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Finnish telecommunications equipment provider Nokia said it had returned to profit in the second quarter and hiked its 2020 forecasts, despite a drop in sales due to the coronavirus pandemic.

Net profit came in at 94 million euros ($112 million) compared to a loss of 193 million euros during April-June last year. The result was still far below the analyst consensus of a profit of 142 million euros compiled by Factset.

“Nokia delivered a strong improvement in Q2, with better-than-expected profitability, significant improvement in cash generation, clear indications of a return to strength in mobile radio, and a year-on-year increase in earnings-per-share, despite the challenges of COVID-19,” outgoing CEO Rajeev Suri said in a statement.  Pekka Lundmark, who until now served as CEO of Finnish energy company Fortum, will take over from Suri.

Sales fell by 10.6 percent to 5 billion euros, with Nokia estimating the impact from the coronavirus pandemic at 300 million euros for the second quarter.

“We expect that the majority of sales missed in the quarter due to COVID-19 will shift to future periods,” said Suri.

The company managed to increase its operating margin to 8.3 percent from 7.9 percent one year ago, using a method that is not compliant with international accounting rules. For this year it now aims to increase this measure to 9.5 percent, “plus or minus 1.5 percentage points,” compared to an earlier forecast of 9.0 percent, with cash flow now clearly positive. In October 2018, the company announced a 700 million euros cost savings plan, which is still ongoing.

On 5G, Nokia’s outgoing CEO said, “In Mobile Access, we saw healthy improvements in our radio portfolio, where roadmaps are strengthening, costs are coming down, and product performance is rising. We have a particularly powerful portfolio in mid-band mobile radio, with proven products deployed with 55 customers, and the first live C-Band network demonstrated in the U.S. during the quarter. Pleasingly, our “5G Powered by ReefShark” shipments continue to increase and we believe we remain on track to reach 35% or better by year end. And, we now have 83 5G deals.”

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