Figure: Overview of Ericsson's 2019 Q2 financial report data.
According to the financial report, Ericsson's second quarter gross profit margin (excluding restructuring costs) was 41.4%, up from 40.2% in the same period last year, but it was down from 43.2% in the previous quarter. Caused by litigation settlement costs, strategic contracts and lower intellectual property license revenue.
Ericsson said that in the long run, these strategic contracts will increase profit margins, but will hurt profitability in the short term. The company's overall business gross margin for the quarter was 36.6%, compared to 34.8% for the same period last year.
“In the quarter, there was a negative impact on gross margin, and we expect this impact to increase in the second half of this year,” the earnings report said.
Ericsson’s quarterly operating profit rose to SEK 3.7 billion from SEK 200 million in the same period last year, in line with Reuters analysts’ expectations. Its net sales increased from SEK 59.8 billion in the same period last year to SEK 54.8 billion, a 10% increase year-on-year, driven mainly by sales growth in network business in North America and Northeast Asia.
In addition, Ericsson's net profit increased to SEK 1.8 billion in the quarter, compared with a net loss of SEK 1.8 billion in the same period last year.