Ericsson reported a strong finish to 2024, with fourth-quarter sales and profit higher thanks largely to growth in North America. As a result, the company increased its dividend, despite lower results for the full year. Ericsson said it sees signs of the RAN market stabilising, and it will focus further on efficiency measures to maintain margins in the new year.
Quarterly revenues rose 1 percent year-on-year to SEK 72.9 billion and improved 2 percent on an organic basis, the first growth in two years. This was driven by the main Networks division, where sales were up 5 percent on an organic basis. Network sales jumped 70 percent in North America, on spending by large customers like AT&T and year-end software demand, and were also up 2 percent in the market area Europe and Latin America, helped by market share gains in Europe.
Sales in the Enterprise segment were still down 7 percent, as Vonage continues to struggle, while revenue from Cloud Software and Services was stable. Ericsson also got a big boost in IP revenue after recovering back fees in a new licensing deal, with total IPR revenue rising to SEK 3.5 billion from SEK 2.7 billion.
Rising margins, higher cash flow
A favourable product mix helped the adjusted gross margin improve to 46.3 percent from 41.1 percent a year ago. This led to a 25 percent increase in adjusted EBITDA to SEK 10.2 billion, for a margin of 14.1 percent. The bottom line was a net profit of SEK 4.9 billion, up 43 percent year-on-year.
Over the full year, Ericsson did less well, with revenues down 6 percent to SEK 247.9 billion, an adjusted EBITA margin of 11.0 percent and net profit of just SEK 0.4 billion, compared to SEK 26.1 billion in 2023. Nevertheless, free cash flow improved strongly, helped by supply chain structural improvements and contract phasing, leading to an inflow of SEK 40 billion before M&A. As a result, Ericsson raised the annual dividend to SEK 2.85 per share from SEK 2.70 a year earlier.
Outlook mixed
For 2025, the focus on APIs and programmable networks remains, with hope this will generate a new growth engine in the face of a largely flat traditional RAN market. Ericsson said it will also work on improving the commercial performance at the Enterprise division, after no improvement in the losses there in Q4, with growth sought in areas such as mission critical and enterprise private networks.
For Q1, Ericsson forecast results in line with seasonal trends for its main divisions.
Source: telecompaper.com
