Nokia's net sales decline by 8% in the latest quarter, marking the lowest figure since 2015.
- In the second quarter, Nokia's comparable operating profit decreased by nearly a third from the previous year, reaching 423 million euros ($462 million).
- Pekka Lundmark, Nokia CEO, stated that the most significant impact was the challenging year-ago comparison period which saw the peak of India's rapid 5G deployment with India accounting for three quarters of the decline.
- In October, Nokia announced it might cut as many as 14,000 jobs due to a decline in third-quarter earnings.
On Thursday, Finnish telecom firm's shares plummeted due to a 32% decline in second-quarter operating profit resulting from low demand for its 5G equipment.
The Helsinki-listed stock of the firm dropped 8% at 9 a.m. London time following the market's opening.
In the second quarter of this year, Nokia reported a 32% decrease in its comparable operating profit, which amounted to 423 million euros ($462 million), compared to the 619 million euros recorded in the same period of the previous year.
According to LSEG data, the company's net sales decreased by 18% to 4.47 billion euros, which is the lowest level achieved since the fourth quarter of 2015, due to ongoing market weakness.
Nokia CEO Pekka Lundmark stated in the earnings release that the most significant impact was the challenging year-ago comparison period which saw the peak of India's rapid 5G deployment with India accounting for three quarters of the decline.
The mobile networks sector remains challenging as operators continue to be cautious, he warned.
Despite the current market conditions, Nokia predicts a steady industry environment and a substantial increase in net sales growth in the second half of the year, based on the order intake recorded in the recent quarter.
"Although the dynamic is improving, the net sales recovery is happening somewhat later than expected, affecting our business group net sales assumptions for 2024, Lundmark said. However, we remain on track to achieve our full year outlook due to our quick action on cost."
The company aims to achieve a comparable operating profit of between 2.3 and 2.9 billion euros for the year, which is slightly below its mid-point target.
Last year, Nokia suffered a significant setback when AT&T chose Ericsson as a supplier to construct a telecom network utilizing ORAN technology.
Amid an industry-wide battle against a slowing economy and infrastructure spending trims from mobile operators, Finnish firm Ericsson and Swedish rival Nokia have embarked on steep cost-cutting programs. In October, Nokia announced it would eliminate up to 14,000 jobs and lower its gross costs by between 800 million and 1.2 billion euros by 2026, following a plunge in third-quarter earnings.
The company announced on Thursday that it had made "significant progress" on its cost savings program and had taken steps to reduce costs by 400 million euros to date.
— CNBC's Arjun Kharpal contributed to this report.
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