Ericsson's group organic sales grew by 8% YoY in Q2 2021 to SEK 54.9 billion, despite a sales decline in Mainland China of SEK -2.5 b. YoY and an IPR revenue decline of SEK -0.5 b. YoY. Reported sales were SEK 54.9 (55.6) b.
Gross margin excl. restructuring charges improved to 43.4% (38.2%) driven mainly by operational leverage in Networks.
The recently announced 5-year, $8.3 billion contract with Verizin is the single largest deal in the history of Ericsson.
Some highlights:
- Q2 2020 was negatively impacted by inventory write-down and initial 5G deployments in Mainland China.
- Reported gross margin was 43.4% (37.6%).
- Organic sales in Networks grew by 11% YoY, driven by market share gains. Sales in Mainland China were SEK -2.0 b. lower YoY. Reported EBIT margin was 21.7% (13.2%).
- Organic sales in Digital Services were stable YoY, despite a sales decline in Mainland China of SEK -0.5 b. YoY. Reported EBIT (loss) was SEK -1.6 (-0.7) b., impacted by a write-down of SEK -0.3 b. for pre-commercial product investments for the Chinese market.
- The RAN market outlook for 2021 has been updated to 10% growth YoY, compared with previously 3% growth. Source: Dell’Oro.
- The North East Asia market outside Mainland China saw strong growth in 5G volumes.
Comments from B̦rje Ekholm, President and CEO of Ericsson: "The opportunity from enterprise for 5G provides an exciting growth path for Ericsson. Building on the strong foundations of our core business we will continue to take a stepwise approach to investing in growth in Dedicated Networks, IoT and the wireless portfolio acquired with Cradlepoint. We foresee 20-30% annual market growth in enterprise, with opportunities in automation, remote operations and safety management across whole industry sectors such as smart manufacturing, ports and airports, energy, mining, health and agriculture. Enterprise use cases in 5G Рand the continuing growth in 4G Рwill drive the digital transformation of business globally combining the high performance, low latency and security benefits of wireless over traditional fixed networks. We are confident that wireless will be the first-choice connection for global business in the 5G era."
