Ericsson profit tops Bloomberg forecasts as chip costs loom

Ericsson’s third-quarter operating profit topped Bloomberg’s analyst consensus even as the Swedish telecoms group warned that geopolitical risks and rising component costs would pressure margins next year.

The company said adjusted EBITA fell 36% from a year earlier to 10.1 billion kronor, or about $1.01 billion. Bloomberg’s consensus of analyst forecasts was 7.93 billion kronor.

Net income fell 49% to 5.8 billion kronor from 11.3 billion kronor a year earlier, when Ericsson benefited from a 7.6 billion kronor gain from selling the US telecoms and IT company Iconectiv.

Sales rose 6% to 59.5 billion kronor. Organic sales, which exclude currency effects, grew 7%, driven by increases in the Networks division in Northeast Asia, Southeast Asia, Oceania and India, as well as Europe, the Middle East and Africa. Ericsson said sales were lower in Latin America.

Gross margin slipped to 47.1% from 47.6%. Ericsson said semiconductor prices had risen because of AI-linked demand and that it was responding with portfolio optimisation, pricing and efficiency measures.

Chief executive Per Narvinger, who took over in June, said Ericsson delivered strong third-quarter results supported by execution, its portfolio and customer trust.