ERICSSON earnings beat analysts’ expectations in the second quarter, helped by cost cutting measures to counter what the Swedish company called a “challenging market environment”.
Adjusted earnings before interest and taxes rose 14 per cent from a year earlier to 3.2 billion kronor (S$409 million), excluding impairments, the Stockholm-based company said on Friday (Jul 12). That compared to an average of 2.7 billion kronor forecast by analysts surveyed by Bloomberg.
Ericsson and its Nordic competitor Nokia, which reports next week, have faced a dismal telecom equipment market for years as anticipated spending on 5G technology never materialised. The prolonged downturn led Ericsson last year to cut about 8 per cent of its workforce, or 8,500 staff worldwide, as it sought to reduce expenses. It announced in March it would eliminate 1,200 jobs in Sweden.
The company has also stumbled in other areas. Ericsson said earlier this month it would take an 11.4 billion kronor non-cash impairment in the second quarter after Vonage Holdings’s performance deteriorated. It was the second writedown on the asset, which it agreed to buy in 2021, since October.
There are some indications that sales will stabilise this year. Ericsson has said previously its US$14 billion network deal with US operator AT&T’s will begin to pay off in the second half.
Investor, the investment firm run by the Sweden’s powerful Wallenberg family and Ericsson’s largest shareholder, increased its share holdings in recent months, as a stamp of approval for chief executive officer Borje Ekholm’s turnaround plan.
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Ericsson shares in Stockholm are up 6.5 per cent so far this year. REUTERS
