Nokia, a global leader in wireless and fixed-network equipment, reported lower-than-expected profits and a significant decline in sales for the first quarter of the year. This drop was primarily due to clients’ lack of investment in 5G technology, which weakened the market overall.
The company, headquartered in Espoo, Finland, disclosed a net profit of 501 million euros ($535 million) for the January to March period. While this represented a 46% increase from the previous year, it still fell short of analysts’ expectations. One-off gains from Nokia’s licensing business contributed to the profit, while net income attributable to shareholders rose to 497 million euros from 332 million euros year-over-year.
Nokia’s sales also experienced a significant decrease of 20% to 4.7 billion euros during the first quarter. The ongoing weakness in the telecom equipment market was a major factor impacting the company’s performance. Operators are scaling back on investments in 5G and other technologies due to economic uncertainty and high financing costs.
Despite these challenges, Nokia CEO Pekka Lundmark expressed confidence in a stronger second half of the year and achieving full-year outlook. He highlighted improved order intake as a positive sign for the company’s future prospects.
Nokia is a key player in the 5G market alongside Ericsson, Huawei, and Samsung. Lundmark acknowledged low levels of spending on 5G technology in North America and India during the first quarter, which affected Nokia’s mobile network unit performance as its second-largest business entity. However, looking ahead, Lundmark remains optimistic about growth opportunities for Network Infrastructure unit in the second half of 2024 and expects net sales growth for full year despite challenging market conditions.
In summary, Nokia has recently reported lower than expected profits and sales decline for Q1 due to weak investment in 5G technology by clients which has led an overall weakening of market demand. Despite this setback, CEO Pekka Lundmark remains optimistic about future growth opportunities for Network Infrastructure unit and achieving full-year outlook with improved order intake as positive sign for company’s future prospects
