Ericsson tops forecasts on 5G boom
30 January, 2021
Ericsson beat fourth-quarter key earnings forecasts on Friday, helped by strong sales of 5G equipment and the ban on Chinese rival Huawei in a number of countries.
Besides selling even more, the Swedish company can be earning even more from each sales, with gross margins soaring to 40.6 % in the quarter from 36.8 % a year earlier.
Specifically, the core Networks business saw margins at 43.5 per cent from 41.1 % a year earlier, on a 20 % rise in sales.
"The competition in our industry is definitely cut-throat and the secret is to be prior to the cost curve," chief monetary officer Carl Mellander explained.
“Most of the funds we invest in R&D [exploration and development] not only switches into making better features and features, but also to lessen the price structure."
The business said its operating margin of 12.5 % in 2020 reached the 2022 group target selection of 12 % to 14 % two years early.
"The 2022 goals are simply also low," said Christer Gardell, co-founder of Ericsson shareholder Cevian Capital. "Ericsson provides a lot more to give."
The business's quarterly adjusted operating earnings rose to 11 billion Swedish crowns ($1.3bn) from 6.5bn crowns a year previous, beating analysts' mean forecast of 8.6bn crowns, according to Refinitiv estimates.
Total earnings rose 5 % to 69.6bn crowns, beating estimates of 68.3bn crowns.
"This reflects continued excessive activity levels found in North America and North East Asia and in addition found in Europe where we additional increased the marketplace share," leader Borje Ekholm said.
North East Asia includes China, where Ericsson, unlike Nordic rival Nokia, got 5G radio equipment contracts from China's three major telecom operators.
Nokia will report revenue next week.