S&P trims Ericsson view to negative

S&P said it revised its outlook on Ericsson (Telefonaktiebolaget L.M.) to negative from stable. At the same time, S&P affirmed its long-term corporate credit and issue ratings on the company at BBB+ and the short-term rating at A-2.

The outlook revision primarily reflects Ericsson's weaker-than-expected revenue and profitability performance in the first half of 2016, and S&P’s view that revenues and margins are unlikely to materially rebound in the second half of 2016.

As a result, S&P said it has materially revised its EBITDA margin expectations for 2016 to about 9%-10% from about 15% before.

Nevertheless, S&P said it does expect a gradual recovery in margins in 2017 and 2018, primarily due to improving industry demand and significant cost cutting.

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