Nokia beats expectations with strong second quarter
The Finnish telecoms giant announced a net profit of 344 million euros
HELSINKI (AFP) - Network equipment maker Nokia revised up its 2021 outlook on Thursday as it posted an almost four-fold increase in profits for the second quarter.
The Finnish telecoms giant announced a net profit of 344 million euros ($408 million) for April-June, up from 94 million one year previously.
"We were expecting quite good results but these were still way better, a very strong second quarter," Atte Riikola, analyst at Inderes, told AFP.
A 4.3 percent increase in revenue to 5.3 billion euros outstripped analysts’ expectations of 5.15 billion according to FactSet.
"Considering our robust start to 2021, we are revising upwards our full year outlook," CEO Pekka Lundmark said in a statement.
"We have executed faster than planned on our strategy in the first half," Lundmark added.
Nokia’s projection for comparable operating margin in 2021 were increased to 10-12 percent, from 7-10 percent, while estimated full-year net sales were adjusted upwards by almost a billion euros to 21.7-22.7 billion.
Thursday’s results come one year after Lundmark took the helm of the company, promising to turn around the fortunes of the group which was flagging in the tough three-way race to dominate the 5G infrastructure market, squaring off against Sweden’s Ericsson and China’s Huawei.
Lundmark’s restructuring programme has involved streamlining Nokia’s structure and announcing the loss of up to 10,000 jobs worldwide within two years, up to 11 percent of the workforce.
Nokia’s share price rose 8.5 percent to 5.37 euros shortly after opening on the Helsinki stock exchange, its highest value in over two years.
"The trust in Nokia’s turnaround is coming back and investors are believing in the story again, that’s visible in the share price," Riikola said.
‘Back in the game’
Lundmark has repeatedly pledged that Nokia will do "whatever it takes to win at 5G" and make up ground lost in the early stages of the rollout of the network infrastructure, when the company’s technology was widely considered less competitive than that of Huawei and Ericsson.
Nokia notably failed to gain a foothold in China, but this month was awarded a 4 percent share in a tender for China Mobile.
"The China market is enormously competitive and we take this award as a testimony and proof that our technological competitiveness in 5G has significantly increased," Lundmark told reporters on Thursday.
"The geopolitical situation is quite helpful for Nokia," analyst Riikola told AFP, with rival Huawei facing sanctions in Europe and North America, and Sweden’s Ericsson also facing reciprocal restrictions in China.
"After the news that they got their first 5G agreement in China, it seems that Nokia is back in the game there," Riikola said.
