Ericsson, which has been criticized for its handling of a bribery probe in Iraq, warned on Thursday that it might face a fine from US authorities and announced a drop in first-quarter primary earnings as a result of its cessation of operations in Russia.
Investors openly chastised Chief Executive Borje Ekholm and the board of directors last week for their handling of the affair, which might lead to yet another fine from the US Department of Justice (DOJ).
Ekholm said that the settlement of these concerns might result in a variety of measures by the DOJ, including further monetary payments.
Ericsson stock was affected by the scandal
In his statement, the CEO said that the sum of the penalties could not be accurately estimated. Following the release of an internal report about possible payments to the Islamic State extremist organization in Iraq, the Swedish company’s stock has dropped significantly in the last two months.
Quarterly adjusted operating earnings declined from 5.3 billion Swedish crowns ($497.44 million) a year earlier to 4.7 billion Swedish crowns ($497.44 million).
According to Refinitiv data, the average forecast of 6.63 billion does not include a provision of 0.9 billion crowns relating to Russia published this week.
The company halted all operations in Russia
The company’s overall quarterly sales, on the other hand, increased by 11% to 55.1 billion crowns, exceeding expectations of 53.36 billion crowns.
Ericsson announced on Monday that it was halting its operations in Russia permanently due to the invasion of Ukraine, citing a $95 million provision in Q1 for asset impairment and other unforeseen costs.
A one-billion-pound yearly software deal, which was supposed to be reported in Q1, was pushed to Q2. Ericsson’s core earnings were 5.9 billion crowns, excluding the provision and other costs.