Nokia Reports Sales and Profit Drop in Q2, Expects Recovery in H2

Nokia CEO Pekka Lundmark said that continued challenges for its Mobile Network division during the second quarter contributed to an 18% drop in sales across the business. However, he cited positive trends elsewhere and said he believes in predictions of a H2 revival.

In its financial results statement, Lundmark attributed the decline in Nokia’s sales to €4.5 billion, partly due to 2Q23 being the peak of 5G spending in India, making for a tough comparison. He did, though, also indicate mobile operators remained cautious with their spending in the recent quarter, taking a toll on its Mobile Networks division.

On a more positive note, Lundmark added that there had been significant customer tendering activity in 2024, with Nokia winning several deals. It also gained €150 million related to a contract resolution with US operator AT&T, which signed an open RAN deal with rival Ericsson late in 2023. He said the conclusion of negotiations with AT&T over its existing RAN agreements gives clarity on the path forward and ensures that they maintain the value agreed in the contracts.

Elsewhere, Lundmark highlighted improved order intake trends, especially in its fixed-focussed Network Infrastructure division, with an expectation of a meaningful improvement in net sales across the whole of Nokia in H2. “While the dynamic is improving, the net sales recovery is happening somewhat later than we previously expected, impacting our business group net sales assumptions for 2024. Despite this, we remain solidly on track to achieve our full-year outlook supported by our quick action on cost.”

Nokia is currently in the process of cutting overheads and reported it had already actioned €400 million out of a previously announced target of reducing costs between €800 million and €1.2 billion by end-2026. The vendor’s comparable net profit was down 20% to €328 million, with figures adjusted to take into account the pending sale of the submarine cable business, the division’s reallocation on Nokia’s books, an associated impairment, and other one-off items.