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.