Outgoing Ericsson CEO Borje Ekholm (pictured) warned higher component costs would impact profitability from its Networks business, as the vendor reported drops across its top line in Q2.

Ekholm highlighted Ericsson took action to mitigate component cost inflation and pledged the company would “continue to pursue internal measures and pricing action to help offset the effect” of likely continued increases in the coming quarters.

“We also expect some pressure on Networks adjusted gross margin in Q3 due to higher volumes of network rollout projects.”

Revenue declined 6% year-on-year to SEK52.7 billion ($5.4 billion) and net income 12% to SEK4 billion. The company attributed the decreases to lower IPR licensing revenue, reflecting a non-recurring benefit from a partial settlement in the comparable period of 2025.

Sales from Networks fell 8% to SEK33 billion due to negative currency impacts and declines in Europe and the Americas.

Its Enterprise division recorded a 19% sales drop.

The picture was brighter in Cloud Software and Services, with sales growing 3% to SEK14.7 billion.

Strength
The Q2 earnings report is the last to be overseen by Ekholm, who is due to leave at the end of September. His successor Per Narvinger will present Q3 figures.  

Ekholm signed-off by stating Ericsson enters the next phase of facing pressures “from a position of strength”.

“Over recent years, we have strengthened our portfolio to capture the next wave of AI-driven connectivity. Building on our technology leadership in mobile networks, we have expanded into attractive growth areas, positioning Ericsson to capitalise as AI increasingly moves into the physical world,” he said.

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