Ericsson's Q4 profit misses estimates while US tariffs in focus
Business
The Swedish telecoms equipment maker saw growth in the North American market
STOCKHOLM (Reuters) – Ericsson missed fourth-quarter adjusted operating profit expectations on Friday reflecting a slowdown in India and sending its shares down 8%.
The Swedish telecoms equipment maker saw growth in the North American market though there are concerns now over potential tariffs on European Union companies from the new US administration.
Operating profit excluding restructuring costs and impairments was 9.8 billion crowns ($897 million) in the quarter, up from 7.4 billion a year earlier, yet fell short of the 10.3 billion crowns consensus forecast in an LSEG poll of analysts.
The strength in Ericsson's core networks business was offset by a consensus miss in the other business units, J.P.Morgan analyst Sandeep Deshpande said.
Its enterprise segment revenue declined 7% in the quarter and made a higher-than-expected loss.
The company could also take a hit as US President Donald Trump has warned of tariffs on imports from the EU and other countries saying they had "troubling trade surpluses with the United States".
"When it comes to tariffs, we don't know what's going to happen. I think everyone is waiting to see what is happening there," CFO Lars Sandström told Reuters in an interview.
"We have a global production system today, with production facilities in the US, so depending on what's happening, we can adjust over time."
Sales in Asia fell by double digits, mainly because of a slowdown in India, which had been helping to offset weaker growth in the North American markets in the last two years.
However, Ericsson has now signed more deals with Indian operators such as Bharti Airtel and Vodafone Idea.
"In the beginning of the year, we see a stable, continued level (in India), and then we will see at the end of the year if there is an increase," Sandström said.
Net sales rose 1% to 72.9 billion crowns, beating estimates of 72.5 billion.
Demand from telecom companies such as AT&T and Verizon pushed up quarterly sales in North America by 54%.
The company reduced its headcount by 6,000 employees to about 94,000 in 2024.
