Ericsson: even with losses in the Chinese market, supplier records growth in 4Q21
Ericsson reported higher-than-expected earnings and sales in the fourth quarter of 2021, lifting its shares by 8%. The group’s sales for the period rose 3% to 71.3 billion kroner ($7.67 billion) from 69.6 billion kroner ($7.49 billion) a year ago. Adjusted sales for comparable units and currency grew by 2%. The group’s organic sales increased by 4%, with a 7% increase in chain sales. The reason for a robust year-end is the high demand for 5G technology, which would have offset market share losses in mainland China.
It is worth remembering that the company has been losing market share in China since Sweden banned Huawei from launching 5G in the country.
Reported sales were flat at SEK 232.3 billion ($25 billion). The loss of market share in Mainland China impacted sales by $830 million, and the growth rate by -3 percentage points, which means that, excluding Mainland China, organic sales growth was 8%.
“Our strategy of investing in technology leadership and increasing market share in our core business underpinned robust financial performance in 2021 and ensured a good fourth quarter for Ericsson overall,” comments Börje Ekholm, Ericsson CEO in the financial report. With an annual EBIT margin of 13.9%, we reached our 2022 target a year earlier, while absorbing significantly greater investments in R&D, Enterprise, cybersecurity, and compliance. Fourth-quarter organic sales grew 2%, gross margin improved to 43.5%, EBIT margin reached 17.3% and free cash flow before mergers and acquisitions totaled $1.45 billion, he added.