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Ericsson says 5G contracts are ‘driving growth in our core business’

Ericsson's net profits are better than expected, but it is concerned about facing reprisals in China after rival Huawei was banned from selling its equipment in Sweden.

Ericsson says 5G contracts are 'driving growth in our core business'
Ericsson CEO Börje Ekholm. Photo: Jessica Gow/TT

China, a major market for Ericsson, accounted for just five percent of the company’s turnover in the third quarter, half of what it represented in the same three-month period last year.

The global supply chain crisis also hit sales late in the third quarter, “and such issues will continue to pose a risk”, Ericsson said in an earnings statement.

The telecom equipment maker’s overall sales fell two percent to 56.3 billion kronor ($6.5 billion, 5.6 billion euros).

The company’s turnover was impacted by a drop in two key segments, network and digital services sales, in China.

But its net profit was better than expected, at 5.8 billion kronor.

Ericsson said it started to see initial revenues from 5G contracts, which it said were “driving growth in our core business”.

It is in a fierce competition with Finnish neighbour Nokia and China’s Huawei to build next-generation 5G networks across the world.

But Ericsson feared repercussions in China after Swedish regulators banned Huawei and another Chinese firm, ZTE, from the country’s 5G network in 2020 for security reasons.

The United States, Britain and Australia have imposed similar bans on Huawei.

In June, a Swedish court struck down an appeal from Huawei.

“As a consequence of the reduced market share in Mainland China we are planning to resize our sales and delivery organization in the country, starting in Q4 (fourth quarter), adding to our restructuring charges,” Ericsson said.

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ABB

Swedish engineering giant ABB to quit Russia over Ukraine

Swedish-Swiss engineering giant ABB said on Thursday it will quit Russia as a result of the war in Ukraine and the related international sanctions against Moscow.

Swedish engineering giant ABB to quit Russia over Ukraine

Russia accounts for only one or two percent of ABB’s overall annual turnover and the decision to pull out will have an estimated financial impact in the second quarter of around $57 million, the group calculated.

“ABB has decided to exit the Russian market due to the ongoing war in Ukraine and impact of related international sanctions,” the group said in a statement.

Russia accounts for only one or two percent of ABB’s overall annual sales and the decision to pull out will have an estimated financial impact in the second quarter of around $57 million, the group calculated.

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A large number of major western companies have pulled out of Russia since Moscow invaded its pro-Western neighbour on February 24.

“When the war broke out, ABB stopped taking new orders in Russia,” the group said.

At the same time, it said it continued to fulfill “a small number of existing contractual obligations with local customers, in compliance with applicable sanctions.”

Most of ABB’s dedicated Russian workforce has been on leave since March “and the company will do its best to support them as it realigns its operations in a controlled manner,” it said.

ABB has about 750 people in Russia and two production sites in the country located in the Moscow region and Lipetsk, as well as several service centres.

Separately, the group said that its net profit fell by 50 percent to $379 million in the second quarter, largely as a result of one-off charges, but also the cost of withdrawing from Russia.

Sales, on the other hand, grew by six percent to $7.2 billion in the period from April to June, ABB said.

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