Ericsson has reported its quarterly results, beating forecasts on increasing 5G demand.
Ericsson is one of the main network equipment providers, and has been a leader in the 5G rollout around the world. The company is in a strong position, with Huawei being banned by multiple countries, and Nokia facing challenges in its efforts to be competitive.
In its quarterly results, Ericsson reported 69.6 billion Swedish crowns, surpassing estimates of 68.35 billion crowns. In addition, the company’s gross margin increased to 40.6%, up from 36.8% a year ago.
“Networks sales grew organically by 20%, reporting a gross margin of 43.5% (41.1%) for Q4,” said Börje Ekholm, President and CEO. “This reflects continued high activity levels in North America and North East Asia, and also in Europe where we further increased market share. Networks delivered an operating margin of 19% for full-year 2020 – well above the 15%-17% target. Investing in R&D is fundamental to our strategy. Since 2017 we have increased R&D investment by SEK 10 b. and delivered SEK 16 b. of improved operating income. Our growth during 2020 is built on a strong and competitive 5G portfolio.”
While the company warned there may be exposure as a result of Sweden’s decision to exclude Huawei from its 5G network. China has never been shy about warning of retaliation against countries that exclude Huawei. Nonetheless, the company’s 180 markets should help insulate it.