STOCKHOLM (Reuters) – Nokia on Thursday reported operating profit below market expectations for the first quarter as the Finnish telecoms equipment maker sees signs of slowing customer spending.
The outlook for the full year, however, remains unchanged, and Nokia says it expects stronger profitability in the second half.
First-quarter comparable operating profit fell to 479 million euros from 583 million euros last year, missing the 532.4 million euros forecast by analysts polled by Refinitiv.
Nokia and rival Ericsson are counting on sales growth in India, where telecom operators are building a new 5G network, to offset the slowdown in high-margin markets such as the United States.
India, where Nokia counts Reliance Jio and Bharti Airtel among its customers, now accounts for 15% of its turnover.
Net revenue increased 10% in the quarter to €5.86 billion, beating the estimate of €5.72 billion.
Managing Director Pekka Lundmark expects some level of North American market recovery in the second half.
The comparable operating margin fell from 10.9% to 8.2% in the first quarter. For the year as a whole, it should be between 11.5% and 14%.
Nokia is diversifying its customer base by turning to manufacturers who are implementing private 5G networks in power plants and mines.
Weak results from Nokia’s patent licensing business are behind the company’s underperformance, said Mads Lindegaard Rosendal, credit research analyst at Danske Bank.
On the Helsinki Stock Exchange, Nokia shares lost 3% in the morning.
(Report Supantha Mukherjee in Stockholm, Victor Goury-Laffont, edited by Blandine Hénault)
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