Overview
- Ericsson reported Q2 results on July 14 showing reported sales of SEK 52.7 billion, organic sales down 1% year over year, an adjusted gross margin of 48.4% and adjusted EBITA of SEK 6.9 billion.
- The board announced that CEO Börje Ekholm will retire effective September 30 and that Per Narvinger will succeed him with Ekholm staying on to advise during the transition.
- Management guided Networks gross margin for Q3 to a midpoint of 49% and said higher volumes of network rollout projects combined with rising semiconductor and component prices will pressure margins in coming quarters.
- Free cash flow before M&A plunged to SEK 0.4 billion in Q2 from SEK 2.6 billion a year earlier even as Ericsson returned SEK 8.2 billion to shareholders in the quarter, including SEK 3.2 billion of buybacks and a strong net cash balance.
- Investors reacted sharply with the stock down about 8% after the report and guidance, while the company highlighted its push into AI-enabled use cases with an on-field drone sensing demo at a Texas stadium and noted the prior-year quarter included a one-off IPR settlement that affected comparisons.