Nokia says it expects rebound in second half of 2024 following 19% drop in first quarter sales

By Louis Goss

Nokia on Thursday posted a 19% drop in its first quarter sales, driven by a global slump in infrastructure spending, but said it remains confident it will achieve its financial goals for 2024 as it forecast a major rebound in the second half of the year.

The Finnish telecoms company said a slowdown in infrastructure spending in the U.S. and India drove a 37% drop in sales made by its mobile networks business in the first-quarter of 2024, which led to a 19% plunge in its overall revenue, to EUR4.67 billion ($4.98 billion).

The Espoo-headquartered company nonetheless successfully increased its operating profits by 25%, to EUR597 million, by boosting its margins to 12.8% in the first quarter of 2024, from 8.2% a year ago, following a series of layoffs and cost-cutting initiatives.

Nokia's (FI:NOKIA) Helsinki listed shares fell 1% on Thursday having lost 18% of their value over the previous 12 months. Nokia's (NOK) New York listed shares were down by less than 1% during Thursday's pre-market session having dropped 21% in the past year.

The Finnish firm's first quarter sales saw it fall short of analysts' expectations, following forecasts the company would generate revenue worth EUR4.96 billion, versus the EUR4.67 billion it made, according to 16 analysts polled by financial data provider Factset.

Nokia, however, said it now expects to achieve its outlook for 2024, through which it aims to generate profits worth EUR2.3- EUR2.9 billion, and predicted its networks infrastructure unit will return to growth in the second half of 2024.

"As expected, the ongoing market weakness drove a 19% year-on-year constant currency decline in net sales in the first quarter. However, we have seen continued improvement in order intake, meaning we remain confident in a stronger second half and achieving our full year outlook," Nokia CEO Pekka Lundmark said.

The slump in Nokia's revenue was driven by plunging sales in Asia and the Americas, including a 37% drop in sales in North America to EUR1 billion, and a 68% slump in sales in India to EUR265 million, following a slowdown in spending on new 5G infrastructure in the wake of COVID-19.

This was partially offset by an increase in sales in Nokia's top regional market, Europe, where its revenue jumped 25% to EUR1.8 billion, driven by higher sales from its Nokia Technologies business which sells various products including tablets and virtual reality cameras.

Nokia previously outlined plans to pursue far-reaching cost-cutting initiatives last October, including by laying off 14,000 staff, after it saw its third-quarter earnings drop 69%.

On Tuesday, Nokia's main rival Ericsson also said it expects its business will recover in the second half of 2024 after it also reported a 19% drop in its sales driven by the slump in global infrastructure spending.

-Louis Goss

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04-18-24 0548ET

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