Visitors pass through the entrance to the Ericsson AB pavilion at the Mobile World Congress in Barcelona, Spain, on Tuesday February 26, 2013.
Simon Dawson | Bloomberg via Getty Images
Sweden’s Ericsson reported quarterly basic earnings ahead of market estimates on Friday, fueled by an increase
margins on the sale of telecommunications equipment, and said it maintained its financial targets for 2020 and 2022.
Despite economic uncertainty about the coronavirus outbreak, many telecommunications companies globally have been pushing ahead with plans to upgrade to 5G networks, bringing Ericsson’s business contract earnings to 99.
Ericsson and Nokia of Finland were also expected to be the beneficiaries of Britain’s decision this week to ban Chinese telecommunications giant Huawei from next-generation 5G networks.
“Some clients are accelerating their investments while others are temporarily cautious,” Chief Executive Börje Ekholm said in a statement. “With current visibility, we maintain the group’s goals for 2020 and 2022.”
But some of those contracts won had a cost. Ericsson, who won contracts from China’s three largest telecom operators, China Mobile, China Telecom, and China Unicom, had to suffer gross margins as he scored around 1 billion kroner ($ 109 million) in product inventory. .
Including the 1.6 percentage point hit, gross margin increased to 38.2% in the quarter from 36.7% in the same period last year.
The company’s second-quarter adjusted quarterly operating profit increased to SEK 4.5 billion ($ 495.85 million) from 3.9 billion a year ago, beating the average forecast of SEK 3.36 billion, according to a Refinitiv analyst survey. .
Total revenue increased 1% to SEK 55.6 billion.
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