Ericsson Stock Down On Q2 Loss; Backs FY View

(RTTNews) - Shares of LM Ericsson were losing around 8 percent in the morning trading in Sweden as well as around 9 percent in pre-market activity on Nasdaq after the networking and telecom major reported Friday a loss in its second quarter, compared to prior year's profit, on restructuring charges and weak organic sales. Reported sales, however, grew, with sharp decline in sales in North America was partly offset by strong sales development in India.

Ericsson further said it remains focused on reaching the lower end of the long term EBITA target range of 15 percent to 18 percent by 2024. Borje Ekholm, President and CEO of Ericsson, said, "Building on our strong position and despite challenging market conditions we delivered a solid quarter - meeting expectations. We continue to execute with discipline and focus without losing sight of the long term."

For the third quarter, Ericsson expects EBITA margin to be in line with or slightly higher than second quarter, followed by a seasonally stronger fourth quarter.

The company added that it is well on track to reduce annual run rate by at least 11 billion kronor by year-end, which will positively impact the P&L over the coming quarters with full effect during 2024. Further, 5G subscriptions are estimated to top 1.5 billion by end-2023 and reach 4.6 billion by 2028. For the second quarter, net loss was 0.6 billion Swedish kronor, compared to profit of 4.7 billion kronor in the prior year, primarily due to restructuring charges. Loss per share was 0.21 kronor, compared to profit of 1.35 kronor last year.

The latest results were hurt by restructuring charges amounted to 3.1 billion kronor.

EBITA was 0.5 billion kronor, down 93 percent from last year's 7.5 billion kronor. EBITA margin was 0.8 percent, compared to 12 percent a year ago. EBITA excluding restructuring charges was 3.7 billion kronor, down 51 percent from 7.5 billion kronor a year ago. Adjusted EBITA margin was 5.7 percent, compared to 12.0 percent a year ago.

Second-quarter net sales were 64.4 billion kronor, up 3 percent from 62.5 billion kronor last year. Group organic sales declined 9 percent. Segment Networks sales fell 13 percent, while segment Enterprise sales grew 20 percent. In Sweden, Ericsson shares were trading at 53.85 kronor, down 8 percent. In pre-market activity on Nasdaq, the shares were losing around 8.7 percent to trade at $5.24.

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