STOCKHOLM (Reuters) – Nokia said on Thursday it expected a recovery in demand in the second half as weak sales of 5G equipment were offset by cost containment, as the Finnish telecoms equipment group announced having achieved a quarterly operating profit higher than forecast.
Telecommunications equipment suppliers such as Nokia and rival Ericsson are anticipating a tough year as operators scale back their purchases of new 5G equipment, prompting them to make cost cuts including job cuts.
Comparable operating profit (Ebit) fell to 846 million euros from 1.15 billion euros a year earlier, while analysts had expected 767.5 million euros, according to LSEG estimates.
Nokia, however, saw its gross margins improve, boosting profits as product sales shifted to software, which generates higher margins.
“Overall, we view the results as strong in a challenging environment,” JP Morgan analysts said in a note.
Nokia shares were up 8% at 11:20 GMT, among the best performers in the STOXX 600
The group said it expects its comparable operating profit for 2024 to be between €2.3 billion and €2.9 billion, while analysts forecast an average of €2.8 billion. euros, according to LSEG data.
“In network infrastructure there are signs of recovery,” Chief Executive Pekka Lundmark told Reuters.
Nokia, which announced in October it would cut up to 14,000 jobs, has signed a patent deal with Chinese smartphone maker Oppo and is close to resolving a dispute with another company.
Pekka Lundmark, however, said Nokia would withdraw from its Chinese joint venture with Huawei.
(Reporting Supantha Mukherjee, French version Augustin Turpin, editing by Zhifan Liu)
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