Ericsson Net Profit Beats Despite China Sales Drop and Supply-Chain Issues

By Dominic Chopping

STOCKHOLM--Ericsson AB on Tuesday posted a third-quarter net profit that beat expectations, as strong sales of 5G equipment in North America, Europe and Latin America helped offset a hefty sales decline in mainland China.

The telecommunications-equipment company reported second-quarter net profit attributable to shareholders of 5.75 billion kronor ($665 million) compared with SEK5.35 billion for the year-earlier period.

Sales slipped 2.1% to SEK56.26 billion after the heavy sales fall in mainland China as well as some supply-chain disturbances late in the third quarter which will continue to pose a risk, it said.

Analysts polled by FactSet had expected net profit of SEK4.86 billion on sales of SEK58.3 billion.

Ericsson previously warned that Sweden's ban on using certain Chinese gear in the country could see the company face retaliation, and it said Tuesday that mainland China sales within networks and digital services fell by SEK3.6 billion on the year.

"As a consequence of the reduced market share in mainland China we are planning to resize our sales and delivery organization in the country, starting in the 4Q, adding to our restructuring charges," Chief Executive Borje Ekholm said.

Overall sales of network equipment fell 3% on the year.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

October 19, 2021 02:01 ET (06:01 GMT)

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