Nokia profit falls as US clients slash spending

By AFP   July 20, 2023 | 03:01 am PT
Nokia profit falls as US clients slash spending
A screen displays the company logo for Nokia Corporation on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2023. Photo by Reuters/Brendan McDermid
Finnish telecommunications equipment maker Nokia reported a sharp fall in second-quarter profits on Thursday, dragged down by a drop in investment by North American mobile phone operators.

The company, which is competing with Swedish rival Ericsson and China's Huawei in the global rollout of 5G equipment, said the deployment in India drove growth for its mobile network business.

But net sales fell in North America as clients continue to review their spending and reduce their inventory levels.

Nokia said its net profit fell by 37% to 289 million euros ($324 million) in the second quarter compared to the same period last year -- well below the two billion euros forecast in a Bloomberg survey of analysts.

Net sales reached 5.7 billion euros, down three percent, though they were flat on a constant currency basis.

Net sales fell by 42% in North America alone while soaring by 333% in India.

Macroeconomic "uncertainty" weighed on sales of network infrastructure.

"Considering the significant decline in major North American operators' investments, our operating margin has proved resilient," chief executive Pekka Lundmark said in an earnings statement.

Nokia was able to deliver an operating margin of 11% "as a result of prudent management of our costs.

Last week, Nokia issued a statement lowering its outlook for the year, warning that high inflation and rising interest rates were increasingly affecting customer spending plans, notably in North America.

Its rival Ericsson reported a rare net quarterly loss as mobile phone operators scale back investment in 5G networks.

"Earlier in the year I highlighted that we were starting to see signs of macroeconomic challenges along with inventory digestion impacting customer spending and this has intensified through the second quarter," Lundmark said.

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