BARCELONA, SPAIN – FEBRUARY 26: A logo lights up at the Nokia booth during Mobile World Congress 2024 on February 26, 2024 in Barcelona, Spain. (Photo by Harvey Torrent/Getty Images)
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Finnish Telecom shares Nokia The company reported a 32% drop in second-quarter operating profit due to weak demand for 5G equipment, sending its shares tumbling Thursday.
The company’s Helsinki-listed shares fell 8% as of shortly after trading opened at 9 a.m. London time.
Earlier in the day, Nokia explain Comparable operating profit fell to 423 million euros ($462 million) in the second quarter, down nearly a third from 619 million euros in the same period last year.
Citing “ongoing market weakness,” the company said net sales also fell 18% to 4.47 billion euros – the lowest level since the fourth quarter of 2015, according to LSEG data.
“The most significant impact is the challenging year-on-year comparison, when 5G deployment in India was at its peak and fell by three-quarters.” Nokia CEO Pekka Lundmark said at the earnings conference.
He warned that the situation in mobile networks also remained “challenging as operators continue to remain cautious”.
Still, Nokia expects the industry environment to be “stable” this year and “net sales growth to accelerate significantly in the second half,” based on order volumes in the latest quarter.
“While conditions are improving, the recovery in net sales is later than we previously expected, impacting our business group net sales assumptions for 2024,” Lundmark said. “Nonetheless, amid our rapid actions on costs With the support of 2020, we remain firmly on track to achieve our full-year outlook.”
The company continues to target full-year results near or just below the midpoint of its comparable operating profit guidance of €2.3 billion to €2.9 billion.
Nokia suffered a huge blow late last year when it lost a major contract in North America when US telecoms giant AT&T selected Ericsson as a supplier to build a telecoms network using only so-called ORAN technology.
The Finnish company and Swedish rival Ericsson have embarked on deep cost-cutting plans amid an industry-wide battle against a slowing economy and cuts in infrastructure spending by mobile operators. As early as October, Nokia announced that due to a sharp decline in profits in the third quarter, the company would lay off as many as 14,000 employees and planned to reduce total costs by 800 million to 1.2 billion euros by 2026.
The company said on Thursday it had made “significant progress” on its cost-savings program and had taken actions aimed at reducing costs by 400 million euros so far.
— CNBC’s Arjun Kharpal contributed to this report.
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