Ericsson Clocks 21% Sales Growth In Q3 Aided By Growing Presence In Mobile Networks; Margins Shrink Due To Footprint Expansion

Ericsson Clocks 21% Sales Growth In Q3 Aided By Growing Presence In Mobile Networks; Margins Shrink Due To Footprint Expansion
  • Telefonaktiebolaget L M Ericsson ERIC reported a third-quarter FY22 sales growth of 21% year-on-year to SEK 68 billion.
  • Group organic sales grew by 3% Y/Y, driven by Networks in North America. Organic sales in Networks rose 7% Y/Y.
  • It reported an EPS of SEK 1.56 versus SEK 1.73 last year.
  • Adjusted gross margin contracted 260 basis points to 41.4% due to lower IPR revenues, supply chain costs, and a larger share of services following footprint expansion in Networks.
  • Adjusted EBIT margin declined by 510 bps to 10.6%, impacted by increased investments in technology.
  • CEO Börje Ekholm said, "We see robust underlying performance and strong momentum in the business as we continue to execute on our strategy. This includes leadership in mobile networks by growing market share. Since 2017, we have increased RAN market share, excluding Mainland China, from 33% to 39%, and we have had multiple contract wins across geographies in this quarter. We continue to solidify our strong position in 5G to capture the considerable opportunities presented by the fastest-scaling mobile generation. Our expansion into the exciting high-growth Enterprise space is gaining momentum with the acquisition of Vonage, providing us with access to a powerful range of cloud communication services."
  • Price Action: ERIC shares traded lower by 14.98% at $5.45 in the premarket session on the last check Thursday.

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