Nokia sales lowest since 2015

Nokia's net sales declined 18% to €4.47bn between April and June compared to a year earlier. 

Sales at Finnish telecoms company Nokia fell during the second quarter to their lowest of any period since 2015, missing 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 quarter from a year earlier, the company said on Thursday.

The revenue excludes its undersea cable business, which it is selling. It compares to an average €4.76bn forecast by analysts. Nokia shares fell 9%.

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 €2.1bn bet on artificial intelligence-driven demand for data centre services, with the purchase of Infinera last month. It also plans to sell Alcatel Submarine Networks, its undersea cable business, to the French government.

Nokia's chief executive officer, Pekka Lundmark, said the company’s order backlog is growing, which is contributing to an improving dynamic.

"No question, volumes are extremely weak at the moment, when you look at the top line," he said.

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

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

"We have taken so 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 actually been able to defend the profitability pretty well," Mr 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, Nokia said.

The North American market is showing signs of recovery, Mr Lundmark said, echoing remarks by Ericsson chief executive Börje Ekholm. Ericsson beat out Nokia for an $14bn network deal with AT&T late last year.