New Strategy At Nokia Puts It On 5G Growth Path

The new and changed strategy of the Finnish telecom network equipment maker Nokia saw good growth in sales of network and 5G equipment which allowed the company to report better than expected revenues and profits for the first quarter. 

With telecom operators starting to roll out 5G networks and with the Chinese telecom giant Huawei facing opposition from an increasing number of national governments because of concerns of threat to national security, more customers are being gained by Nokia and rival Swedish firm Ericsson.

“We expect our typical quarterly earnings seasonality to be less pronounced in 2021,” Chief Executive Pekka Lundmark said in a statement. There was also strong growth in sales in network infrastructure business of the company, Lundmark added.

Since assuming the role of company head last year, Lundmark has implemented a turnaround strategy of the company under which the operations of the company has been streamlined, jobs are being cut and changes are being made in the company to recover from product missteps as that had happened under the company’s previous management that was detrimental to the 5G business of the company and hurt its shares. 

There was a 3 per cent growth in revenues for the q1uarter which came in at 5.08 billion euros ($6.16 billion) which comfortably beat a consensus figure of 4.72 billion according to IBES data from Refinitiv.

“Overall a surprisingly good start to the year,” said Mads Rosendal, an analyst at Danske Bank Credit Research. “The good result was driven by strong growth in network infrastructure as well as mobile networks and on a constant currency basis total group sales were up 9% y/y,” he said.

The was a very health 28 per cent growth in the sales of network infrastructure business, which includes optical and fixed network products, of Nokia at 1.73 billion euros which was driven by strong demand from the products from enterprise customers.

The profits for the quarter increase and came in at 5 euro cents per share while the adjusted profit came in at 7 euro cents per share compared to expectations of analysts at 1 euro cents.

The company also reported growth of 38.2 per cent in its comparable gross margin for the quarter compared to 36.4 per cent for the same quarter a year ago primarily because of demand in 5G business.

The full year net sales forecast was maintained by Nokia at between 20.6 billion euros to 21.8 billion euros which was mostly what the market was expecting.

Quarterly core earnings above market expectations were reported by Ericsson last week because of higher margins and greater rollout of 5G networks. .

(Adapted from EconomicTimes.com)

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