Due to a -23% decline in its Networks business, Ericsson’s Q4 reported sales were down by -16% to SEK 71.9 billion. Gross income excluding restructuring charges decreased to SEK 29.6 (35.7) billion. Gross margin excluding restructuring charges was 41.1% (41.5%).
“Despite headwinds and a very weak mobile networks market, we were able to generate a full-year EBITA[2] of SEK 21.4 b. While the actions we have taken to improve performance are paying off, we are not satisfied with our profitability and there is more work to do. As we look to 2024, we expect the market outside China to further decline, with similar uncertainties as experienced in 2023. In this environment, we remain laser focused on managing elements within our control, including operational efficiency and tight cost management. We are confident in our strategy and are committed to driving long-term value for our shareholders,” stated Börje Ekholm, President and CEO of Ericsson.
“The mobile network industry remains challenging. We expect the current market uncertainties to prevail into 2024 with a further decline of the RAN market outside China as our customers remain cautious and the investment pace is normalizing in India. The new US contract will start to ramp up in the second half of 2024.”
“Underlying demand from growing data traffic and 5G only being in the early stages of build-out will require additional network investments. In our view, the current investment levels are unsustainably low for many operators. We are therefore confident that a market recovery should materialize. However, the timing of market recovery is ultimately in the hands of our customers.”
Highlights:
- Q4 Networks sales decreased organically by -23% YoY as customers continued to focus on cash flow.
- Sales in India declined QoQ as the market started its transition to normalized investment levels following an unprecedented roll-out pace. Q4 gross margin grew QoQ to 43.2%.
- In Cloud Software and Services, Ericsson delivered on its EBITA target to reach at least breakeven in 2023 with an EBITA of SEK 2.0 billion in Q4 and SEK 1.7 billion for the full year.
- Enterprise sales grew by 7% organically YoY mainly driven by Enterprise Wireless Solutions. EBITA (loss) was stable YoY, negatively impacted by an inventory write-off in Enterprise Wireless Solutions.
- Full year 2023 sales declined organically by -10% to SEK 263.4 (271.5) billion, impacted by a -15% decrease in Networks, partly offset by an 11% growth in Enterprise.