Latest news with #Ericsson
Yahoo
2 days ago
- Business
- Yahoo
Telefonaktiebolaget L M Ericsson (ERIC) Q2 2025 Earnings Call Highlights: Navigating Growth ...
Organic Sales Growth: 2% year-over-year. Gross Margin: 48%, up from 43.9% in Q2 last year. EBITA Margin: 13.2%, a three-year high. Net Sales: SEK 56.1 billion, with a reported decline of 6% due to currency impact. IPR Revenue: Increased to SEK 4.9 billion from SEK 3.2 billion in Q1. Operating Expenses: SEK 20 billion, around SEK 3 billion lower than last year. Free Cash Flow Before M&A: SEK 2.6 billion. Networks Sales: Decreased by 5% year-on-year to SEK 35.7 billion. Networks Adjusted Gross Margin: 49.5%. Cloud and Software Services Sales: Declined by 5% year-on-year to SEK 14.4 billion. Enterprise Sales: Decreased by 14%, with organic sales down 6%. Net Cash: Decreased by SEK 2.6 billion compared to the previous quarter. Warning! GuruFocus has detected 4 Warning Sign with ERIC. Release Date: July 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) reported a 2% organic sales growth in Q2 2025, with significant contributions from the Americas and IPR segments. The company achieved a three-year high in EBITA margin at 13.2%, demonstrating strong execution against operational and strategic priorities. Gross margin improved to 48%, with broad-based margin improvements across all segments. The company successfully signed up all three operators in Japan for its joint venture Aduna, expanding its market coverage. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) is investing in AI and 5G stand-alone networks, which are expected to drive future growth and innovation in connectivity solutions. Sales in Southeast Asia, Oceania, and India decreased by 22% year over year, primarily due to temporary pauses in network investments in India. The company faced a negative currency impact of SEK4.7 billion due to the strengthening of the Swedish krona against the US dollar and other currencies. Sales in Northeast Asia declined by 15%, attributed to reduced customer investments in some 5G front-runner markets. Free cash flow before M&A was SEK2.6 billion, down compared to last year, partly due to lower inventory levels and completion of large-scale rollout projects. Restructuring costs are expected to remain elevated during the year, impacting overall financial performance. Q: Can you explain the dynamics behind the robust gross margin guidance for the network's business in the next quarter? Are there specific deals or mix shifts contributing to this? A: The margin outlook is based on the current product and market mix, not related to IPR. It's more about the underlying margins we see coming into the quarter. We don't have high expectations for India in Q3 due to the temporary pause in investments. Q: How do you see operating expenses (OpEx) trending for the rest of the year? A: The cost reduction activities from the past year are now reflected in our OpEx. We expect a similar level of OpEx in the second half of the year, with some seasonality potentially leading to higher costs. It takes time for cost reductions to fully impact the numbers. Q: Can you provide more details on the tariff-related effects during the quarter and expectations for Q3? A: The impact of tariffs was around 1 percentage point, slightly lower than expected. We anticipate similar levels going forward, given current information. We are preparing for potential changes but have not made any major investment decisions yet. Q: Could you elaborate on the trends in the North American market, particularly regarding inventory levels and mix changes? A: Inventory levels among operators are fairly balanced. We expect more services and rollout activities to contribute to revenue. While there may be quarterly margin shifts, we anticipate stable development for the full year. Q: How do you see 5G standalone and AI investments impacting your business and product mix? A: 5G standalone is crucial for low latency and high-speed applications, but deployments are still limited. AI is fundamental for network operations and efficiency. We expect AI to drive traffic and connectivity needs as applications move to the edge. Q: What opportunities do you see in defense and 5G for such areas? A: There is substantial potential for 5G technology in defense, as it can connect equipment and sensors. We are engaged in discussions globally and have launched the Ericsson Federal Technology Group in the US. Mission-critical applications for first responders also present significant opportunities. Q: What measures are you taking to mitigate tariff impacts, and are there plans to realign your supply chain? A: We are preparing for potential changes but have not made firm decisions due to uncertainty. We are exploring options to adjust our supply chain and have already built a factory in the US to increase flexibility. Q: Can you elaborate on your confidence in gaining market share, particularly in the North American market? A: We are focusing on strengthening our position in key markets like the US, India, and Japan. Investments in local R&D and manufacturing facilities are part of our strategy to enhance market presence and competitiveness. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Yahoo
2 days ago
- Business
- Yahoo
Telefonaktiebolaget L M Ericsson (ERIC) Q2 2025 Earnings Call Highlights: Navigating Growth ...
Organic Sales Growth: 2% year-over-year. Gross Margin: 48%, up from 43.9% in Q2 last year. EBITA Margin: 13.2%, a three-year high. Net Sales: SEK 56.1 billion, with a reported decline of 6% due to currency impact. IPR Revenue: Increased to SEK 4.9 billion from SEK 3.2 billion in Q1. Operating Expenses: SEK 20 billion, around SEK 3 billion lower than last year. Free Cash Flow Before M&A: SEK 2.6 billion. Networks Sales: Decreased by 5% year-on-year to SEK 35.7 billion. Networks Adjusted Gross Margin: 49.5%. Cloud and Software Services Sales: Declined by 5% year-on-year to SEK 14.4 billion. Enterprise Sales: Decreased by 14%, with organic sales down 6%. Net Cash: Decreased by SEK 2.6 billion compared to the previous quarter. Warning! GuruFocus has detected 4 Warning Sign with ERIC. Release Date: July 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) reported a 2% organic sales growth in Q2 2025, with significant contributions from the Americas and IPR segments. The company achieved a three-year high in EBITA margin at 13.2%, demonstrating strong execution against operational and strategic priorities. Gross margin improved to 48%, with broad-based margin improvements across all segments. The company successfully signed up all three operators in Japan for its joint venture Aduna, expanding its market coverage. Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) is investing in AI and 5G stand-alone networks, which are expected to drive future growth and innovation in connectivity solutions. Sales in Southeast Asia, Oceania, and India decreased by 22% year over year, primarily due to temporary pauses in network investments in India. The company faced a negative currency impact of SEK4.7 billion due to the strengthening of the Swedish krona against the US dollar and other currencies. Sales in Northeast Asia declined by 15%, attributed to reduced customer investments in some 5G front-runner markets. Free cash flow before M&A was SEK2.6 billion, down compared to last year, partly due to lower inventory levels and completion of large-scale rollout projects. Restructuring costs are expected to remain elevated during the year, impacting overall financial performance. Q: Can you explain the dynamics behind the robust gross margin guidance for the network's business in the next quarter? Are there specific deals or mix shifts contributing to this? A: The margin outlook is based on the current product and market mix, not related to IPR. It's more about the underlying margins we see coming into the quarter. We don't have high expectations for India in Q3 due to the temporary pause in investments. Q: How do you see operating expenses (OpEx) trending for the rest of the year? A: The cost reduction activities from the past year are now reflected in our OpEx. We expect a similar level of OpEx in the second half of the year, with some seasonality potentially leading to higher costs. It takes time for cost reductions to fully impact the numbers. Q: Can you provide more details on the tariff-related effects during the quarter and expectations for Q3? A: The impact of tariffs was around 1 percentage point, slightly lower than expected. We anticipate similar levels going forward, given current information. We are preparing for potential changes but have not made any major investment decisions yet. Q: Could you elaborate on the trends in the North American market, particularly regarding inventory levels and mix changes? A: Inventory levels among operators are fairly balanced. We expect more services and rollout activities to contribute to revenue. While there may be quarterly margin shifts, we anticipate stable development for the full year. Q: How do you see 5G standalone and AI investments impacting your business and product mix? A: 5G standalone is crucial for low latency and high-speed applications, but deployments are still limited. AI is fundamental for network operations and efficiency. We expect AI to drive traffic and connectivity needs as applications move to the edge. Q: What opportunities do you see in defense and 5G for such areas? A: There is substantial potential for 5G technology in defense, as it can connect equipment and sensors. We are engaged in discussions globally and have launched the Ericsson Federal Technology Group in the US. Mission-critical applications for first responders also present significant opportunities. Q: What measures are you taking to mitigate tariff impacts, and are there plans to realign your supply chain? A: We are preparing for potential changes but have not made firm decisions due to uncertainty. We are exploring options to adjust our supply chain and have already built a factory in the US to increase flexibility. Q: Can you elaborate on your confidence in gaining market share, particularly in the North American market? A: We are focusing on strengthening our position in key markets like the US, India, and Japan. Investments in local R&D and manufacturing facilities are part of our strategy to enhance market presence and competitiveness. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
The Hindu
2 days ago
- Business
- The Hindu
Draft procurement rules pit domestic telecom firms against foreign players that manufacture in India
Indian telecom equipment manufacturers are growing concerned about the sops being handed out to foreign telecom equipment manufacturers as global firms set up domestic assembly to deepen access to the country's growing telecom infrastructure. The dispute is playing out in meetings with the Department of Telecommunications, which is being asked to weigh two priorities: to increase domestic manufacturing by global firms like Ericsson, and to promote the growth of indigenous firms that eventually hope to compete with these companies. One sticking point has been foreign telecom gear makers like Ericsson's potential qualification as Class 2 suppliers under the 2017 Make in India procurement order, which guides government organisations to accept bids from manufacturers whose products are, to varying degrees, assembled and manufactured in India. The foreign firms are also seeking duty exemptions and relaxation for components that are either not made in India or made in a very small quantity. Since the majority of such components come in from China, domestic players have spied an opportunity to press their case in meetings in June with the DoT. The telecom department has issued de facto curbs against Chinese equipment across much of Indian telecom operators' infrastructure in the past. A key development has been draft changes underway at the DoT to 'local content rules for the telecom sector' under the 2017 public procurement rules that encourage domestic manufacturers, Ajay Srivastava, a former senior trade official and the founder of the Delhi-based Global Trade Research Initiative said in a June memo. 'Multiple reports [from NITI Aayog and a clutch of industry associations] indicate that India's limited component ecosystem poses challenges in achieving 50–60% local content in electronic/telecom products,' the DoT said in its June 3 notice, inviting firms to comment on the proposed changes. 'Recognising this constraint, the conditions for local content qualification also requires a review.' 'Multinational corporations (MNCs) like Cisco and Ericsson are lobbying India's DoT to ease local content requirements, as they struggle to qualify as Class-I local suppliers for government telecom tenders,' Mr. Srivastava said. 'The underlying issue is that most of the work performed in India is done on an outsourcing basis for their foreign parent companies. The parent companies retain ownership of intellectual property (IP) and earn the bulk of profits. For instance, Cisco's India operations follow a low-cost-plus model, earning a profit margin of only 5–10%, while the global Cisco business enjoys margins of around 65%. In practice, design and R&D work done in India is treated as work-for-hire, with profits and IP rights controlled by the foreign headquarters.' One senior industry executive told The Hindu that a possible solution could be 'differentiated credit systems where higher weight is given to Indian-owned IP and designs, domestic fabrication of critical components, and in-country software with IP assignment to Indian entities.' The executive asked not to be named as discussions are ongoing with the DoT.
Time of India
3 days ago
- Business
- Time of India
Ericsson India sale drops 32.5 per cent to $230 million in Q2 2025
Swedish telecom gear maker Ericsson has posted a 32.5 per cent decline in net sales in India to USD 230 million (about Rs 1,974 crore) due to telecom operators holding back on new investments in the communication network. The company's net sales in India stood at around USD 341 million a year ago, representing 6 per cent of its global sales, according to data shared in the second-quarter performance report. "Sales in India were weak, as operators held back on new network investments," the report said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Join new Free to Play WWII MMO War Thunder War Thunder Play Now Undo India continues to be a leading market for Ericsson in terms of contribution to the total sales. Ericsson reported a decline of 6 per cent in total sales to 56.1 billion Swedish Krona (SEK) or USD 5.9 billion. Live Events Sales in India contributed 4 per cent to the total, which comes to around USD 230 million, about Rs 1,974 crore. It reported a 28 per cent decline on a year-over-year basis in South East Asia, Oceania and India region to 5.5 billion SEK or about USD 578 million. "Network sales declined, primarily due to reduced network investment levels in India, as well as increased competition in Southeast Asia. Cloud Software and Services sales declined, reflecting the timing of project deliverables," the report said. During the quarter, Ericsson bagged a multi-year network operations centre managed services contract from Bharti Airtel .
Free Malaysia Today
3 days ago
- Business
- Free Malaysia Today
Currency headwinds wipe out Ericsson's sales gain
Ericsson shares shed more than 3% in morning trading in Stockholm and are down more than 17% from the start of the year. (EPA Images pic) STOCKHOLM : Swedish telecommunications equipment manufacturer Ericsson said today that it swung into profit in the second quarter (Q2), but the strong krona wiped out sales gains. The company, a pioneer in building the equipment that run mobile phone networks along with Finnish rival Nokia, said it earned a net profit of SEK4.6 billion (US$479 million) in Q2 compared to a US$1.0 billion loss in the same period last year due to writing down the value of a US investment. However, net sales, which were converted into Swedish krona, slid 6% to SEK56.1 billion. The SEK3.7 billion drop in revenue was less than the estimated SEK4.7 billion impact from the higher value of the krona relative to other currencies, in particular the US dollar. While investors are looking at how companies are coping with the US tariffs, the drop in the value of the dollar versus most currencies is also putting pressure on firms. 'It is encouraging that Americas' growth continues, and that Europe has stabilised,' Ericsson chief executive Borje Ekholm said. Sales in the Americas region – Ericsson's largest market – were flat in krona terms but rose 10% when correcting for currency effects and discontinued business. European sales dipped 1% after stripping out currency fluctuations and other changes. Meanwhile the company said its adjusted operating profit hit a three-year high due cost-cutting measures. 'We have structurally lowered our cost base and are strongly focused on delivering further efficiencies,' said Ekholm. Ericsson shares shed more than 3% in morning trading in Stockholm, and are down more than 17% from the start of the year.
