Nokia Announces a 32% Decrease in Profits, with an Expected Recovery in the Second Half of the Year (H2)
Nokia experienced a 32% decline in its second-quarter operating profit due to subdued demand for 5G telecommunications equipment. However, the Finnish telecommunications conglomerate anticipates a sales rebound towards the end of 2024, driven by orders from North America.
The adjusted profit, excluding specific expenses and asset
revaluations for year-over-year comparison purposes, decreased from 619 million
euros in the corresponding quarter of the previous year to 423 million euros
($462.38 million).
Warner Bros Discovery has held discussions regarding a
potential strategic reorganization involving the separation of certain key
business segments.
Nokia and its competitor Ericsson have experienced a decline
in demand for their telecommunications equipment, prompting both companies to
announce significant workforce reductions.
Net sales experienced an 18% year-over-year decline,
primarily attributed to a deceleration in the pace of 5G technology investments
within the Indian market. This market had previously exhibited rapid growth in
the preceding year.
Jefferies analysts reported that both sales and earnings
fell short of projections when excluding non-recurring items. Consequently,
Nokia’s shares experienced a decline of 8% by 07:18 GMT.
Our CEO, Pekka Lundmark, shared that sales recovery is
taking longer than previously anticipated. However, he projects a substantial
acceleration in net sales during the latter half of the year, aligning with
similar forecasts recently provided by Ericsson.
The Chief Executive Officer highlighted an upswing in the
fiber market within the United States, coupled with a substantial $42 billion
initiative undertaken by the U.S. government to enhance citizens’ access to
high-speed broadband internet connectivity.
"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 the European market, Nokia and Ericsson may experience a
potential increase in their business opportunities due to the recent decision
by Germany to exclude Chinese vendors, including Huawei, from participating in
the nation’s 5G network infrastructure projects from the year 2029 onwards.
This development could result in a shift in market share dynamics, potentially
benefiting Nokia and Ericsson.
Lundmark stated that Nokia is currently assessing the
potential implications of the aforementioned decision.
The organization maintained its annual projection for
comparable operating profit. Inderes analysts indicated that the outlook would
likely face ongoing challenges until the end of the year.