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Ericsson braces for component cost hit after third-quarter profit beat - Finance news and analysis from Global Banking & Finance Review
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Ericsson braces for component cost hit after third-quarter profit beat

Published by Global Banking & Finance Review

Posted on October 15, 2026

2 min read

· Last updated: October 15, 2026

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Ericsson Beats Q3 Profit Forecast, Warns on Component Cost Pressure for 2024

Ericsson's Third-Quarter Financial Performance and Outlook

STOCKHOLM, Oct 15 (Reuters) - Telecom gear maker Ericsson on Thursday reported a smaller-than-expected drop in third-quarter core profit as efficiency measures helped offset higher component costs, but warned that such costs would affect margins next year. 

Key Financial Highlights

Operating Profit and Analyst Expectations

• Operating profit before amortisation and restructuring costs was 10.1 billion crowns ($1.01 billion) against a year-earlier 15.8 billion and a mean forecast of 7.87 billion in a poll of analysts provided by Ericsson

Component Cost Increases

• The Swedish group said component costs rose in the quarter

CEO Commentary and Market Conditions

Outlook from CEO Per Narvinger

• "Looking ahead, the RAN (Radio Access Network) market is flat, geopolitical uncertainty remains elevated and component costs are a headwind to gross margin," new CEO Per Narvinger said in a statement

Impact of Memory Chip Costs and AI Demand

• Ericsson in July warned it was under pressure from rising memory chip costs due to surging AI demand

Margins and Sales Performance

EBITA Margin and Sales Growth

• Adjusted EBITA margin narrowed to 17.0% from 28.1% against a forecast 14.2%

• Organic sales rose 7% to 59.5 billion crowns, beating a forecast 55.4 billion and Ericsson said sales in North America increased slightly supported by project phasing

Reporting Credits

(Reporting by Anna Ringstrom, editing by Terje Solsvik)

Key Takeaways

  • Q3 adjusted operating profit before amortisation and restructuring rose to SEK 10.1 b, beating analysts’ SEK 7.87 b forecast (mfn.se).
  • Organic sales grew 7% year‑on‑year to SEK 59.5 b, outperforming forecast SEK 55.4 b, with North America benefiting from timing of project phasing (mfn.se).
  • Ericsson anticipates that flat RAN market conditions, elevated geopolitical uncertainty, and continued increases in component costs—especially memory chips driven by AI demand—will pressure gross margins next year (mfn.se).

References

Frequently Asked Questions

What is affecting Ericsson's profit margins?
Higher component costs, especially from increased AI demand and rising memory chip prices, are impacting margins.
What did Ericsson say about future margin pressures?
Ericsson warned that component costs will continue to pressure margins next year.
How are Ericsson's sales performing in North America?
Ericsson reported slightly increased sales in North America, supported by project phasing.
What market conditions are currently impacting Ericsson?
Ericsson cited a flat RAN market, geopolitical uncertainties, and rising component costs as key challenges.

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