Nokia shares fall after reporting weak quarterly revenue

Shares of the Finnish telecommunications company Nokia fell Thursday after the company reported a 32% drop in second-quarter operating profit due to weak demand for its 5G equipment.

Shares in the Helsinki-listed company were down 8 percent at 9 a.m. London time, shortly after the market opened.

Earlier in the day, Nokia said its comparable operating profit fell to 423 million euros ($462 million) in the second quarter, down nearly a third from 619 million euros in the same period last year.

Citing “continued market weakness,” the company said its net sales also fell 18% to 4.47 billion euros – the lowest level since the fourth quarter of 2015, according to LSEG data.

“The most significant impact was the challenging prior-year comparison period, which saw the peak of the rapid 5G rollout in India, with India accounting for three-quarters of the decline,” Nokia CEO Pekka Lundmark said in the earnings press release.

The landscape also remains “challenging as operators continue to be cautious” in the mobile network sector, he warned.

Nokia nevertheless expects a “stabilized” industrial environment and a “significant acceleration in net sales growth in the second half” of the year, based on order intake recorded during the last quarter.

“Although momentum is improving, the recovery in net sales is coming somewhat later than expected, which impacts our business group’s net sales assumptions for 2024,” Lundmark said. “Despite this, we remain firmly on track to achieve our full-year guidance, driven by our swift action on costs.”

The company continues to target performance near or just below the midpoint of its full-year comparable operating profit guidance of €2.3 billion to €2.9 billion.

Nokia suffered a major blow with the loss of a major North American contract late last year, when US telecoms giant AT&T chose Ericsson as its supplier to build a telecoms network using only so-called ORAN technology.

The Finnish group and its Swedish rival Ericsson have launched drastic cost-cutting programs as they battle the economic slowdown and cut infrastructure spending by mobile operators. Last October, Nokia announced it would cut up to 14,000 jobs after its third-quarter profits fell, with a goal of reducing its gross costs by 800 million euros to 1.2 billion euros by 2026.

The group said on Thursday it had made “significant progress” on its cost-savings programme and implemented measures to reduce costs by 400 million euros to date.

— CNBC’s Arjun Kharpal contributed to this report.