Q2 Profit Falls Amidst Market Weakness
Nokia reported a significant decline in profit and sales for the second quarter, attributing this drop to a sluggish market where clients are hesitant to invest in 5G technology. The Espoo, Finland-based company saw its net profit fall to €328 million, a 20% decrease from €409 million in the same period last year. Net income attributable to shareholders also dropped to €325 million from €410 million.
Impact of Reduced 5G Investments
Similar to its Nordic competitor Ericsson, Nokia has faced challenges over the past year due to telecom operators scaling back investments in 5G and other technologies. This reduction is driven by economic uncertainty and high financing costs. The company’s net sales decreased by 18%, reaching €4.5 billion compared to €5.4 billion a year earlier.
CEO Comments on Financial Performance
Nokia’s CEO, Pekka Lundmark, acknowledged the continued impact of market weakness on the company’s financial performance. “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,” Lundmark stated. Despite these challenges, he expressed optimism about the company’s future sales performance.
Optimism for the Second Half of the Year
Nokia remains one of the leading suppliers of 5G technology, alongside Ericsson, Huawei, and Samsung. Lundmark believes the industry is stabilizing and expects a notable increase in net sales growth in the latter half of the year, especially in the network infrastructure business unit. “Looking forward, we believe the industry is stabilizing and given the order intake seen in recent quarters we expect a significant acceleration in net sales growth in the second half,” he said.
Challenges in Mobile Network Unit
Despite the optimistic outlook for the second half, Nokia’s mobile network unit, its largest business entity by sales, continues to face challenges. Operators remain cautious about investing in 5G technology and equipment. Lundmark noted, “the market dynamic remains challenging as operators continue to be cautious” of spending in this area.
SOURCE: Ref Image from Telecom
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