Telefonaktiebolaget LM Ericsson (ST:ERICb) has reported smaller than expected fourth-quarter operating income, as carriers in developed markets like the United States pulled back on capital expenditures due to broader concerns over the health of the global economy.
Adjusted earnings before interest and taxes excluding restructuring charges slumped by 34% year-on-year in the final quarter of 2022 to SEK8.1 billion ($1 = SEK10.3095), below Bloomberg consensus estimates of SEK10.74B.
Although the Swedish telecom equipment supplier’s networks business grew in India, it was not enough to fully make up for a reduction in spending and inventory in North America, where customers such as Verizon in the U.S. have been tightening their financial belts.
“We expect operators to continue to sweat assets in response to macroeconomic headwinds,” said Ericsson chief executive officer and president Börje Ekholm in a statement.
Adjusted gross margin for the group came in at 41.5% in the fourth quarter, missing forecasts of 43.6%. Ekholm added that he expects margin in the networks unit to slip further during the first half of 2023, but will receive some support from cost controls in the second quarter.
Shares in Ericsson dropped to near the bottom of the pan-European STOXX 600 on Friday.