Ericsson's Q4 Profit Takes Hit Due To Cloud Strategy Adjustments; Goes Cautious On Q1 Amid Macro Headwinds

Ericsson ERIC reported a fourth-quarter FY22 sales growth of 21% year-on-year to SEK 86 billion.
Group organic sales grew by 1% Y/Y, driven by IPR Networks.
It reported an EPS of SEK 1.82 versus SEK 3.02 last year.
Adjusted gross margin contracted 200 basis points to 41.5% due to business mix changes in Networks and charges for contract exits and portfolio adjustments in Cloud Software and Services.
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Adjusted EBIT margin declined by 790 bps to 9.4% as the adjusted EBIT declined 34% Y/Y after some of its major customers for 5G networks pulled back on spending amid an uncertain economic environment, Bloomberg reports.
Adjusted EBITA declined 27% Y/Y to SEK 9.3 billion.
Ericsson anticipates declining margins in Networks during the first half of 2023 due to changing business mix.
In Q1, Ericsson expects the EBITA to be somewhat lower than EBITA last year, with improvements during the year.
CEO Börje Ekholm said, "As we said during our Capital Markets Day, there are near-term uncertainties, however, we are still in the early phase of global 5G rollout and widespread enterprise digitalization."
Price Action: ERIC shares closed lower by 1.66% at $5.93 on Thursday.
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