Ericsson 1Q Net Profit Beat Views as 5G Network Sales Offset Lower Royalties

    By Dominic Chopping 
 

STOCKHOLM--Ericsson AB on Wednesday posted forecast-beating first-quarter net profit as growing sales of its fifth-generation network gear offset lower intellectual property royalties due to a previously announced patent lawsuit with Samsung Electronics Co.

The telecommunications equipment company reported first-quarter net profit attributable to shareholders of 3.19 billion Swedish kronor ($378.2 million) compared with SEK2.16 billion for the year-earlier period.

Sales edged 0.1% higher to SEK49.78 billion.

Analysts polled by FactSet had expected net profit of SEK2.87 billion on sales of SEK52.66 billion.

Ericsson had previously warned delayed royalty payments and legal costs from the Samsung litigation could cost the company between SEK1 billion and SEK1.5 billion a quarter.

Sales of network equipment rose 15% on year, on an adjusted basis, with the company witnessing double-digit growth in all regions except the Middle East and Africa, where the Covid-19 impact continued to weigh on operators' investment levels, it said.

Gross margin at Ericsson's networks unit rose to 46.1% from 44.4%.

The company said it continued to grow market share with strong order intake, while measures to protect its supply chain have been able to manage the global semiconductors shortage situation without any impact to customer deliveries.

"There is strong momentum in the global 5G demand with lead markets moving forward at high pace," Chief Executive Borje Ekholm said.

"To that end we continue to invest in further strengthening our portfolio and growing our global footprint," Mr. Ekholm said.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

April 21, 2021 01:59 ET (05:59 GMT)

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