Ericsson’s Revenue Decline in the First Quarter

Swedish telecommunications equipment manufacturer Ericsson reported on Tuesday a sharp decline in revenue in the first quarter, highlighting weaker demand in Asia and North America.

In the period from January to March, Ericsson’s net revenue was down 15 percent compared to the same period last year, sliding to 53.33 billion Swedish kronor (4.61 billion euros).

In the key network equipment division, revenue decreased by 19 percent, reflecting reduced investments by telecommunications companies. In 2023, it had dropped by 11 percent, with a halved performance in North America.

The most significant decline at the beginning of the year was in net revenue in Southeast Asia, Oceania, and India, down 38 percent. A significant decline was also recorded in North America, down 18 percent.

Net profit, however, surged in the first quarter by 66 percent to 2.6 billion Swedish kronor. The company stated that it recorded a one-time revenue of 1.9 billion kronor in the first quarter, highlighting the resolution of a legal dispute.

When excluding restructuring costs, earnings before interest and taxes (EBIT) rose by seven percent to 4.3 billion kronor.

This year, Ericsson expects restructuring costs in the range of 3.0 billion to 4.0 billion Swedish kronor.

In January, Chief Financial Officer Carl Mellander announced that costs would be reduced this year as well, adding that measures could include layoffs. At the end of March, they announced that they would lay off about 1,200 employees in their home country of Sweden.

About a year ago, the Swedish company announced that it would globally eliminate around 8,500 jobs, including about 1,400 in Sweden. According to data from the 2023 earnings report, they reduced the number of employees by 5,500, of which about 500 were in Sweden.

Telecommunications equipment suppliers expect a challenging year due to declining sales in North America and possible slower growth in India.

Ericsson anticipates further declines in the RAN 5G network market, at least until the end of the year, as customers remain cautious in their investments. They also highlight the ongoing “normalization” of capital expenditure in India.

If current trends continue, the Swedish company expects revenue stabilization during the second half of the year, thanks to new contracts and stabilization of client inventories in North America.