STOCKHOLM (Reuters) – Nokia (HE:NOKIA)’s fourth-quarter operating profit beat expectations on Thursday despite weak sales of 5G equipment as the Finnish telecom gear maker kept a tight lid on costs, and forecast demand recovery in the second half of 2024.
Telecom equipment suppliers like Nokia and Swedish rival Ericsson (BS:ERICAs) are set for a challenging year as mobile operators cut back on purchasing new 5G gear.
U.S. telecom operator Verizon (NYSE:VZ), for example, spent $18.8 billion in 2023 on capital expenditures, compared to $23.1 billion in 2022, and plans to cut spending to between $17 billion and $17.5 billion this year.
Nokia’s quarterly comparable net sales dropped 23% to 5.71 billion euros, missing estimates of 6.28 billion euros.
“Looking ahead, we expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter,” CEO Pekka Lundmark said in a statement.
But, “we are now starting to see some green shoots on the horizon,” he added.
The company expects growth in network infrastructure sales in the second half of the year and margins to improve as cost-cuts and benefits from deals kick in.
Nokia, which laid out plans in October to cut up to 14,000 jobs, had signed a patent deal with Chinese smartphone maker Oppo and is close to resolving a dispute with another company.
The company expects full year 2024 comparable operating profit of between 2.3 billion euros to 2.9 billion euros, compared with estimates of 2.38 billion euros.
Comparable earnings before interest and tax (EBIT) fell to 846 million euros ($920.2 million) from 1.15 billion euros last year, beating the 767.5 million euros expected by analysts in an LSEG poll.
Nokia, however, saw improvement in gross margin-boosting profits as sales of products shifted towards software.
($1 = 0.9194 euros)
Source:reuters