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Swedish Ericsson sees shares sink after missing expectations

Swedish telecom giant Ericsson reported lower-than-expected profits for the third quarter on Thursday, sending its shares diving as the company stressed rising uncertainty in global markets.

Published: 20 October 2022 15:50 CEST
Swedish Ericsson sees shares sink after missing expectations
File photo of Ericsson's CEO Börje Ekholm. Photo: Jessica Gow/TT

Ericsson’s shares sank by more than 11 percent as the Stockholm stock exchange opened.

Sweden’s Ericsson reported a net profit of 5.4 billion Swedish kronor ($480 million) between July and September, down seven percent compared to a year earlier.

It was below analyst expectations of between 5.7 billion and 5.9 billion kronor, according to surveys by financial data firm FactSet and Bloomberg news agency.

The lower profits were partly due to Ericsson’s $6.2 billion acquisition of US cloud communications company Vonage.

Chief executive Börje Ekholm said the company would “continue to be proactive in reviewing options to reduce costs.”

“Cost efficiency is also crucial to allow investments in technology leadership and to strengthen our resilience in an uncertain market,” Ekholm said in a statement.

He added that Ericsson was making “pricing adjustments” as inflation soars worldwide.

Ericsson reported an increase in net sales to 68 billion kronor, up from 56.3 billion kronor the year before, but its sales were impacted by its departures from Russia following the invasion of Ukraine.

Ericsson said the withdrawal from the Russian market impacted sales by 800 million kronor.

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NORTHVOLT

Northvolt warns work permit salary threshold could jeopardise Sweden’s green transition

Sweden’s minimum salary threshold for work permits has increased by almost 120 percent in less than a year, and there are plans to increase it again to the median salary next summer. Battery manufacturers Northvolt warns that this could stop the company from hiring and retaining key workers.

Published: 3 July 2024 12:32 CEST
Northvolt warns work permit salary threshold could jeopardise Sweden's green transition

“Northvolt’s extensive labour requirements in northern Sweden cannot currently be met by permanently established workers in Sweden or within the EU,” the company wrote in a response to the government’s proposal to raise the salary threshold to the median salary, currently 35,600 kronor.

“This applies in particular to machine operators and technicians, whose minimum wages under collective bargaining agreements are lower than the median wage, and therefore are particularly vulnerable in this context.”

The EU has highlighted qualified machine operators and technicians as professions which are particularly hard to source within the bloc, meaning companies often have no choice but to source these workers from non-EU countries.

Northvolt has the added complication of being located in northern Sweden, an area which in general often struggles to find key workers in a number of industries, and the company isn’t convinced that enough is being done to fix this.

“Northvolt does not believe that the government and the Public Employment Service’s measures to promote geographic mobility in the Swedish labour market is going to be able to cover the company’s need for labour,” it wrote, while adding that it believes the proposed hike to the work permit salary threshold could have “significant consequences” for its facility in Skellefteå.

“Aside from the direct effects on the company, Northvolt sees a risk that staffing in healthcare, services and infrastructure in northern Sweden could be negatively affected by the salary threshold, which would indirectly affect Northvolt’s expansion.”

In addition to this, the company deems the proposed exemptions to the salary threshold – these would be put forward by the Migration Agency and the Public Employment Service based on professions where there’s a labour shortage – to be insufficient and unpredictable.

Northvolt’s criticism highlighted the fact that the exemptions are based on a model which is currently under development and which may not be ready by the time the law is due to come into force, as well as the fact that professions with a labour shortage will be defined using a so-called SSYK code.

Some key roles for Northvolt to do with battery production do not have one of these codes, as they are relatively new roles.

“It remains to be seen how the proposed model would effectively be able to identify professions with a labour shortage when they don’t have an SSYK code,” the company wrote, adding that this all makes it harder for the company to plan, for example, will an employee who is granted a work permit once be eligible for renewal two years later?

“The employee in that situation would risk being deported from Sweden. If that were to happen, it would be deeply unfair for the employee who has contributed to supporting Swedish society in a role where there is a shortage, and a catastrophe for the employer who has invested years of education and talent in the employee.”

“This lack of predictability can be compared to earlier notorious so-called kompetensutvisningar (talent deportations), and will further complicate the recruitment or necessary talent,” it wrote.

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