Ericsson CEO Borje Ekholm warned it expected to be hit with financial penalties in the aftermath of revelations about historical activities in Iraq during a Q1 results call where he also highlighted positive underlying figures despite a provision related to its business in Russia.
Ekholm noted Ericsson was still engaging with the US Department of Justice (DoJ) over potential breaches related to a deferred prosecution agreement in the wake of the exposure of a well-publicised Iraq scandal.
Although limited in detail Ericsson can provide about discussions with the DoJ, the executive noted it expects “the resolution will likely result in monetary and other measures, however the magnitude of these at this time cannot be reliably estimated”.
Outside of the aftermath of the Iraq revelations, Ericsson pointed to encouraging sales in its key markets and continued momentum in 5G, though it booked an 8 per cent year-on-year decline in net profit to SEK2.9 billion ($307.2 million).
Revenue of SEK55.1 billion was up 11 per cent.
During the quarter, Ericsson booked a SEK900 million provision related to the suspension of business in Russia.
Ericsson also recorded a loss of SEK300 million on the revaluation of assets held by its investment arm.
Supply and demand
Ekholm noted the company had spent cash stockpiling various components in response to continued global supply chain issues in Q1 and expected this increased investment to continue in the coming months.
Pointing to continued momentum in sales of network kit in the US, Europe and Latin America he noted it had booked “another solid quarter” adding “there are some one off effects this quarter, which is unfortunate, but happens in business”.