Swedish telecommunications company Ericsson has reported a 12 percent decrease in net profit for the second quarter, bringing the total to 4.1 billion kronor, or 370 million euros. The decline was largely driven by a 6 percent drop in sales and an increase in component costs.
Turnover for the period fell to 52.7 billion kronor, equivalent to 4.8 billion euros. The company attributed this performance to unfavorable exchange rate movements and the absence of one-off license income that had bolstered revenue in the same period last year. Operating profit also saw a 7 percent decline, reaching 5.9 billion kronor, which fell short of the 6.3 billion kronor consensus forecast previously anticipated by analysts.
CEO Börje Ekholm, who is scheduled to step down in October after a decade at the helm, stated that the company implemented measures to mitigate rising component costs during the quarter. He noted that the group intends to continue adjusting pricing in upcoming quarters to offset these financial pressures. The group had already suffered during the first quarter from soaring semiconductor prices, due in part to AI-linked demand.
The broader telecommunications equipment sector has faced significant pressure for several years, as the global rollout of 5G technology has not met initial expectations. Additionally, growth in the Indian market, which has long served as a key area of expansion for the industry, has now leveled off. Earlier this year, in response to these market conditions, Ericsson announced plans to cut 1,600 jobs in Sweden as part of its efforts to manage a global workforce of 90,000 employees.
Despite the current downturn, the company maintains a positive long-term outlook. Similar to its Finnish competitor Nokia, Ericsson stated that it has strengthened its portfolio to capitalize on the next wave of AI-based connectivity.
