Ericsson, sales down but revenues and profits beat expectations

Sales fell in Q3 2024, but Ericsson's Q3 accounts beat estimates for both revenues and core earnings. Mixed results that reflect both strategic progress (read the good results coming from North America thanks to the agreement with AT&T) and operational challenges.

The Swedish multinational ICT infrastructure and services company's financial figures show a 4 per cent drop in total sales compared to the same period in the previous year, with sales of SEK 61.8bn (EUR 5.4bn) compared to SEK 64.5bn in 2023. This decline was offset by a significant expansion of the gross margin to 45.6 per cent, up significantly from 38.4 per cent in 2023. Most importantly, the value exceeded analysts' forecasts of SEK 61.6bn.

"We are seeing signs of stabilisation in North America, as an early adopter market, which is returning to growth," said CEO Borje Ekholm in a statement accompanying the release of the accounts, recalling in this way also the decline in demand from North American mobile operators that in the past two years has affected exposed vendors in the region such as Ericsson and Nokia, which have had to seek growth in developing markets such as India, often at the cost of sacrificing profits.

Another key factor for the positive results was the increase in revenues from 5G patent licences, which reached SEK 3.5 billion in the quarter, a growth of 25 per cent compared to 2023.

As for margins, adjusted earnings before interest and taxes were SEK 7.3bn (EUR 642m), compared to an average of SEK 5.6bn forecast by analysts surveyed by Bloomberg. Adjusted operating profit (EBITDA) showed a 64 per cent increase from SEK 4.7bn in Q3 2023 to SEK 7.8bn in 2024, with the adjusted EBITDA margin standing at 12.6 per cent, compared to 7.3 per cent last year.