In This Article:
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Net Sales: SEK 55 billion, with a 3% reported increase including a currency benefit of SEK 1.8 billion.
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Gross Margin: 48.5%, up from 42.7% last year.
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EBITA Margin: 12.6%, supported by increased gross income.
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Operating Expenses: SEK 20.5 billion, flat compared to the prior year.
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Cash Flow: SEK 2.7 billion, a slight decline compared to last year.
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Networks Sales: SEK 35.6 billion, with a 6% year-on-year increase.
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Networks Gross Margin: 51%, benefiting from product and market mix.
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Networks EBITA: SEK 7.5 billion, with a significant year-on-year margin increase to 21%.
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Cloud Software & Services Gross Margin: 39.9%, benefiting from a higher software share.
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Enterprise Sales: Decreased by 1%, with organic sales down 7%.
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Free Cash Flow: SEK 2.7 billion before M&A.
Release Date: April 15, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) reported a strong gross margin of 48.5% for Q1 2025, an improvement from 42.7% the previous year.
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The company achieved an EBITA margin of 12.6%, supported by increased gross income.
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Sales in the Americas market area increased by 20% year-over-year, with strong growth in North America.
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The Cloud Software and Services segment reported its first positive first quarter ever, indicating progress in strategic priorities.
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Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) announced new partnerships to accelerate the development of programmable networks, enhancing its leadership in mobile networks.
Negative Points
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Sales in Europe, Middle East, and Africa declined by 7% year-over-year, with Europe remaining stable but offset by declines in other regions.
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Sales in Southeast Asia, Oceania, and India decreased by 17% year-over-year due to normalized operator investment levels in India.
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The company faces intense competition from Chinese vendors, particularly impacting sales in Latin America.
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The macroeconomic environment and tariffs are creating uncertainties that could affect customer behaviors and investment decisions.
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Telefonaktiebolaget L M Ericsson (NASDAQ:ERIC) experienced a decline in free cash flow to SEK 2.7 billion, partly due to seasonal payments and early payments in Q4.
Q & A Highlights
Q: Could you elaborate on how tariffs are impacting your business and whether there is any inventory build-up happening ahead of these tariffs? A: Lars Sandstrom, CFO, explained that the impact is connected to the material flow, including direct components and site materials. Ericsson has diversified production across various regions to build resilience. There was some inventory build-up in Q1 to handle the situation, but no significant impact is expected from customer perspectives.