Similarly to its Swedish rival Ericsson, Nokia has suffered from customers buying less telecom equipment and operators cutting back on investments into 5G leading to many lay-offs in response.
ADVERTISEMENTWireless and fixed-network equipment maker Nokia saw a fall of 32% in operating profit in its second quarter due to a lack of demand, and clients holding off investments in 5G technology.
The Espoo, Finland-based company reported a net profit of €328 million for the April-June period, down 20% from €409 million a year earlier. Its comparable operating profit fell to €423m from €619m a year earlier in the same quarter. Net income attributable to shareholders was €325 million, down from €410 million a year earlier.
Similarly to its Swedish rival Ericsson, Nokia has suffered from customers buying less telecom equipment and operators cutting back on investments into 5G leading to many lay-offs in response.
"Our financial performance in the second quarter continued to be impacted by the ongoing market weakness with net sales declining 18% year-on-year in constant currency," Nokia CEO Pekka Lundmark said in a statement. Nokia's sales were down 18% at €4.5 billion compared with €5.4 billion a year earlier.
The Finnish company is one of the world's main suppliers of 5G, the latest generation of broadband technology along with Ericsson, China's Huawei, and South Korea's Samsung.
However, in Nokia's mobile network unit, the biggest business entity during the quarter by sales, “the market dynamic remains challenging as operators continue to be cautious” of spending in 5G technology and equipment, Lundmark said.
They forecast a demand improvement to happen in the second half. "Despite this, we remain solidly on track to achieve our full-year outlook supported by our quick action on cost." Lundmark said.
Nokia's full-year 2024 outlook is unchanged and they are expecting "comparable operating profit between €2.3 billion and €2.9 billion and free cash flow conversion from comparable operating profit between 30% and 60%," according to a statement.
