Ericsson's Q4 Profit Takes Hit Due To Cloud Strategy Adjustments; Goes Cautious On Q1 Amid Macro Headwinds

Anusuya Lahiri
1 min read
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In this article:

  • Ericsson (NASDAQ: ERIC) reported a fourth-quarter FY22 sales growth of 21% year-on-year to SEK 86 billion.

  • Group organic sales grew by 1% Y/Y, driven by IPR Networks.

  • It reported an EPS of SEK 1.82 versus SEK 3.02 last year.

  • Adjusted gross margin contracted 200 basis points to 41.5% due to business mix changes in Networks and charges for contract exits and portfolio adjustments in Cloud Software and Services.

  • Also Read: Why Ericsson Stock Is Gaining Today

  • Adjusted EBIT margin declined by 790 bps to 9.4% as the adjusted EBIT declined 34% Y/Y after some of its major customers for 5G networks pulled back on spending amid an uncertain economic environment, Bloomberg reports.

  • Adjusted EBITA declined 27% Y/Y to SEK 9.3 billion.

  • Ericsson anticipates declining margins in Networks during the first half of 2023 due to changing business mix.

  • In Q1, Ericsson expects the EBITA to be somewhat lower than EBITA last year, with improvements during the year.

  • CEO Börje Ekholm said, "As we said during our Capital Markets Day, there are near-term uncertainties, however, we are still in the early phase of global 5G rollout and widespread enterprise digitalization."

  • Price Action: ERIC shares closed lower by 1.66% at $5.93 on Thursday.

  • Photo Via Wikimedia Commons

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