Ericsson Q2 profit beats expectations, but US tariffs crimped margin growth
Ericsson's shares fell 3% in early trading after the result.
Operating profit excluding restructuring charges was 7.0 billion crowns ($728.5 million) against a year-earlier loss of 11.9 billion and a mean forecast of 6.1 billion in an LSEG poll of analysts.
"We have structurally lowered our cost base and are strongly focused on delivering further efficiencies," CEO Borje Ekholm said in a statement.
U.S. tariffs hampered growth in its profit margins, the company said. President Donald Trump on Saturday threatened to impose a 30% tariff on imports from the European Union starting on August 1.
"With production in many parts of the world, including in North America, we will try to balance production, given the development with tariffs," Sandström said. "But of course, we cannot guarantee that we are immune to tariffs."
Ericsson missed sales growth estimates, with quarterly group sales, which included a currency headwind of 4.7 billion crowns, falling 6% to 56.1 billion crowns against a mean forecast of 59.3 billion in the poll. Organic sales, however, grew 2%.
The company said sales growth was strongest in its largest market, North America, offsetting slowdowns in markets such as India.
Business in the U.S. continues to benefit from a solid pace of investments by mobile operators, CFO Lars Sandström told Reuters.
He added that he expects the Indian market to pick up soon.
Growth in the U.S. has helped Ericsson's profit margin, which stood at 47.5%, a jump from 43.1% in the year-earlier period when sales were higher in low-margin markets such as India.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
20 minutes ago
- Reuters
Oil rises as demand hopes and economic data lift sentiment
July 17 (Reuters) - Oil prices rose in early trade on Thursday, reversing the previous session's losses, buoyed by stronger-than-expected economic data from the world's top oil consumers and signs of easing trade tensions. Brent crude futures rose 27 cents, or 0.39%, to $68.79 a barrel at 0000 GMT. U.S. West Texas Intermediate crude futures were up 31 cents, or 0.47%, at $66.69. Both benchmarks fell more than 0.2% in the previous session. U.S. crude inventories fell by 3.9 million barrels to 422.2 million barrels last week, the Energy Information Administration said on Wednesday, a steeper decline than forecasts for a 552,000-barrel draw, suggesting stronger refinery activity, tighter supply, and increased demand. There is "some support from the favorable margin environment associated with the refining sector. Product spreads remain relatively wide in all the regions," said John Paisie, president of Stratas Advisors. However, larger-than-expected builds in gasoline and diesel inventories capped price gains. The U.S. central bank's latest snapshot of the economy, released on Wednesday, showed activity picked up in recent weeks. However, the outlook was "neutral to slightly pessimistic" as businesses reported that higher import tariffs were putting upward pressure on prices. China data showed growth slowed in the second quarter, but not by as much as previously feared, in part because of front-loading to beat U.S. tariffs, easing fears over the state of the world's largest crude importer's economy. The data also showed that China's June crude oil throughput was up 8.5% from a year ago, implying stronger fuel demand. Additionally, "support has come from the positive news pertaining to some easing of trade tensions between China and the U.S. with President Trump lifting the ban on the sale of AI chips to China along with the announcement of a trade deal with Indonesia," John Paisie added. U.S. President Donald Trump offered fresh optimism about the prospects of a deal with Beijing on illicit drugs. He also hinted that a trade deal with India is very close, while an agreement could possibly be reached with Europe as well. Trade tariffs could slow down global economic growth, and in turn dampen fuel demand, putting downward pressure on prices.
Reuters
20 minutes ago
- Reuters
Fed's Williams won't comment on Trump attacks on central bank
NEW YORK, July 16 (Reuters) - Federal Reserve Bank of New York President John Williams declined on Wednesday to comment on President Donald Trump's attacks on the central bank and what it might mean if the president were to somehow remove the Fed's leader from office. 'I can't comment' on what the president has said and how markets reacted, Williams told reporters. He was commenting on reports from earlier in the day that suggested Trump was close to firing Fed Chairman Jerome Powell, even as the president later said that was not something he was planning to do. Williams reiterated that an independent central bank delivers better results and noted that in his experience Fed officials and staff maintain a 'laser like' focus on the central bank's mission. Williams also told reporters that amid a drop in the dollar's value, its status as the preeminent reserve currency remains unchanged. 'There are a lot of fundamental factors that support the role of the dollar … in global trade and in global financial markets, and that I see is unchanged now.'
The Guardian
35 minutes ago
- The Guardian
Meta shareholders sue Zuckerberg, Thiel and Sandberg for $8bn over FTC fines
An $8bn trial brought by Meta Platforms shareholders against Mark Zuckerberg and other current and former company leaders kicked off on Wednesday over claims they illegally harvested the data of Facebook users in violation of a 2012 agreement with the US Federal Trade Commission (FTC). The trial started with a privacy expert for the plaintiffs, Neil Richards of Washington University School of Law, who testified about Facebook's data policies. 'Facebook's privacy disclosures were misleading,' he told the court. Jeffrey Zients, White House chief of staff under Joe Biden and a Meta director for two years starting in May 2018, is expected to take the stand later on Wednesday in the non-jury trial before Kathaleen McCormick, chief judge of the Delaware chancery court. The case will feature testimony from Zuckerberg and other billionaire defendants including the former chief operating officer Sheryl Sandberg, venture capitalist and board member Marc Andreessen, and former board members Peter Thiel, Palantir Technologies co-founder, and Reed Hastings, co-founder of Netflix. A lawyer for the defendants, who have denied the allegations, declined to comment. McCormick, the judge who rescinded Elon Musk's $56bn Tesla pay package last year, is expected to rule on liability and damages months after the trial concludes. The case began in 2018, following revelations that data from millions of Facebook users was accessed by Cambridge Analytica, a now defunct political consulting firm that worked for Donald Trump's successful US presidential campaign in 2016. The FTC fined Facebook $5bn in the wake of the Cambridge Analytica scandal, saying the company had violated a 2012 agreement to protect user data. Shareholders want the defendants to reimburse Meta for the FTC fine and other legal costs, which the plaintiffs estimate total more than $8bn. In court filings, the defendants described the allegations as 'extreme' and said the evidence at trial will show Facebook hired an outside consulting firm to ensure compliance with the FTC agreement and that Facebook was a victim of Cambridge Analytica's deceit. Meta, which is not a defendant, declined to comment. On its website, the company has said it has invested billions of dollars into protecting user privacy since 2019. The lawsuit is considered the first of its kind to go to trial that alleges that board members consciously failed to oversee their company. Known as a Caremark claim, such lawsuits are often described as the hardest to prove in Delaware corporate law. However, in recent years, Delaware courts have allowed a growing number of these claims to proceed. Boeing's current and former board members settled a case with similar claims in 2021 for $237.5m, the largest ever in an alleged breach of oversight lawsuit. The Boeing directors did not admit to wrongdoing. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion The Meta trial comes four months after Delaware lawmakers overhauled the state's corporate law to make it harder for shareholders to challenge deals struck with controlling shareholders such as Zuckerberg. The bill, which did not address Caremark claims, was drafted after the state's governor met with representatives of Meta. Most publicly traded companies are incorporated in the state, generating more than a quarter of the state's budget revenue. Meta, which was reportedly considering leaving Delaware earlier this year, is still incorporated in the state. Andreessen Horowitz, the venture capital fund co-founded by Andreessen, said earlier this month that it was reincorporating in Nevada from Delaware and encouraged other companies to do the same. The company cited the uncertainty of the state's courts and referenced the Musk pay ruling. Andreessen is expected to testify on Thursday. In addition to privacy claims at the heart of the Meta case, plaintiffs allege that Zuckerberg anticipated that the Cambridge Analytica scandal would send the company's stock lower and sold his Facebook shares as a result, pocketing at least $1bn. Defendants said evidence will show that Zuckerberg did not trade on inside information and that he used a stock-trading plan that removes his control over sales and is designed to guard against insider trading.
