Ericsson in Stockholm, quarterly profit up sharply

(Il Sole 24 Ore Radiocor) -Ericsson - Class B soared on the Stockholm Stock Exchange, thanks to the positive reception given to its quarterly accounts, in particular to the strong increase in profit and gross margin, aided by cost cutting. The Swedish ICT technology, software and infrastructure group was up 5.5% to 56.53 kronor just over an hour after the start of trading, outperforming the Stoxx Europe 600 index and also the Omx Nordic 40. Ericsson ended the first three months of 2024 with a net profit of 2.6 billion kronor (approximately EUR 223.8 million), up 66% compared to the same period in 2023. Earnings per share amounted to 0.77 kronor from 0.45. Revenues, on the other hand, dropped by 15% to EUR 53.3 billion, but the gross margin increased to 42.5% from 38.6%. Ebit rose by 35% to 4.1 billion. Free cash flow before M&A was positive at 3.7 billion versus negative 8 billion in Q1 2023.

"Against the backdrop of a difficult market, we realised a solid expansion of gross margin. This underscores the competitiveness of our solutions, our business discipline and our cost initiatives,' commented President and CEO Borje Erkholm, quoted in a note, in which he recalled that during the quarter the group announced further measures 'to improve cost efficiency and simplify operations, including the reduction of headcount. This is a necessary action to position the company for long-term success'. As for the outlook, the Swedish multinational's number one indicates that "if current trends persist",revenues should stabilise during the second half of the year, benefiting from some recent contracts and the normalisation of inventory levels at customers in North America. "Margins should benefit from the improved business mix," Erkholm added. During the quarter, R&D expenses decreased to 11.6 billion from 12 billion and selling and administrative expenses fell to 8.7 billion from 9.1 billion. At the end of the quarter, the number of group employees had fallen to 99,140 from 99,952 at the end of December 2023.