Ericsson’s sales deteriorated further in the fourth quarter of 2023, with revenues down 16 percent year-on-year to SEK 71.88 billion, compared to a 5 percent drop in Q3. After North America, the Indian market for mobile network equipment has now started to slow down, and Ericsson sees widespread caution among operators on capital investment. The company said it will remain focused on cost reductions in 2024 amid an expected further decline in the RAN market. 

Organic sales, excluding currency effects and changes in scope, fell 17 percent in Q4 and were down 10 percent in the full year. Ericsson blamed the lower sales on a “very weak mobile market”, with revenues at its Networks division falling 23 percent year-on-year in Q4. 

Given the difficult market conditions, the company focused on cost efficiency. Ericsson said it eliminated SEK 12 billion in gross costs on an annual run rate, about half of which had an impact already in 2023. This helped increase the Q4 adjusted EBITA margin to 11.4 percent from 10.8 percent a year ago, in line with its target. 

More work to do

Nevertheless, the margin was still down over the full year, to 8.1 percent from 10.9 percent in 2022. CEO Borje Ekholm said the group was “not satisfied with our profitability and there is more work to do”. Strategic priorities include maintaining its technology leadership and growing the enterprise business, which was still in the red in Q4. 

Looking ahead, the current market uncertainties are expected to prevail into 2024, with a further decline of the RAN market outside China, Ericsson said. Its new contract with AT&T signed at the end of last year will start to ramp up only in the second half of 2024. Over the medium term, the company expects the market to recover, as “current investment levels are unsustainably low for many operators”, the CEO said.

Ericsson’s bottom line was a net loss of SEK 26.1 billion in 2023, versus a profit of SEK 19.1 billion, hurt by the writedown on Vonage in Q3 and SEK 6.5 billion in restructuring charges. Free cash flow before M&A was a negative SEK 1.1 billion last year, due to the completion of several large projects. Nevertheless, the company maintained its dividend at SEK 2.70 per share and said it aims to return to positive cash flow at 9-12 percent of sales “as soon as possible”.

Original article can be seen at: