Nokia's Q2 profit drops 37% on market headwinds

The Finnish technology major reported a profit of $324 million in three months to June 30

Nokia's revenue dropped 3 per cent annually to about $6.4 billion in the second quarter. AFP

Nokia, one of the world's largest manufacturers of telecoms equipment and electronics, reported a 37 per cent yearly drop in its second-quarter profit as the company faced headwinds in its mobile networks business.

The Finnish technology major reported a profit of €289 million ($324.01 million) in three months to June 30.

The company's revenue for the three-month period dropped 3 per cent annually to about €5.7 billion.

The company's comparable profit in the second quarter fell 29 per cent to €414 million from €585 million in the same period a year ago.

“As a result of prudent management of our costs, we were able to deliver a solid comparable operating margin of 11 per cent despite the regional mix headwinds faced in our mobile networks business,” Pekka Lundmark, president and chief executive of Nokia, said.

The company’s stock, which has dropped more than 20 per cent since the start of the year, closed 0.31 per cent higher at €3.54 on Wednesday. It was 0.50 per cent up on Thursday.

The company has reduced its net sales outlook for 2023 to €23.2 billion to €24.6 billion from the prior €24.6 billion to €26.2 billion.

Nokia’s mobile networks business added more than €2.6 billion, or 46 per cent to total sales. It was up 1 per cent on a yearly basis.

“Our mobile networks business continued to benefit from 5G deployments in India ... offsetting on-going weakness in North America,” Mr Lundmark said.

“There is still a substantial need for operators to invest in 5G globally with only approximately 25 per cent of the potential mid-band 5G base stations so far deployed outside China,” he added.

Network infrastructure division, which added more than €1.9 billion in the last quarter, dropped 8 per cent annually compared to the prior year period.

While the company’s cloud and network services business added €742 million in the last quarter. It dropped 1 per cent annually.

On Wednesday, Nokia’s board announced to distribute a dividend of €0.03 per share. The dividend record date is July 25 and it will be paid on August 3, the company said in a statement.

In February last year, the company started a share buyback programme to repurchase shares to return up to €600 million of cash to shareholders in tranches over a period of two years.

The second €300 million phase of the share buyback programme started in January this year and it will end by December 21, Nokia said.