Nokia Reports 32% Drop In Profit But Sees Recovery In 2nd Half

Nokia reported a 32% drop in second-quarter operating profit, citing weak demand for 5G telecom equipment.

The Finnish telecoms group anticipates a recovery in sales towards the end of 2024. I Photo: Open Grid Scheduler / Grid Engine Flickr

However, the Finnish telecoms group anticipates a recovery in sales towards the end of 2024, aided by orders from North America, Olivier Sorgho and Supantha Mukherjee reported for Reuters.

The profit, excluding certain charges and asset revaluations to make it comparable with last year's results, fell to 423 million euros ($462.38 million) from 619 million euros in the same quarter a year earlier.

Both Nokia and its rival Ericsson have been affected by customers buying less telecom equipment and have announced thousands of layoffs in response.

Net sales fell 18% year-on-year as the pace of investment in 5G technology in India, a key market, slowed after rapid growth the previous year. Jefferies analysts noted that both sales and earnings missed forecasts when one-offs were excluded.

Nokia's shares dropped by 8%. CEO Pekka Lundmark stated that sales were taking longer to recover than earlier anticipated but forecast that net sales would significantly accelerate in the second half of the year, echoing similar forecasts made last week by Ericsson.

The CEO pointed to an improving fiber market in the US and a $42 billion US government program to boost citizens' access to high-speed broadband.