China Sales Pulls Down Ericsson’s Earnings in 3Q21

In a financial report for the third quarter of 2021, Ericsson posted a 2% decline in sales compared with the same period last year. Vendor’s revenue fell to SEK 56.3 billion ($6.53 billion) compared with SEK 57.5 billion in 3Q20.

Sales in Mainland China in Networks and Digital Services declined by SEK -3.6 billion impacting the growth rate by -6%. EBIT margin excluding restructuring charges increased slightly to 15.7%. Reported EBIT increased to SEK 8.8 billion (15.7%) from SEK 8.6 billion (15.0%). Reported net income was SEK 5.8 billion.

“As a consequence of the reduced market share in Mainland China we are planning to resize our sales and delivery organization in the country, starting in Q4, adding to our restructuring charges,“ said Börje Ekholm, President and CEO of Ericsson.

In its statement, Ericsson noted while it mitigated global supply chain issues in the first half of 2021, in late Q3 it had experienced some impact on sales from disturbances in the supply chain warning these could pose a risk going forward. Issues included access to components, production delays, and transport and logistics problems, which are being experienced globally across a number of sectors and markets.