Ericsson sales dip 14% in Q1 due to 19% drop in Networks business

Ericsson has revealed that its sales fell 14 percent to SEK 53.3 billion in the first quarter of 2024, due to a 19 percent decline in Networks business.
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India is the second largest telecom market for Ericsson. The Sweden-based telecom equipment maker said it concluded an intense 5G roll-out phase in India. Both Reliance Jio and Bharti Airtel are using 5G equipment from Ericsson.

Ericsson has generated 37 percent of its first-quarter revenue from the United States, 10 percent from India, 4 percent from China, 4 percent from the United Kingdom and 3 percent from Japan.

The number of employees at Ericsson fell to 99,140 in March 2024 from 99,952 at the end of December, 2023.

Ericsson has generated SEK 33.7 billion (down 21 percent) from Networks in Q1.

The decline in Networks sales was most pronounced in market area South East Asia, Oceania and India, with a decrease of 42 percent. This was primarily due to a reduction in Capex investments in India, after record-high investment levels in 2023, as well as a decrease in sales in the Philippines and Malaysia due to timing of project milestones in Q1 2023.

Ericsson’s Networks sales in North America declined 23 percent, reflecting lower level of 5G Capex. Ericsson’s Networks sales increased in market area Middle East and Africa, driven by a second wave of 5G investments across several markets.

Ericsson’s sales from Cloud Software and Services decreased 2 percent to SEK 13 billion due to a decline in Managed Network Services as a result of descoping and contract exits. Sales grew in North America and were stable in Europe and Latin America.

Ericsson’s sales from Enterprise business increased 1 percent to SEK 6 billion with growth in Enterprise Wireless Solutions offset by lower Global Communications Platform sales.

EXPECTS DROP IN SALES

Research firm Dell’Oro estimates the global RAN equipment market will decline by 4 percent in 2024.

Ericsson is not expecting growth in business during the current year. “We expect a further decline in the RAN market, at least through the end of this year, as customers remain cautious with their investments and the pace of investment in India continues to normalize,” Ericsson CEO Borje Ekholm said during an analyst call.

“If current trends persist, we expect our sales to stabilize during the second half of the year, benefiting from recent contract wins and the normalization of customer inventory levels in North America. In Q2, we expect Networks gross margin to be in the range of 42-44 percent. In the second half, our margins should benefit from improved business mix,” Borje Ekholm said.

Baburajan Kizhakedath