Nokia Reports 32% Decline in Profit, Expects Recovery in Second Half
Nokia reports a 32% decline in operating profit for the second quarter of 2024. Weak demand for 5G telecom equipment is cited as the key cause of the fall. Sales are likely to recover in the second half of the year, boosted by orders from North America.
The company declared a profit of 423 million euros (US$462.38 million), excluding certain costs and asset revaluations, as opposed to 619 million euros in the same quarter last year. Customers purchasing less telecom equipment has led to a fall in profit for both Nokia and its rival Ericsson.
Net revenues declined 18% year on year, owing mostly to a delay in 5G technology investment in India, Nokia's key market. Despite missing sales and profitability predictions when one-time costs are excluded, Nokia's CEO, Pekka Lundmark, remains optimistic that sales would increase significantly in the second half of the year.
Lundmark cited the improving fibre market in the United States and a $42 billion government programme focused at increasing citizens' access to high-speed broadband as factors that will help Nokia recover. He underlined that Nokia's product portfolio meets the "Buy America" requirements, establishing the company as a market leader.
In Europe, Nokia and Ericsson may benefit from Chinese vendors losing market share as a result of Germany's decision to prohibit Huawei and ZTE from its 5G network equipment beginning in 2029. However, Lundmark noted that Nokia is still evaluating the impact of this move.
Despite the obstacles encountered in the first half of the year, Nokia maintains its full-year forecast for similar operating profit. Analysts predict that the outlook will remain challenging until the end of 2024.
Nokia reports a 32% drop in operating profit for Q2 2024.
Weak demand for 5G telecom equipment is cited as the primary reason for the decline.
Sales are expected to recover in the second half of the year, driven by orders from North America.
Source: REUTERS