Nokia sales hit lowest since 2015 as 5G slump persists

Revenue in the period was the lowest since the end of 2015, before Nokia acquired Alcatel-Lucent for €10.6bn

Nokia Oyj sales between April and June of this year were the lowest of any period since 2015 and missed analyst estimates as weak investment in mobile network upgrades continues to hobble the 5G equipment market.

Net sales declined 18% to €4.47bn in the three months ending in June from a year earlier, the Espoo, Finland-based company said in a statement on Thursday. That compares to an average €4.76bn forecast by analysts surveyed by Bloomberg.

Nokia and its Nordic competitor Ericsson have faced a dismal telecom equipment market for years with few signs that mobile operators are going to invest big in 5G equipment anytime soon. Both companies have slashed thousands of jobs in the last year and streamlined operations to save costs.

The weak telecom equipment market has pushed Nokia to make major changes to its network infrastructure division, such as a $2.3bn bet on artificial intelligence-driven demand for data center services with the purchase of Infinera last month. It also plans to sell its underwater sea cable business to the French government.

“The order backlog is growing and that’s obviously a factor that we are seeing” contributing to an improving dynamic, Nokia Chief Executive Officer Pekka Lundmark said in an interview. 

“No question, volumes are extremely weak at the moment when you look at the top line.” 

Revenue in the period was the lowest since the end of 2015, before Nokia acquired Alcatel-Lucent for €10.6bn, according to data compiled by Bloomberg.

Adjusted operating profit was €423m in the three months to June, beating an average analyst estimate of €372m. Nokia reconfirmed its 2024 profit forecast.

“We have taken much action on cost and as you can see when you look at the profitability side of it that, despite the top line weakness, we have been able to defend the profitability pretty well,” Lundmark said.

Both net sales and operating profit in the period were boosted by €150m after settling an outstanding contract with US operator AT&T Inc., Nokia said.

The North American market is showing early signs of recovery, Lundmark said on a call with reporters, echoing remarks by Ericsson CEO Börje Ekholm last week. Ericsson beat out Nokia for a $14bn network deal with AT&T late last year.

​​Nokia shares have risen 17% so far this year.

Bloomberg.