Interim reports|Analysts estimate that the company’s comparable operating profit has decreased by 40 percent.
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The summary is made by artificial intelligence and checked by a human.
According to analysts’ preliminary estimates, Nokia’s turnover has shrunk by 17 percent and operating profit by 40 percent in April–June.
In the same period, Ericsson’s turnover shrank by seven percent, but operating profit grew by 14 percent.
If the analysts’ predictions come true, Nokia may have to lower its estimate of the development of its profitability
Network devices the difficulties of the manufacturer Nokia have hardly abated. It is therefore possible that the company will have to lower its estimate of the development of its profitability in its interim report on Thursday.
According to analysts’ preliminary estimates, the company’s turnover has decreased by 17 percent to 4.8 billion euros in April–June, and comparable operating profit by 40 percent to 373 million euros. A year ago, in the same period, the operating profit was 626 million euros.
Analysts estimate that the turnover of Nokia’s mobile phone networks has decreased by almost 30 percent to 1.9 billion euros and that the operating profit is only 2.3 million euros.
In the spring, Nokia estimated that the difficulties would ease in the second half of the year as the demand for fixed networks recovers.
Key the problem is still low demand for mobile network equipment, as telecom operators have postponed their investments. Nokia’s Swedish competitor has also warned of a weak market.
However, Ericsson’s turnover increased in April–June in North America, where Nokia’s market position is not as strong.
Overall, Ericsson’s turnover decreased by seven percent to 5.2 billion euros in the second quarter, but the comparable operating profit increased by 14 percent to 278 million euros.
Due to the weakness of the market, the pressure on Nokia to hasten its cost cutting increases, which could mean new job cuts.
Nokia has long been striving to increase the share of business customers in its sales. By business customers, Nokia means non-telecom operators who mainly buy mobile network equipment and software.
At the end of June, the company announced that it would buy Infinera, a US specialist in optical networks, for 2.3 billion dollars, or 2.1 billion euros.
The purpose of the deal is specifically to expand the customer base so that the company’s dependence on telecom operators gradually decreases, CEO Pekka Lundmark said when announcing the deal.
Nokia believes that it has the opportunity to improve its comparable earnings per share by at least ten percent by 2027.
Its profitability to protect it, Nokia announced new cost cuts in October. The company plans to cut its costs by 800–1,200 million euros by the end of 2026. The cuts mean between 9,000 and 14,000 job cuts around the world.
Correction 17.7. at 5:34 p.m. In the intro of the article, it was previously erroneously written that, according to analysts’ estimates, Nokia’s turnover would have shrunk by 40 percent. It is an estimate of the change in comparable operating profit.
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