Ericsson Cautions on Falling Sales in China

By Dominic Chopping

STOCKHOLM--Ericsson AB on Friday announced an $8.3 billion multiyear 5G deal from Verizon Communications Inc. as it posted a second-quarter net profit that beat expectations, but cautioned that delayed 5G deployments in mainland China weighed on sales.

The telecommunications-equipment company reported second-quarter net profit attributable to shareholders of 3.68 billion kronor ($424.6 million) compared with SEK2.45 billion for the year-earlier period.

Sales slipped 1.1% to SEK54.94 billion after sales in mainland China fell by SEK2.5 billion in the quarter.

Analysts polled by FactSet had expected net profit of SEK3.58 billion on sales of SEK57.26 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 Friday that it is now "prudent to forecast a materially lower market share in mainland China for networks and digital services."

Sales of network equipment rose 11% on year, on an adjusted basis, with the company having continued high activity levels in most markets, while gross margin at the unit rose to 47.9% from 40.5%.

The company said through proactive and continuous measures for supply-chain resilience, it has accelerated production to meet customer demand.

Ericsson said it now expects the global radio access network equipment market to grow by 10% in 2021, from 3% previously.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

July 16, 2021 02:02 ET (06:02 GMT)

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