter
Ericsson's Sweden headquarters. Photo: Maja Suslin/TT
Swedish telecoms manufacturer Ericsson reported its highest profitability rating since 2006 on Wednesday, with its third quarter results ahead of estimates.

Ericsson posted a three months to September net profit of 5.6 billion kronor (522 million euros, $622 million) compared with a loss in the same period the previous year of 6.9 billion kronor when it had to make large provisions.

Sales were up just 0.6 percent at 57.5 billion kronor.

The company said that while the coronavirus pandemic “has hurt revenues for several of our customers, and in some cases this has led to a reduction of capex (capital expenditure), we have not seen any negative impact on our business.”

The gross margin — a broad measure of profitability — came in at 43.2 percent, its highest level since 2006 and compared with analyst forecasts for 39.4 percent.

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“We remain positive on the longer-term outlook for the industry and on Ericsson,” company head Borje Ekholm said in a statement.

Ericsson has emerged as a key player in 5G systems along with Finland's Nokia and the Chinese group Huawei whose position has come under attack in the United States over allegations it effectively acts on Beijing's behalf.

Huawei denies the charge but it has steadily been pushed out in the US and increasingly in the EU, leaving Ericsson and Nokia the main 5G suppliers there.

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