Nokia, the Finnish telecom equipment company, released its financial results for the third quarter. Here are the highlights:
The company reported a comparable net profit of 304 million euros ($320.4 million) for Q3, a decrease from 550 million euros in the same period last year. The FactSet analyst poll had predicted a net profit of 399 million euros. On a reported basis, net profit stood at 139 million euros, falling short of the expected 325 million euros.
Sales for the quarter experienced a 20% decline, totaling 4.98 billion euros. This figure was below the FactSet poll’s forecast of 5.67 billion euros.
Nokia aims to achieve cost savings between 800 million and 1.2 billion euros by 2026. To reach this goal, the company plans to cut jobs within a range of 9,000 to 14,000 positions from its current workforce of 86,000 employees.
Nokia’s network infrastructure business witnessed a 14% decrease in sales during the quarter due to reduced customer spending. Additionally, sales in mobile networks plummeted by 19%, largely due to a significant decline in North America sales and slower 5G deployments in India. The company cited macroeconomic challenges, operator spending pressures, customer inventory digestion, and moderation in India’s 5G deployment pace as contributing factors to this decline.
Nokia’s group comparable operating margin for the quarter was 8.5%, down from 10.5% in the same period last year. Within the network infrastructure unit, the gross margin increased to 36.3%, but the operating margin decreased to 9.5%. In mobile networks, both the gross margin and operating margin witnessed declines, falling to 34.8% and 4.6% respectively. These changes primarily reflect the shift in regional mix.
Nokia maintained its 2023 guidance, projecting net sales between 23.2 billion euros and 24.6 billion euros, alongside a comparable operating margin of 11.5% to 13%. However, the company stated that it anticipates landing toward the lower end of the sales range and the midpoint of the operating margin range. Nokia remains confident in achieving its long-term target of a comparable operating margin of at least 14% by 2026, thanks to the planned cost savings.