Ericsson braces for component cost hit after third-quarter profit beat

By Reuters News

STOCKHOLM, Oct 15 (Reuters) - Telecom gear maker Ericsson ERICb.ST on Thursday reported a smaller-than-expected drop in third-quarter core profit as efficiency measures helped offset higher component costs, but warned that such costs would affect margins next year.

  • Operating profit before amortisation and restructuring costs was 10.1 billion crowns ($1.01 billion) against a year-earlier 15.8 billion and a mean forecast of 7.87 billion in a poll of analysts provided by Ericsson

  • The Swedish group said component costs rose in the quarter

  • "Looking ahead, the RAN (Radio Access Network) market is flat, geopolitical uncertainty remains elevated and component costs are a headwind to gross margin," new CEO Per Narvinger said in a statement

  • Ericsson in July warned it was under pressure from rising memory chip costs due to surging AI demand

  • Adjusted EBITA margin narrowed to 17.0% from 28.1% against a forecast 14.2%

  • Organic sales rose 7% to 59.5 billion crowns, beating a forecast 55.4 billion and Ericsson said sales in North America increased slightly supported by project phasing

Capital.com is an execution-only brokerage platform and the content provided on the Capital.com website is intended for informational purposes only and should not be regarded as an offer to sell or a solicitation of an offer to buy the products or securities to which it applies. No representation or warranty is given as to the accuracy or completeness of the information provided.

The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.

To the extent permitted by law, in no event shall Capital.com (or any affiliate or employee) have any liability for any loss arising from the use of the information provided. Any person acting on the information does so entirely at their own risk.

Any information which could be construed as “investment research” has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication.