Ericsson net profit falls 12 percent as telecom equipment sales slide
Swedish telecoms giant Ericsson reported a 12 percent drop in net profit, highlighting the ongoing structural challenges facing European network equipment suppliers amid sluggish 5G adoption and rising component costs.
Ericsson has reported a 12 percent decline in net profit, with quarterly turnover falling to 52.7 billion kronor, or 4.8 billion euros. The Swedish telecommunications equipment maker attributed the revenue drop to unfavourable exchange rate movements and the absence of one-off licence income that boosted figures a year earlier.
Operating profit slipped 7 percent to 5.9 billion kronor, missing the 6.3 billion kronor consensus forecast expected by market analysts. The Swedish group has been grappling with soaring semiconductor prices, driven in part by surging artificial intelligence demand, which first began to pressure margins during the first quarter.
Chief executive Börje Ekholm, who will step down in October after a decade in charge, stated that the group has already implemented measures to mitigate these rising component costs over the recent quarter. He indicated that Ericsson will continue to adjust its pricing strategies in the coming quarters to offset these persistent financial pressures.
Structural headwinds for European telecoms
The latest results underscore a prolonged period of difficulty for European telecoms equipment manufacturers trying to maintain growth. The global roll-out of 5G networks has consistently failed to meet initial industry expectations, while previous rapid expansion in key growth markets such as India has now noticeably levelled off.
For investors, the missed earnings forecast signals that pricing power remains a critical battleground as supply chain costs remain elevated. The company’s ability to navigate this transition will be closely watched, especially as it attempts to reassure markets of its future viability in a shifting technological landscape.
Despite these immediate macroeconomic headwinds, Ericsson insists it has strengthened its product portfolio to capitalise on the next wave of AI-based connectivity. This strategic pivot mirrors the approach of its Finnish rival Nokia. It also follows a difficult year for the company’s workforce, which saw 1,600 job cuts in Sweden announced earlier this year amid a broader restructuring of its 90,000 global employees.
