Lower results than expected for Ericsson - falls on the stock exchange

Ericsson's adjusted operating profit of SEK 4.8 billion is lower than in the same period last year and slightly worse than what the analysts in the stock market expected.

When trading on the Stockholm Stock Exchange began at 9 o'clock, Ericsson's B share fell heavily by around 6 percent.

The company reports a sales increase of 3 percent compared with the same period last year to SEK 55.1 billion.

The Networks business area in North America, as well as in Europe and Latin America, is most important.

At the same time, profitability fell slightly due to investments in a "more robust supply chain", the company writes in the report. 

Ericsson's sales in the Digital Services business area decreased during the quarter by 2 percent compared with last year.

Additional fines await

In the report, Börje Ekholm, CEO of Ericsson, also comments on the legal investigations that are ongoing after the Assignment review reveals that the company paid bribes to the terrorist sect IS to be able to do business in Iraq but did not tell about it.

Ericsson's internal documents contained information on suspected bribery and crime in ten different countries.

Ekholm now flags in the interim report that the company will "probably" be punished with additional fines from the US Department of Justice DOJ for the bribes.

"We are currently working with the Department of Justice (DOJ) in the United States on the infringement notices they issued related to our Deferred Prosecution Agreement.

A settlement regarding these matters may result in various measures from the DOJ, and may probably include additional monetary payments, the size of which can not yet be reliably estimated ", he writes.

As early as 2019, US authorities fined Ericsson the equivalent of SEK 10 billion in fines for corruption offenses.

Russian write-downs

As a result of Russia's invasion of Ukraine and the economic sanctions that followed, Ericsson has suspended its operations in Russia indefinitely.

The company reports a provision for write-downs of assets and other extraordinary expenses due to this to SEK -0.9 billion.

Ericsson's share plummeted after the Assignment review's disclosure at the end of February.

Later, the board and Börje Ekholm were denied discharge at the general meeting due to the shortcomings in the information about the bribery suspicions.

This is not commented on in the report.

SVT has continued to apply for Börje Ekholm for an interview without results.