Ericsson, a Swedish telecoms equipment maker, fell short of fourth-quarter adjusted operating profit expectations on Friday due to a slowdown in India, causing its shares to drop by 8%. Despite growth in the North American market, concerns have arisen regarding potential tariffs on European Union companies by the new U.S. administration. Operating profit, excluding restructuring costs and impairments, reached 9.8 billion crowns ($897 million) in the quarter, up from the previous year's 7.4 billion, but below the 10.3 billion consensus forecast in an LSEG poll of analysts.
While Ericsson's core networks business performed well, there was a consensus miss in other business units, according to J.P. Morgan analyst Sandeep Deshpande. The company's enterprise segment revenue decreased by 7% in the quarter, with a higher-than-expected loss. There is concern about potential impacts from U.S. President Donald Trump's proposed tariffs on imports from the EU and other countries, citing "troubling trade surpluses with the United States."
Regarding the uncertainty of tariffs, CFO Lars Sandström mentioned in an interview with Reuters, "We have a global production system today, with production facilities in the U.S., so depending on what's happening, we can adjust over time." Sales in Asia, particularly in India, declined significantly, offsetting the weaker growth in North American markets observed in the last two years. Nevertheless, Ericsson has secured more deals with Indian operators such as Bharti Airtel and Vodafone Idea.
Sandström noted, "In the beginning of the year, we see a stable, continued level (in India), and then we will see at the end of the year if there is an increase." Net sales increased by 1% to 72.9 billion crowns, surpassing estimates of 72.5 billion. Strong demand from telecom giants like AT&T and Verizon fueled a 54% rise in quarterly sales in North America. The company also reduced its workforce by 6,000 employees to about 94,000 in 2024. (1 USD = 10.9272 Swedish crowns)