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Ericsson exceeds expectations – the stock surges

The telecom equipment manufacturer Ericsson achieves an unexpectedly strong result for the third quarter. The stock surges 7-8 percent on the stock exchange. Successes in the USA lie behind the upswing, but also significant cost savings, according to Ericsson CEO Börje Ekholm.

» Updated: 15 October 2024, 10:39

» Published: 15 October 2024

Ericsson exceeds expectations – the stock surges
Photo: Lars Schröder/TT

The market mix is affected by the USA coming back. We can see that clearly, says Börje Ekholm to TT.

However, it is almost only in the USA that sales are increasing, otherwise, there are large minus figures and total revenue is still decreasing slightly.

But the gradual decline is decreasing, he says.

The past few years have been tough, and it has been a long time since Ericsson could report any growth. The question is whether there is any growth in sight now? The USA usually acts as a locomotive, and the hope is that other regions will follow.

A different future?

Ekholm believes he can see signs that the telecom market is on its way to awakening in a broader, different perspective, with new technologies.

There are several indicators that we can see a different future in, but we cannot predict when the market will turn, says the Ericsson CEO.

He says that the target for a profit margin of 15-18 percent remains, despite only reaching just over 9 percent in the third quarter (almost 12 percent adjusted for one-time items).

The target remains. We will reach it as soon as possible.

The improved profitability is largely explained by the cost savings made, where thousands of employees have left.

Move from Kista "far-fetched"

The recent speculations about Ericsson considering moving its headquarters from Kista in Stockholm, Ekholm does not want to fuel further.

We are always looking at where it is right to have our operations. It is in Sweden and it is abroad as well. Where should we be and where should we be to attract the right talents for the future, he says.

Must Ericsson's headquarters then be in Sweden?

We have fantastic research and development in Sweden. It is completely central to our global competitiveness, so to see an Ericsson that is not sitting here is like "far-fetched", he says.

Better than expected

Ericsson's operating result, adjusted for comparable items and write-downs, was SEK 7.8 billion for the third quarter of the year. This is almost SEK 2 billion better than analysts' forecasts and clearly better than the SEK 4.7 billion for the same quarter last year.

Before Tuesday, Ericsson's share had risen by 24 percent since the beginning of the year, more than double the rest of the stock market.

Ericsson reports an operating result of SEK 5.8 billion for the third quarter of the year. This can be compared to the loss of SEK 28.9 billion for the same quarter a year earlier.

Last year's large loss in the third quarter is explained by a write-down of the value of the acquired cloud service company Vonage by SEK 31.9 billion, which was made then.

Excluding restructuring costs and write-downs of goodwill, Ericsson's operating result (EBITA) was SEK 7.8 billion for the third quarter of the year, compared to SEK 4.7 billion for the same quarter a year earlier.

Sales revenue for the third quarter of the year was SEK 61.8 billion, which can be compared to SEK 64.5 billion for the same period last year.

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By TTThis article has been altered and translated by Sweden Herald

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