Ericsson boosted by earnings

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Ericsson's Q3 results were dominated by a SEK 7.6 billion capital gain from the divestment of iconectiv, which significantly inflated reported profitability while the company's core top line showed a 2% organic sales decline. This sales dip was primarily driven by a 5% organic decline in the key Networks segment, although the Cloud Software & Services division was a bright spot with 9% organic growth. Despite the lower sales, operational efficiency improved significantly, with the adjusted gross margin expanding to 48.1% from 46.3% year-over-year, establishing a new long-term level of profitability.



The adjusted EBITA margin of 28.1% is highly misleading as it includes a 13.5 percentage point benefit from the one-time gain. The most significant technical development is the balance sheet strength; the massive cash influx from the sale has boosted the net cash position by 103% year-over-year to a robust SEK 51.9 billion. This substantial financial flexibility has prompted the board to signal that increased shareholder distributions are now under consideration, with a final proposal on higher dividends or a share buyback program expected with the Q4 report.

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