Thursday, October 28, 2021
Surprisingly strong summer
Nokia saves itself back on the road to success
Global investments in wireless networks are generating increasing revenue for Nokia. Thanks to the red pencil, profitability also increases. Too much optimism is now being held back by the uncertainty in the chip market.
The Finnish network supplier is making further progress with its realignment. In the summer, the operating result climbed – also thanks to savings – over the year by almost a third to 633 million euros, as Nokia announced. That was well above the expectations of analysts. Sales increased by two percent to 5.4 billion euros.
The company’s net income on a like-for-like basis for the quarter increased from € 300 million a year ago to € 454 million. For the full year, the company is now assuming that the margins will be at the upper end of the forecast range. However, it cautioned that both availability and “unforeseen” component cost inflation could hurt margins for the next year.
For the full year Nokia continues to expect net sales of 21.7 billion to 22.7 billion euros, while the adjusted operating margin is likely to be at the upper end of the range of 10 to 12 percent. “The uncertainty about the global semiconductor market limits our view of the fourth quarter and the year 2022,” said CEO Pekka Lundmark. The company works closely with suppliers to ensure component availability and with customers to meet their needs and mitigate unprecedented component cost inflation. “Coupled with the one-off measures we have benefited from this year, this could limit our potential for margin expansion in 2022,” added Lundmark.
Lundmark has streamlined Nokia’s business, given the company a new organizational structure and initiated the elimination of up to 10,000 of the approximately 90,000 jobs. In this way, he wants to get the costs under control and invest more heavily in research and development again.