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(Sharecast News) - Ericsson reported a stronger-than-expected rise in first-quarter profit on Tuesday, driven by a surge in US operator demand, even as global sales remained flat and trade tensions introduced new uncertainty.
Adjusted operating earnings climbed 44% year-on-year to SEK 6.2bn (£475.44m), significantly ahead of analysts' average estimate of SEK 4.44bn.
The improved profitability was supported by a higher-margin sales mix and strict cost controls.
Gross margins rose to 48.2% from 42.5%, and the adjusted EBITA margin reached 12.6%.
Revenue for the quarter came in at SEK 55bn crowns, a 3% annual increase, though in organic terms the figure was flat, reflecting weaker demand outside the Americas.
North America - now Ericsson's largest regional market - grew 20% year-on-year and contributed nearly 38% of total group sales.
Growth was attributed to rising investments by US telecom operators, including deliveries under a multi-billion-dollar network deal with AT&T.
However, Ericsson's growing reliance on the US market, amid a volatile geopolitical and trade environment, was introducing fresh risks.
The company acknowledged that uncertainty surrounding potential new tariffs imposed by the Trump administration could pressure future margins and customer investment decisions.
It said the impact of the tariffs was expected to shave roughly one percentage point off the networks segment's gross margin in the second quarter.
Chief financial officer Lars Sandström said Ericsson had already taken steps to mitigate supply chain disruptions, including building inventory and leveraging its globally distributed manufacturing footprint.
However, he warned that any further escalation in tariffs could influence how and where Ericsson manufactures its products.
CEO Börje Ekholm reiterated confidence in the company's long-term strategy, citing Ericsson's focus on cost discipline, product innovation, and a shift toward "programmable networks" as key to maintaining competitiveness.
"We are not immune, but we are resilient," he said, highlighting a diversified supply chain and plans to expand a "Western ecosystem" for components to reduce dependence on Asian suppliers.
Outside North America, market conditions remained challenging.
Revenue declined across Europe, Asia, and Latin America as capital expenditures slowed and competition from Chinese vendors intensified.
Ericsson said its enterprise segment also continued to underperform, with the CEO expressing hope for stabilisation later in 2025.
At the close on Tuesday, shares in Telefonaktiebolaget LM Ericsson were up 7.88% in Stockholm, at SEK 79.40.
Reporting by Josh White for Sharecast.com.