Ericsson Q2 net income grows 76%

Dylan Bushell-Embling
21 Jul 2014

Ericsson has reported a second quarter net income of 2.7 billion kronor ($394.8 million) - up 76% year-on-year – as sales started to recover.

Increased activity in China, India and the Middle East helped net sales reach 54.8 billion kronor, down 1% year-on-year but up 15% from the previous quarter.

Previously awarded LTE contracts from China’s 4G rollouts contributed to the recovery, and Ericsson said the investment climate in India is improving following the recent elections and spectrum auctions.

These gains were partly offset by reduced sales activity in Japan and lower revenue from two large broadband coverage projects in North America that peaked last year. Political unrest in parts of the MEA region also continue to impact sales, Ericsson said.

Gross margin for the second quarter meanwhile improved to 36.4%, up from 32.4% a year earlier, driven in part by strong development in the company’s capacity business.

The company’s new modems business is expected to start generating sales by the end of the year. Ericsson said it has invested 1.2 billion kronor into the business, primarily in R&D, for the first half of 2014.

Ericsson’s earnings for the quarter were ahead of expectations, Bloombergreported, and financial analysts have responded positively to the figures.

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