By Dominic Chopping

STOCKHOLM--Sweden's Ericsson is due to report second-quarter earnings on Tuesday. Here is what you need to know:

NET PROFIT: The telecom-equipment maker is expected to post a net profit of 3.39 billion kronor ($354.6 million), according to a consensus provided by FactSet, compared with a loss of 11.13 billion kronor in the same period a year prior. Earnings last year were weighed by an impairment of 11.4 billion kronor related to its Vonage cloud communications subsidiary.

SALES: A FactSet forecast expects sales to slip 0.9% to 59.29 billion kronor from 59.85 billion kronor a year earlier.

The stock is up around 9.2% from a year ago and trades at 77.40 kronor on Monday.

WHAT TO WATCH:

--Ericsson has previously guided for a negative impact from tariffs in its networks business of around one percentage point, with its second-quarter adjusted gross margin in the unit expected to be in the range of 48% to 50%. It expects network sales growth in the second quarter to be broadly similar to the three-year average seasonality of 8%.

--In the first quarter, the company reported a strong group adjusted gross margin at 48.5%, thanks mainly to a network gross margin of 51%. The network gross margin was driven by cost savings and geographical mix, with more sales in North America. UBS expects a second-quarter group gross margin of 46.7%.

--UBS expects the trend to slow in 2025 as the U.S. market normalizes in 2025, leading to a less favorable mix. "Therefore, North America networks' performance will be closely watched in the upcoming results," analyst Francois-Xavier Bouvignies said in a note.

--Although the radio access network market is still expected to stabilize in 2025--after the crash in 2023-24--there is still some downside risk in the coming months, depending on the final outcome of U.S. tariffs, Kepler Cheuvreux analyst Sebastien Sztabowicz says.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

July 14, 2025 05:34 ET (09:34 GMT)

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