Ericsson Shares Drop Post Q1 Results; Acknowledges DOJ Penalty, Russia Business Suspension

Telefonaktiebolaget L M Ericsson ERIC reported a first-quarter FY22 sales growth of 11% year-on-year to SEK 55.1 billion.
Group organic sales grew by 3% Y/Y, driven by Networks in North America, Europe, and Latin America.
Organic sales in Networks rose 4% Y/Y, and Digital Services sales down by 2% Y/Y.
It reported an EPS of SEK 0.88 versus SEK 0.96 last year.
Adjusted gross margin contracted 60 basis points to 42.3% due to investments in network supply chain resilience.
Adjusted EBIT margin declined by 200 bps to 8.7%.
Ericsson saw strong business momentum, and its investments in technology and a resilient supply chain have allowed it to continue to win market share and deliver on customer commitments.
Ericsson acknowledged the indefinite suspension of its business in Russia following current sanctions.
Ericsson saw an unspecified DOJ penalty due to its failure to make adequate disclosures about its operations in Iraq before entering a deferred prosecution agreement in 2019.
Price Action: ERIC shares traded lower by 6.30% at $8.77 in the premarket session on the last check Thursday.