By Olivier Sorgho
(Reuters) -Ericsson mentioned on Tuesday it expects gross sales to stabilise within the second half of 2024 amid indicators some prospects wish to spend once more, because the telecoms tools maker beat first-quarter revenue forecasts helped by a one-off achieve.
The Swedish group pointed to current contract wins and normalising buyer stock ranges in North America.
Nonetheless, it additionally predicted the 5G Radio Entry Community (RAN) market would maintain falling a minimum of via the top of the yr.
“There’s nonetheless uncertainty out there, and that we attempt to spotlight as effectively,” chief monetary officer Lars Sandström instructed Reuters.
Telecoms tools makers like Ericsson and rival Nokia have been hit by a drop in spending by prospects on 5G tools amid excessive rates of interest and an unsure financial outlook.
Ericsson’s working revenue excluding restructuring costs rose unexpectedly to 4.3 billion Swedish crowns ($394.4 million) within the first quarter from 4.0 billion crowns a yr earlier, regardless of a 15% gross sales drop. Analysts polled by LSEG had on common forecast a decline in revenue to 1.7 billion crowns.
The revenue included a one-off achieve of 1.9 billion crowns associated to the decision of a industrial dispute, Ericsson mentioned.
Analyst Paolo Pescatore at PP Foresight wrote on X that the outcomes marked “one other extraordinarily difficult quarter for Ericsson,” and this was anticipated to proceed into 2025 on account of funding cuts amongst telecom corporations.
Ericsson in January predicted markets outdoors China would maintain weakening this yr and introduced new layoffs in March, having slashed prices and shed hundreds of jobs in 2023 as gross sales slowed after years of excessive demand for 5G gear.
“There will probably be extra (lay-offs),” Sandström mentioned, including {that a} “massive portion” of Ericsson’s full-year restructuring prices of 3-4 billion crowns could be associated to job cuts.
The corporate forecast a gross margin excluding restructuring costs at its Networks division of 42%-44% for the second quarter. Within the first quarter it was 44.3%.
“Within the second half, our margins ought to profit from improved enterprise combine,” it added.
($1 = 10.9026 Swedish crowns)
(Reporting by Olivier Sorgho in Gdansk Modifying by Terje Solsvik and Mark Potter)
Disclaimer: This report is auto generated from the Reuters information service. ThePrint holds no responsibilty for its content material.
