Jakob Bluestone

Jakob Bluestone asked about potential supply chain shortages impacting growth, specifically concerning memory price increases, their share of the bill of materials, hedging strategies, and ability to pass on costs to customers.

Answer

Lars Sandström, SVP and CFO, stated that Ericsson has worked on supply chain resiliency and is well-positioned regarding memory price increases for the year. He mentioned managing pricing through a mix of impacts and close collaboration with suppliers and customers, and that avoiding shortages involves inventory management and long-term supplier relationships.

Jakob Bluestone of BNP Paribas sought clarification on tariff-related impacts in Q2, asking if the margin hit aligned with the 100-basis-point guidance and what the expectation is for Q3.

Answer

CFO Lars Sandström stated that the tariff impact in Q2 was approximately the guided one percentage point. He described the quarter as more 'normal' regarding customer purchasing patterns compared to Q1 and expects a similar level of tariff impact going forward, based on current information.

Jakob Bluestone of BNP Paribas requested an update on the competitive environment in the Radio Access Network (RAN) market, with a specific focus on any changes in pressure from Chinese vendors.

Answer

CEO Börje Ekholm stated that the competitive landscape has been largely unchanged over the last few years, characterized by some footprint gains and losses. He reiterated Ericsson's commitment to maintaining commercial discipline rather than chasing every contract.

Jakob Bluestone from BNP Paribas asked for the reason behind the year being so heavily skewed towards Q4 and whether the midpoint of the revised guidance is covered by the existing order book.

Answer

CFO Marco Wirén explained that the Q4 weighting is a long-standing industry pattern driven by CSPs utilizing remaining CapEx budgets late in the year. He stated that while order coverage varies by business, with project-based businesses having longer visibility, the current order coverage does not deviate from the normal pattern seen in previous years.

Jakob Bluestone of BNP Paribas asked for the reason behind the year being so heavily weighted to Q4 and whether the midpoint of the current guidance is covered by the existing order book.

Answer

CFO Marco Wirén explained that the Q4 weighting is a normal industry pattern driven by CSPs making late-year budget decisions. He stated that while order coverage varies by business, the current situation shows no deviation from the normal pattern for this time of year, and they are not dependent on large, unbooked deals to meet the guidance.

Jakob Bluestone asked for clarification on who contractually bears the cost of tariffs and requested details on the new T-Mobile contract, such as its start date and margin profile.

Answer

President and CEO Justin Hotard explained that contracts vary across businesses, so there isn't a single answer on who bears tariff costs, but reiterated that all mitigation options are being explored. Regarding the T-Mobile deal, he described it as a significant multiyear extension and a signal of a strong partnership but declined to share further contractual or financial details.

Asked for clarification on whether Nokia or its customers bear the cost of tariffs under their contracts, and requested details on the timing and margin profile of the new T-Mobile contract.

Answer

There is no simple answer on who bears tariff costs, as contracts vary across businesses and have different exposures. Nokia is evaluating all mitigation alternatives. No further details on the T-Mobile contract, including timing or margin profile, will be provided beyond stating it is a significant multi-year extension.

Jakob Bluestone asked if the €200 million cut in CapEx guidance was due to currency effects or a strategic scale-back in response to potential tariffs.

Answer

CFO Sven Schneider explained the CapEx cut was primarily due to pushing out major front-end building investments in Dresden and Kulim, with only a minor currency effect. CEO Jochen Hanebeck added that the Dresden fab is still considered necessary long-term, and the delay is a matter of detailed timing, not a change in strategy.

Jakob Bluestone asked if the €200 million reduction in the CapEx guidance was primarily due to currency effects or a strategic scaling back in response to potential tariffs.

Answer

CFO Sven Schneider clarified that the main driver for the CapEx reduction was the push-out of investments in major front-end buildings, specifically in Dresden and Kulim, into the next fiscal year, with only a minor currency effect. CEO Jochen Hanebeck added that this is a timing adjustment and the long-term need for the capacity remains unchanged.