Ericsson ERIC stock is trading lower Tuesday morning after it reported its third-quarter FY23 results. The company reported a sales decline of 5% year-on-year to SEK 64.5 billion ($5.96) billion, missing the consensus of $6.27 billion.
Group organic sales declined by 10% Y/Y. Networks' organic sales decreased by 16%, partly offset by 5% growth in Cloud Software and Services and 11% in Enterprise.
ERIC reported an EPS loss of SEK (9.21) versus SEK 1.56 last year. Adjusted EPS was $0.07 compared to a consensus of $0.07.
Adjusted gross margin contracted 220 basis points to 39.2% due to business mix changes in Networks.
Adjusted EBIT margin plunged by 460 bps to 6.0% as the adjusted EBIT declined 46% Y/Y.
Adjusted EBITA declined 39% Y/Y to SEK 4.7 billion. The margin came at 7.3% vs. 11.3% Y/Y.
Free cash flow before M&A was SEK (0.5) billion.
Outlook: Ericsson expects lower than-normal seasonality in sales between Q3 and Q4 for Networks and Cloud Software and Services.
The company expects a Q4 EBITA margin of 10%.
Ericsson reiterated long-term EBITA target of 15% - 18%.
Price Action: ERIC shares traded lower by 5.88% at $4.48 premarket on the last check Tuesday.
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