Ericsson Q1 LatAm sales down on competition, lower client investments

Ericsson reported another weak quarter for Latin America, amid unfavorable market conditions.

Sales decreased on an annual basis due to "continued intense competition and lower customer network investments," Ericsson said in its financial statement.

Starting in Q1, the company also changed the way it reports results for the region. 

Until the end of 2024, Latin America was part of the market area Europe & Latin America. Now, the region is included in the new market area Americas, whereas Europe is reported with Middle East & Africa.

According to Ericsson, the financial reporting reflects the new structure and prior quarters have been restated accordingly, the company said.

In the Americas, Ericsson saw a 26% North America-driven revenue growth in Q1, to 20.8bn kronor (US$2.1bn), or 34% of its global net sales.

The Americas market area was the only one to have seen an increase in sales and helped propel the company's total results towards 3% global growth, reaching revenue of 55bn kronor. 

Global net income jumped 61% to 4.2bn kronor.

Tariff impacts

In North America, sales for the core networks segment grew strongly, Ericsson said, benefiting from previous contract wins and accelerated network investments by other customers. 

According to the vendor, this effect is also in part related to the scenario of tariff uncertainty in the US, as clients sought to buy gear ahead of the new duties.

Meanwhile, North American sales for cloud software and services declined, which the company attributed to the "timing of project deliverables."

Overall, the Americas region saw a 64% sales increase in networks and a 25% decrease in cloud software and services.

Looking ahead, Ericsson said that increased uncertainty remains part of the outlook for Q2, both in terms of potential for further tariff changes as well as in the broader macroeconomic environment.

"Based on our current assessment of announced tariffs, and including a negative impact from tariffs estimated at approximately 1 percentage point, adjusted gross margin in Q2 is expected to be in the range of 48% to 50%," Ericsson said about the networks category.