Swedish investors hold breath on Ericsson

First quarter results from telecoms giant Ericsson later today are being closely watched for any adverse impact on local investors.

The chief concerns being expressed by analysts are around margins because of the ongoing strength of the local currency, the Swedish Krona, and the impact of Japan’s devastating earthquake.

The impact of currency is something all Sweden based exporters are struggling with. Less known currently is the precise impact of the earthquake.

As with other industries, there is concern that supply chain disruption to key components could hit Ericsson’s global business of supplying mobile telecommunications network equipment. The company claims that 40% of all global mobile phone traffic goes through its equipment, used by more than 1,000 network operators. Other business areas hit by Japan’s earthquake include the manufacturing of silicon chips, camera components, and automobiles with the likes of Toyota already stating that global production will not recover until later this year.

Ericsson’s mobile phone business was hived off some years ago to become SonyEricsson, a 50/50 venture, sales of which are not included in Ericsson’s own figures.

Ericsson’s importance to local investors comes via both direct and indirect holdings. For example, technology, media and telecoms (TMT) makes up about 6% in Lannebo Sverige, one of the biggest and best known Sweden funds in which local retail investors have directly invested their money.

However, indirect exposure may be more important for asset management, pension and insurance investors alike. Key investors in Ericsson include Investor AB – the biggest shareholder in Ericsson, with 19.3% of the votes – and Industrivärden AB, with 13.6% of the votes. Investor is the holding company of the Wallenberg family, one of the Nordic region’s biggest investment vehicles. However, Investor itself is listed, and its own key shareholders include the likes of Alecta (2.5% of votes), Skandia Liv (4.1%), Swedbank Robur funds (2.3%), SEB Investment Management (0.6%), Handelsbanken funds (0.5%), and Oppenheimer funds (0.3%). The vote share does not reflect the capital share because of the continued offering of both A and B shares in the company.

Ericsson’s results are scheduled for publication at 11pm Central European Time on 26 April, with a conference call scheduled for 5pm Central European Time on 27 April.


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