Ericsson 2025 Q1: Gross Margin Hits 42.5% with Sales Set to Stabilize, Stock at $4.84
Ericsson surpasses profit forecasts with a 42.5% gross margin in Q1 2025, forecasting sales stabilization in H2 amid cautious customer investments. Explore the latest financial insights and market outlook.
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Highlights
- Ericsson’s Q1 operating profit and earnings per share exceeded market expectations despite a revenue decline.
- Gross margin increased significantly to 42.5%, driven by strategic cost management and strong product positioning.
- CEO Börje Ekholm anticipates sales to stabilize in the latter half of 2024, supported by contract wins and normalized inventory in North America.
Shares of Ericsson (ERIC) rose 1.2% to $4.84 following the company’s impressive first-quarter results and positive sales outlook for the second half of 2024. The Swedish telecommunications leader reported an EBIT of 4.3 billion SEK ($390 million), surpassing analyst expectations, alongside EPS of SEK 0.77 ($0.07). However, total revenue dipped 15% year-over-year to 53.3 billion SEK ($4.87 billion), reflecting cautious customer spending.
CEO Börje Ekholm highlighted that while network sales dropped 19%, the company’s gross margin improved from 38.6% to 42.5%. This margin growth is credited to Ericsson’s advanced technology leadership, competitive product lineup, and strategic cost initiatives.
Looking ahead, Ekholm expressed confidence that sales will stabilize in H2 2024 due to recent contract acquisitions and the normalization of customer inventory levels in the North American market.
Market analysts from Jefferies expect continued strength in gross margins and will closely monitor the sales stabilization phase in the second half of the year.
Despite a 22% decline in Ericsson’s ADRs so far this year, the recent results have sparked renewed investor interest, positioning the company for a potential turnaround as the year progresses.
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