2023-07-14 10:30:25
By Le Figaro with AFP
Posted 2 hours ago, Just Updated
“We are convinced that the market will recover,” however indicated the CEO of Ericsson. Dado Ruvic / REUTERS
Swedish telecom equipment giant Ericsson announced rare losses on Friday, while its Finnish competitor Nokia lowered its 2023 forecasts due to a slowdown in their main market, the construction of 5G networks. At the opening of the Helsinki and Stockholm Stock Exchanges, around 07:30 GMT, Nokia and Ericsson shares fell sharply, losing 6.23% and 6.59% respectively.
Ericsson fell into the red in the second quarter, mainly due, according to the group, to restructuring costs linked to its vast savings plan launched at the end of last year, but also to the decline in its network activity, particularly in North America. . Between April and June, the Swedish group recorded a net loss of 600 million crowns (about 52 million euros) against a profit of 4.7 billion crowns in the second quarter of 2022, according to its quarterly report. He also announced an unexpected operational loss, linked to a slowdown in investments in 5G networks in several countries, including the United States.
«We are convinced that the market will recoverHowever, Ericsson CEO Erik Börje said in a statement, saying he was confident about the prospect of increased investment. “The exact timing of course remains in the hands of our customers but we expect the market to gradually improve in late 2023 and then in 2024.“, he added.
At the same time, its Finnish competitor, telecom equipment manufacturer Nokia issued a profit warning, lowering its sales and operating margin forecasts for 2023.Clients’ investment plans are increasingly impacted by high inflation and rising interest rates, with projects pushed back to 2024, particularly in North America“, emphasizes the group.
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Nokia, which publishes its quarterly results on July 20, now expects an evolution of its annual sales of between -4% and +2% at constant exchange rates, against an expected increase of 2 to 8% so far. The 2023 operating margin should be between 11.5% and 13%, against a range of 11.5% to 14% initially forecast. Ericsson and Nokia, which dominate the global 5G market with the Chinese giant Huawei, had warned in recent months of the slowdown in investment by their customers, the mobile operators, due to the global economic deterioration.
At the end of February, Ericsson announced the loss of 8,500 jobs worldwide, a few months after having implemented a major savings plan. During the second quarter, the restructuring costs of this plan represented 3.1 billion Swedish crowns (270 million euros), explaining a large part of the group’s net loss. The Swede also accused the consequences of a case of possible corruption in Iraq involving the Islamic State organization, which has already earned him a fine of more than 200 million dollars from the American courts.
The two European groups have long suffered from the emergence of Huawei on their markets, but have benefited for several years from the restrictive measures taken against the Chinese giant by several Western countries, the United States in the lead. 5G is one of the few areas of the tech industry where the United States does not have a major national champion.
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