Ericsson AB beat second-quarter earnings forecasts, as growth in India helped offset weak sales in more established markets like the U.S.
The Swedish maker of mobile networks reported adjusted earnings before interest and taxes in the period of 2.8 billion kronor ($274 million), excluding restructuring charges, it said in a statement Friday. That compares with an average estimate of 2.6 billion kronor among analysts polled by Bloomberg.
Equipment makers are struggling as the global market for the radio access networks, the gear that handles mobile communications, is expected to stagnate in coming years. The RAN market’s compound growth rate is projected to decline by 1% annually over the next five years, although less developed markets will perform better, according to a Dell’Oro Group forecast published Thursday.
“In Networks, we saw strong execution with record build-out speed in India,” Chief Executive Officer Borje Ekholm said in the statement. “Sales growth in India partly offset the expected softening we saw in other markets, notably in North America, where build-out pace moderated and customer inventory levels were reduced.”
Read More: Global Mobile Networks Market Is Forecast to Shrink Through 2027
Net sales grew by 3% to 64.4 billion kronor, while Ericsson posted a net loss of 600 million kronor, primarily due to restructuring charges.
The company said it expects third-quarter Ebita margin will be in line with or slightly higher than last quarter, and it maintained its target of reaching the low end of its 15-18% target in 2024. The early impact of Ericsson’s 11 billion-kronor cost-cutting plan announced in February will be seen in the current period, according to the statement.
Inventory corrections at US carriers remained a factor in the period, according to Chief Financial Officer Carl Mellander.
“They are continuing to reduce their inventory and therefore buying less equipment from us, but it is flattening out,” Mellander said in an interview. Sales are likely to recover there to normal levels by the fourth quarter, he added.
(Updates with CEO comments, details starting from fourth paragraph)
