Ericsson stock falls nearly 4 percent in lunch trading on the Stockholm stock exchange.
The currency situation – with a krona that has risen sharply against all major currencies – has been "tough" during the second quarter, according to CEO Börje Ekholm.
But we deliver organic growth of 2 percent, he says.
Ekholm chooses the word "solid" when he summarizes the quarter.
Thanks to the measures we have taken – on our operational efficiency, commercial discipline and review of the product portfolio – we can deliver a good result. One of the better results in a long time.
Currency impact: 4.7 billion
The currency impact during the second quarter is summarized at minus 4.7 billion kronor. Ericsson has small sales in Sweden – less than half a percent – but large costs in kronor as much research and development takes place here, with around 14,000 employees in the country.
We get quite large effects quite quickly when the currency fluctuates, says Ekholm.
The Trump tariffs are eating up about 1 percentage point of Ericsson's gross margin, roughly as the telecom equipment manufacturer warned in April when President Donald Trump's first tariff shock was delivered.
But the big thing is the uncertainty that we have seen. What will the outcome be of the negotiations? How will this look? It makes it simply a bit of uncertainty, says Ekholm.
We are friends of free trade. We would rather have low tariffs. We are in more than 150 countries. A low tariff or no tariffs is of course preferable. But this is basically political decisions and we as a company have to adapt to them, he adds.
In the quarterly report, Ericsson flags that there will be "further efficiency measures" after those that have already been made – where the workforce globally has been reduced by 6,000 employees in recent years.
We see that we will continue to work in that way – to simply make gradual improvements. We will continue to deliver on that for the rest of the year and into next year, says Ekholm.
Back to growth
Ericsson's stock had already fallen 14 percent since the beginning of the year and about 35 percent if you start from the peak in 2021.
In the long term, we must return to growth. That's what our strategy aims for. To simply create new uses for the mobile network, says Ekholm.
He hopes that AI can become a major factor and he expects an increased need for 5G networks in the future.
We will probably enter a more stable market situation, he says about the prospects.
Ekholm has been CEO since 2017, but does not want to talk about when he might step down.
How many years can you stay on?
I'm standing at least when I talk to you. I'm not sitting, after all. We'll see.
Telecom equipment manufacturer Ericsson reports an adjusted operating result (ebit) of just over 7 billion kronor for the second quarter of the year. This can be compared to the loss of 11.9 billion during the same quarter a year earlier – when Ericsson made a giant write-down.
The profit for the second quarter was higher than expected. Analysts had on average expected 6.6 billion, according to a compilation of forecasts made by Bloomberg.
Net sales fell 6 percent to 56.1 billion kronor, down from 59.8 billion during the second quarter last year. It was a larger decline than expected. The average forecast was 59.3 billion. A large part of the sales miss is explained by currency effects.
