Nokia reported a 32% plunge in operating profit in Q2 blaming low demand for 5G telecoms equipment.
In a statement, the Finnish vendor detailed operating profit fell year-on-year from EUR619 million in Q2 2023, to EUR423 million in this quarter. Net sales fell 18% year-on-year to EUR4.4 billion, this was due to operators in India slowing down rates of investment after rapidly pumping money in the previous year.
Nokia CEO Pekka Lundmark expects a “meaningful improvement” to net sales in the second half of this year, despite results being “impacted by the ongoing market weakness”.
Lack of demand for 5G telecoms equipment also hit rival Ericsson. Both Nordic vendors have made massive lay-offs due to the weakened global demand for their equipment.
“Looking forward, we believe the industry is stabilising and given the order intake seen in recent quarters we expect a significant acceleration in net sales growth in the second half.
“While the dynamic is improving, the net sales recovery is happening somewhat later than we previously expected, impacting our business group net sales assumptions for 2024.
“Despite this, we remain solidly on track to achieve our full year outlook supported by our quick action on cost.
“We are currently tracking towards the mid-point or slightly below the mid-point of our comparable operating profit guidance of EUR 2.3 to 2.9 billion and towards the higher-end of our free cash flow conversion guidance of 30% to 60%,” said Lundmark.
