Ericsson has announced financial results for the second quarter (Q2) of 2024. The organic sales for the company declined organically by 7 per cent year-over-year (YoY), however, market area North America grew by 14 per cent. The gross income excluding restructuring charges increased to SEK 26.3 (24.7) billion driven by strong gross margin expansion. Meanwhile, the reported gross income stood at SEK 25.8 (24.1) billion.
The gross margin excluding restructuring charges was 43.9 per cent supported by higher intellectual property rights (IPR) licensing revenue and cost actions. Reported gross margin was 43.1 per cent. Earnings before interest, taxes, and amortisation (EBITA) excluding restructuring charges amounted to SEK 4.1 (3.7) b. with a 6.8 per cent (5.7 per cent) margin, with higher gross income partly offset by increased research and development (R&D) investments in networks for technology leadership.
Further, the net income was reported as SEK 11.0 (0.6) billion, including a SEK 11.4 billion impairment impact. Free cash flow before mergers and acquisition (M&A) was SEK 7.6 (5) billion benefiting from a strong improvement in working capital. Additionally, net cash on June 30, 2024, was SEK 13.13 billion compared with SEK 10.8 billion on March 31, 2024.
Commenting on the results, Börje Ekholm, president and chief executive officer, Ericsson, said, “In Q2, we maintained our leading market position, returned to growth in North America, and delivered strong gross margin expansion and free cash flow. We remained focused on matters in our control, to optimize our business amid a challenging market environment, with industry investment levels unsustainably low.”
Ekholm added, “Vonage remains foundational to build out a global platform for network application programming interface (APIs). This is critical for the digitalisation of enterprises and society, and will drive future growth in the telecoms industry. We recorded an impairment charge in Q2, as market growth in the current business has slowed, and we must now refocus on improving performance.”
He concluded, “Our results highlight our competitiveness, and we will continue to take proactive steps to position the business for longer-term success. We expect market conditions to remain challenging this year, as the pace of India investments slow, however our sales will benefit during the second half (H2) from contract deliveries in North America.”
