Shares in Ericsson slumped on Friday after the Swedish telecommunications equipment manufacturer failed to meet profit expectations and warned of tough times ahead.
The company’s shares were down more than five percent in midday trading after it reported the 39 percent drop in net profit in 2022 to 6.2 billion kronor (1.7 billion euros, $1.8 billion).
The analyst consensus compiled by Bloomberg was for net profit to come in at 7.6 billion kronor.
The performance was impacted by the company having set aside $220 million to cover potential US fines over suspected bribes to the Islamic State group in Iraq, a case that has weighed over the Swedish telecoms group for months.
“The near-term outlook… remains uncertain,” chief executive Borje Ekholm said, citing “broad macroeconomic headwinds”.
He said Ericsson had already begun to sense at the end of last year that network operators wanted to reduce assets and that it expects this to continue at least through the first half of 2023.
While Ericsson hopes to win market share, this will not fully offset the headwinds, Ekholm said.
Faced with the uncertain economic situation, Ericsson announced an 830-million-euro cost savings plan, the effects of which should soon be felt.
Ericsson is locked in a battle with Finland’s Nokia and China’s Huawei for 5G network equipment.
The company’s sales rose by three percent when currency effects were stripped out and comparable units used.
By value, they jumped 17 percent to 232.3 billion kronor. — Agence France-Presse