Ericsson Posts Rise in Revenue and Profits in 3Q20

Ericsson turned to a profit and posted a revenue rise in the third quarter of 2020. The turnaround on a yearly basis was boosted by continued traction for its 5G portfolio including wins in China. Ericsson now has a total of 112 commercial contracts for 5G.

Growth in the Networks division was a major driver in Q3, as net sales rose 6 percent year-on-year to SEK41.7 billion ($4.8 billion). 5G contracts in China contributed positively to profit, and are expected to improve further. Business in Europe also grew, based on several footprint gains. But other business units did not perform so strongly.

Digital Services revenue dropped 12 percent to SEK8.7 billion on lower legacy equipment sales; Managed Services fell 14 per cent to SEK5.5 billion on declines in North America and increased R&D investments; while its Emerging Business and Other segment registered a 3 percent reduction to SEK1.6 billion. Net sales grew 1 per cent to SEK57.5 billion, with net income of SEK5.6 billion overturning an SEK6.9 billion loss in the same period last year. Gross margin improved from 37.8 to 43.2 percent, its highest level since 2006.

"Amid the continuing global Covid-19 pandemic and with more than 80% of our people working from home, we keep on executing on our focused strategy. We continue to win footprint in several markets leveraging our competitive 5G portfolio. The gross margin improved in all segments in the third quarter and reached 43.2% (37.8%), the highest since 2006. Covid-19 has so far had limited impact on our business, but we are closely monitoring any signs of a change in the situation. The year to date results strengthen our confidence in delivering on the 2020 Group target," said Börje Ekholm, President and CEO of Ericsson.