Nokia Posts Falling Network Sales, Lifts Cost-Saving Targets

Nokia's net sales of telecoms equipment fell more than expected in the first quarter as the Finnish company warned on Tuesday that earnings in its mainstay business would decline this year due to slowing demand in China.

In its first unified earnings report since taking control of rival Alcatel-Lucent in January, Nokia also nudged up its cost-cutting target for the merger, saying it was now seeking savings of "above" EUR 900 million (roughly Rs. 6,828 crores) in the course of 2018, compared to "approximately" EUR 900 million previously.

Net sales at the combined networks business dropped 8 percent from a year ago to EUR 5.18 billion ($5.89 billion), missing a market consensus of 5.51 billion.

Nokia said it expected networks sales in the full year to decline due to weak investing by the mobile operators as well as its focus on the integration of Alcatel-Lucent.

Nokia acquired Alcatel in a 15.6 billion euro all-stock offer to help the Finnish company more broadly compete with Sweden's Ericsson and China's Huawei in the market with limited growth and pressure on prices.

First-quarter non-IFRS earnings before interest and taxes (EBIT) at the Networks division jumped 61 percent from a year earlier to EUR 337 million, above the average analyst forecast of 270 million in a Reuters poll.

However, total group operating profit, which includes earnings from Nokia's patents, came in at EUR 345 million, roughly in line with a mean forecast of EUR 349 million in the poll.

© Thomson Reuters 2016