By Dominic Hacking
STOCKHOLM–Ericsson AB on Thursday reported second-quarter net income that missed expectations, but said it continued to see strong 5G sales momentum in North America and Europe.
The Swedish telecommunications equipment company reported net income attributable to shareholders of SEK 4.5 billion (US$426.3 million), compared with SEK 3.68 billion a year earlier, as sales rose 14% to SEK 62.47 billion rose.
Analysts polled by FactSet had expected net income of SEK 5.27 billion on sales of SEK 61.36 billion.
Total network equipment sales rose 15% year over year, although margins were weighed down by lower royalty income as several expiring patent licensing agreements await renewal, the company said. Increased component and logistics costs as well as proactive investments in supply chain resilience also negatively impacted the margin, it said.
With ongoing deals, royalty revenue will be between SEK 1.0 billion and SEK 1.5 billion in the third quarter, it said.
The global supply chain situation remains challenging and inflationary pressures are strong, leading to cost increases that the company intends to mitigate as much as possible, including adjusting prices on expiring contracts, it said.
“Meeting customer commitments in the current challenging environment comes at a cost that dilutes gross margin,” said Chief Executive Borje Ekholm.
“We expect a gradual destocking towards the end of the year.”
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https://www.marketwatch.com/story/ericsson-2q-sales-sek62-5b-271657778380?rss=1&siteid=rss Ericsson 2Q Sales SEK62.5B – MarketWatch