(Reuters) -Nokia reported a 32% drop in second-quarter operating profit, citing weak demand for 5G telecom equipment, but the Finnish telecoms group said sales should recover towards the end of 2024 with the help of orders from North America.
The adjusted profit, excluding specific charges and asset revaluations for comparability, dropped to 423 million euros. This decline contrasts with the previous year’s 619 million euros for the same quarter.
Nokia and Ericsson faced reduced telecom equipment demand, prompting them to announce thousands of layoffs in response. #NokiaProfitDrop
Net sales fell 18% year-on-year, as the pace of investment in 5G technology in India, a key market, slowed after rapid growth a year before.
Jefferies analysts said that both sales and earnings missed forecasts when one-offs were excluded. Nokia’s shares were down 8% by 0718 GMT.
CEO Pekka Lundmark noted slower sales recovery but expects significant acceleration in net sales in the second half. His forecast aligns with recent projections from Ericsson.
The CEO pointed to an improving fibre market in the U.S and a $42 billion U.S government program to boost citizens’ access to high-speed broadband. #NokiaProfitDrop
“That’s creating some interesting additional dynamics right now for us because we are clearly the first mover there with a product portfolio that is compatible with the ‘Buy America’ requirements,” Lundmark told Reuters. He said that the real boost would be felt next year.
In Europe, Nokia and Ericsson could benefit as Chinese vendors lose market share. Germany’s decision to exclude Huawei and ZTE from its 5G network products by 2029 plays a significant role.
Looking ahead, Nokia is implementing strategic measures to mitigate the impact of the profit drop.
