On Thursday, Finnish telecom equipment company Nokia said that its second-quarter operating profit plummeted 32% due to sluggish 5G telecom equipment demand but predicted a rebound in the second half
Compared to the same quarter a year ago, its comparable operating profit decreased from 619 million euros to 423 million euros ($462.38 million ).
Nokia and its Swedish competitor, Ericsson, have announced thousands of layoffs due to consumers purchasing less telecommunications equipment.
In constant currency, Nokia reported that its net sales decreased by 18% year-over-year. This decline was primarily due to the slowdown in the pace of investment in 5G technology in India, which accounted for approximately 12.5% of the company’s total 2023 sales, following a period of rapid growth the previous year.
“The most significant impact was the challenging year-ago comparison period, which saw the peak of India’s rapid 5G deployment with India accounting for three-quarters of the decline,” Nokia reported.
Nevertheless, it anticipated a return to development in the latter half of the year.
“While the dynamic is improving, the net sales recovery is happening somewhat later than we expected,” the company’s chief executive officer stated.
“Looking forward, we believe the industry is stabilizing, and given the order intake seen in recent quarters, we expect a significant acceleration in net sales growth in the second half,” he said.
Last week, Ericsson, a competitor, also anticipated a market recovery due to increased demand in North America.
According to Lundmark, during a conference call with reporters, Nokia was experiencing comparable preliminary indications of enhanced demand in North America.
“The fiber market in North America is exhibiting promising signs.” He stated, “We executed new significant agreements there.”
The company maintained its full-year guidance for a comparable operating profit, expected to range from 2.3 billion to 2.9 billion euros.