(Reuters) – Nokia shares fell on Thursday after reporting a 32% drop in second-quarter operating profit, weighed down by weak demand for 5G telecoms equipment, but the Finnish company forecast sales would recover towards the end of the year on orders from North America.

Nokia’s operating profit, which excludes some income and expense items, fell to 423 million euros from 619 million euros a year ago.

Nokia and its Swedish rival Ericsson have been hit hard by falling demand for telecommunications equipment and have announced thousands of layoffs in response.

Nokia’s net sales fell 18% year-on-year as the pace of investment in 5G technology in India, a key market for the group, slowed after rapid growth the previous year.

Excluding non-recurring items, sales and profits missed expectations, according to Jefferies analysts.

On the Helsinki Stock Exchange, around 09:15 GMT, the share fell by 6.5% to 3.35 euros, compared to a loss of 0.65% for the benchmark Finnish index at the same time, and on track to experience its worst day on the stock market since July 2023.

Nokia CEO Pekka Lundmark said the recovery was taking longer than expected, but net sales were expected to accelerate significantly in the second half of the year, echoing similar guidance from Ericsson last week.

Pekka Lundmark highlighted in particular the improvement of the fiber optic market in the United States and the US government’s $42 billion (€38.44 billion) program aimed at improving citizens’ access to high-speed broadband.

“This creates an interesting additional dynamic for us, because we are clearly the first to offer a product portfolio that is compatible with the requirements of the ‘Buy America’ program,” the executive told Reuters, adding that the real boost would be felt next year.

The group maintained its outlook for the full year.

(Reporting by Olivier Sorgho and Supantha Mukherjee, by Dimitri Rhodes and Elena Smirnova, edited by Augustin Turpin)

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