Ericsson says quarterly profit fell as sales and costs weighed

Swedish telecoms group Ericsson reported a 12 percent fall in second-quarter net profit to 4.1 billion kronor, or 370 million euros, as sales declined and component costs rose.

The company said turnover fell 6 percent to 52.7 billion kronor, or 4.8 billion euros. It said the decline was partly due to unfavourable exchange rate movements and to one-off licence income that had supported revenue a year earlier.

Operating profit fell 7 percent to 5.9 billion kronor. That was below the 6.3 billion kronor consensus forecast by analysts published by the group.

Chief executive Borje Ekholm, who is due to step down in October after 10 years in the role, said Ericsson had taken steps during the quarter to limit the effect of higher component costs. He said the company would continue adjusting pricing in coming quarters to offset the impact.

Ericsson had already been affected in the first quarter by rising semiconductor prices, which the source says were due in part to demand linked to artificial intelligence. On its outlook, the company said it had strengthened its portfolio to benefit from the next wave of AI-based connectivity, similar to Finnish rival Nokia.

Telecoms equipment makers have faced several years of pressure on sales. The source says the 5G rollout has not met expectations, while growth in India, previously a source of expansion, has levelled off. Earlier this year, Ericsson announced 1,600 job losses in Sweden out of a total workforce of 90,000 employees worldwide.