Ericsson loses 2,555 million until September after taking an extraordinary charge for Vonage

MADRID, 17 Oct.

Ericsson loses 2,555 million until September after taking an extraordinary charge for Vonage


Ericsson recorded losses amounting to 29,513 million Swedish crowns (2,555 million euros) in the first nine months of 2023, in contrast to the attributable net profit of 12,922 million crowns (1,119 million euros) in the same period of the previous year. after recording an extraordinary charge of almost 32,000 million crowns (2,671 million euros) in the third quarter in relation to the impairment of Vonage.

Year-to-date net profit was affected by the 31.9 billion crown impairment of goodwill attributed to the Vonage acquisition, which Ericsson attributed to the significant drop in the market capitalization of its listed peers. Vonage, rising interest rates and the general slowdown in Vonage's core markets.

Likewise, Ericsson specified that in the first nine months of the year it has assumed an adverse impact of around 5,000 million crowns (433 million euros) from restructuring expenses, as well as higher operating expenses related mainly to its Enterprise division through the consolidation of Vonage.

The net sales of the Swedish manufacturer of telecommunications networks and equipment between January and September reached 191,470 million Swedish crowns (16,575 million euros), a figure 3.2% higher than Ericsson's turnover in the first three quarters of 2022 For its part, costs increased by 9.8%, up to 118,473 million crowns (10,256 million euros).

Specifically, the Swedish company's network business reduced its revenue by 6.2%, to 126,444 million crowns (10,946 million euros), while the cloud and digital services area increased its revenue by 9.3%. sales, up to 44,072 million crowns (3,815 million euros) and income from the business business increased by 130%, up to 19,047 million crowns (1,649 million euros).

Between July and September, Ericsson recorded losses of 30,491 million Swedish crowns (2,639 million euros), compared to the positive result of 5,214 million crowns (451 million euros) in the third quarter of 2022, while its quarterly revenue decreased by 5 .2%, up to 64,473 million crowns (5,581 million euros).

The president and CEO of Ericsson, Börje Ekholm, defended that the company's results were in line with forecasts "in a challenging operating environment", warning that, like the rest of the sector, "we expect macroeconomic uncertainty to persist." until 2024", which affects clients' investment capacity.

"We are addressing these challenges by focusing on elements that are under our control, namely cost management and operational efficiency," he added, highlighting that the cost reduction measures implemented are already being noticed, leading Ericsson to increase up to 12,000 million crowns (1,038 million euros) the savings target in execution rate at the end of the year, which represents an increase of 1,000 million Swedish crowns compared to what was planned.

Likewise, the executive warned that the underlying uncertainty that affects the mobile network business will persist until 2024, so the company will continue taking measures to reduce costs.

In this way, the company has indicated that, given the current uncertainty, it will not give guidance beyond the fourth quarter of 2023, limiting itself to indicating that it maintains the long-term Ebita margin objective of between 15-18% and intends to achieve it. "as soon as possible", subject to market recovery.