Ericsson braces for component cost hit after third-quarter profit beat

STOCKHOLM, Oct 15 : Telecom gear maker Ericsson on Thursday reported a smaller-than-expected drop in third-quarter core profit as efficiency measures helped offset higher component costs, but warned that such costs would affect margins next year. 

• Operating profit before amortisation and restructuring costs was 10.1 billion crowns ($1.01 billion) against a year-earlier 15.8 billion and a mean forecast of 7.87 billion in a poll of analysts provided by Ericsson

• The Swedish group said component costs rose in the quarter

• “Looking ahead, the RAN (Radio Access Network) market is flat, geopolitical uncertainty remains elevated and component costs are a headwind to gross margin,” new CEO Per Narvinger said in a statement

• Ericsson in July warned it was under pressure from rising memory chip costs due to surging AI demand

• Adjusted EBITA margin narrowed to 17.0 per cent from 28.1 per cent against a forecast 14.2 per cent

• Organic sales rose 7 per cent to 59.5 billion crowns, beating a forecast 55.4 billion and Ericsson said sales in North America increased slightly supported by project phasing