Ericsson has released its Q2 2024 financial results, reporting a 7% year-over-year decline in sales, though the market area North America grew by 14%. The company’s total reported sales for the quarter stood at SEK 59.8 billion, down from SEK 64.4 billion in the same period last year.
Despite the decline in sales, Ericsson saw an improvement in adjusted gross income, which increased to SEK 26.3 billion from SEK 24.7 billion, driven by a strong gross margin expansion. The reported gross income was SEK 25.8 billion, up from SEK 24.1 billion. The adjusted gross margin improved significantly to 43.9% from 38.3%, supported by higher IPR licensing revenue and cost actions, with the Networks adjusted gross margin at 46.1%. The reported gross margin was 43.1%, compared to 37.4% in the previous year.
However, Ericsson reported a net loss of SEK 11.0 billion, including a SEK 11.4 billion impairment impact. The earnings per share (EPS) diluted was SEK -3.34, compared to SEK -0.21 last year. The company did see a positive turn in its free cash flow before M&A, which was SEK 7.6 billion, benefiting from a significant improvement in working capital.
Key Points:
• Sales Decline: Overall sales declined by 7% year-over-year to SEK 59.8 billion.
• North American Growth: Sales in North America grew by 14%.
• Gross Margin Expansion: Adjusted gross margin improved to 43.9%, with Networks adjusted gross margin at 46.1%.
• Net Loss: Net loss of SEK 11.0 billion, with an EPS diluted of SEK -3.34.
• Positive Cash Flow: Free cash flow before M&A was SEK 7.6 billion, showing strong improvement in working capital.
Börje Ekholm, President and CEO, said: “In Q2, we maintained our leading market position, returned to growth in North America, and delivered strong gross margin expansion and free cash flow. We remained focused on matters in our control, to optimize our business amid a challenging market environment, with industry investment levels unsustainably low.
Vonage remains foundational to build out a global platform for network APIs. This is critical for the digitalization of enterprises and society, and will drive future growth in the telecoms industry. We recorded an impairment charge in Q2, as market growth in the current business has slowed, and we must now refocus on improving performance.
Our results highlight our competitiveness, and we will continue to take proactive steps to position the business for longer-term success. We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half from contract deliveries in North America.”
https://www.ericsson.com/en/press-releases/2024/7/ericsson-reports-second-quarter-results-2024
