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Telecommunications equipment maker Ericsson on Tuesday reported revised first-quarter earnings that beat expectations and said sales may stabilize in the second half of the year despite weak demand for 5G equipment.
Operating profit excluding restructuring charges unexpectedly grew to 4.3 billion kroner ($394.40 million) from 4.0 billion kroner a year earlier despite a 15% drop in sales. Analysts polled by LSEG on average expected a decline to 1.7 billion kroner.
Ericsson said the earnings included a one-time gain of 1.9 billion crowns related to the resolution of a commercial dispute.
The Swedish group said it expects the Radio Access Networks (RAN) market to continue to decline at least until the end of the year as customers pull back investments, but added:
“If current trends continue, we expect our sales to stabilize during the second half of the year, benefiting from recent contract wins and customer inventory levels returning to normal in North America.”
“In the second half, our margins should benefit from improved business mix,” she said.
The company had already predicted in January that markets outside China would continue to weaken this year and announced new layoffs in March, after it cut costs and shed thousands of jobs in 2023 as sales slowed after years of high demand for 5G equipment.
Ericsson on Tuesday forecast gross margin excluding restructuring charges in its networking division of 42%-44% for the second quarter of 2024. In the first quarter it was 44.3%.
