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Ericsson continued its revenue hit in mainland China during Q3

Supply chain issues and the continued decline of sales in mainland China has seen Ericsson's net sales stall.
Written by Campbell Kwan, Contributor
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Ericsson reported its third-quarter net sales remained steady despite its continued decline in mainland China and supply chain issues.

For the quarter, Ericsson posted SEK56.3 billion, which was a 2% year-on-year dip. Of that, Ericsson said its networks segment contributed SEK40.6 billion, digital services chipped in SEK8.6 billion, while the managed services and emerging businesses segments earned SEK7 billion in total.

Earnings before interest and tax (EBIT) was SEK8.8 billion, up 2% year-on-year, and net income saw a 4% year-on-year jump to SEK5.8 billion.

The company said it saw revenue growth in three of the five markets it operated in, but this was offset by its performance in mainland China, where sales declined by SEK3.6 billion to SEK1.3 billion.

The performance dip in China started last quarter, Ericsson CEO Borje Ekholm said, following Sweden's decision to ban Huawei and ZTE 5G kit from being used by local telcos. As of the third quarter, this has led to the percentage of Ericsson's revenue coming from China being chopped in half, from 10% to 5%.

Looking specifically at Ericsson's network segment, the company added the segment experienced supply chain issues during the third quarter after having "avoided customer impact during the first half of the year".

The supply chain issues were mainly to do with a shortage of individual components. The network segment's sales remained stable, however, decreasing 3% year-on-year to SEK$40.6 billion.

"The disturbance in the global supply chain, including shortage of individual components, will continue to pose a risk for impact on sales in Networks," Ekholm said.

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