Ericsson’s second-quarter sales beat helped by North American demand
2024.07.12 04:51
(Reuters) -Ericsson shares rose 8% on Friday after the Swedish telecoms equipment maker reported a smaller-than-expected fall in second-quarter revenue helped by a pick up in demand in North America.
Ericsson (BS:) and rival Nokia (HE:) have shed thousands of jobs and cut costs as customers buy less 5G telecom equipment.
But both companies were more upbeat in April, forecasting that demand would gradually revive towards the year-end.
“We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America,” CEO Börje Ekholm said.
Revenue fell 7% to 59.9 billion crowns ($5.69 billion) in the quarter but topped the 58.3 billion expected by analysts in an LSEG poll.
In North America, sales rose by 14%.
Ericsson is benefiting in North America after winning a major contract over rival Nokia to supply equipment to mobile operator AT&T (NYSE:).
CFO Lars Sandström told Reuters that the second quarter in North America was boosted by several customers, but he did not name them.
The company’s statement referenced “larger customers” in the Networks business unit.
Ericsson shares were up 8% by 0730 GMT, heading for their best day since October 2020.
Paolo Pescatore, analyst at PP Foresight, said the results were “encouraging” in tough market conditions.
Inderes analysts said in a note that growing volumes in the Networks business in North America are raising hopes that big operators there will start investing again towards the end of the year.
The group’s quarterly adjusted gross margin widened to 43.9% from 38.3% a year earlier as sales shift from low-margin India to the higher margin U.S. market.
It posted a loss in adjusted earnings before interest and taxes (EBIT) of 11.9 billion crowns versus a profit of 2.8 billion a year earlier reflecting an impairment it booked on its acquisition of cloud communications company Vonage.
($1 = 10.5104 Swedish crowns)
