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Nokia Q3 Operating Profits Below Expectations Amid Strong Demand From Phone Makers, India 5G Rollout

Nokia said that the firm's comparable operating margin fell year-on-year to 10.5 percent from 11.7 percent.

Nokia Q3 Operating Profits Below Expectations Amid Strong Demand From Phone Makers, India 5G Rollout

Photo Credit: Reuters

Nokia expects growth on a constant currency basis in its markets in 2023

Highlights
  • Nokia expects its 5G deals will allow it to outperform the market
  • Ericsson also posted weaker-than-expected core earnings on Thursday
  • Nokia's share price is down some 15 percent year-to-date

Nokia on Thursday reported quarterly operating profit below market expectations even as the Finnish telecom equipment maker continues to benefit from strong demand from phone companies as they roll out 5G.

Third-quarter comparable operating profit rose to EUR 658 million (roughly Rs. 5,500 crore) from EUR 633 million (roughly Rs. 5,150 crore) last year, lagging the EUR 690.6 million (roughly Rs. 5,600 crore) mean forecast of 10 analysts polled by Refinitiv.

While increasing macro and geopolitical uncertainty could have an impact on some customers' capex spending, Nokia expects growth on a constant currency basis in its markets in 2023, Chief Executive Officer Pekka Lundmark said.

"Considering our recent success in new 5G deals in regions like India which are expected to ramp up strongly in 2023, we believe we are firmly on a path to outperform the market and to make progress towards achieving our long-term margin targets," he said.

Net sales grew 6 percent in constant currency in the quarter compared to the same period a year ago to EUR 6.24 billion (roughly Rs. 50,700 crore), beating estimates of EUR 6.06 billion (roughly Rs. 50,000 crore).

But the comparable operating margin fell year-on-year to 10.5 percent from 11.7 percent as improving profitability in Mobile Networks and Network Infrastructure was offset by timing effects of contract renewals in Nokia Technologies, the company said.

Rival Ericsson also posted weaker-than-expected core earnings on Thursday.

Nokia's share price is down some 15 percent year-to-date, outperforming Ericsson's 28 percent drop and in line with European telecoms stocks which on average are down 15 percent in 2022.

© Thomson Reuters 2022


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