Nokia reports rise in second-quarter profit driven by 5G demand

Nokia_Headquarters_Espoo
The geadquarters of Nokia Corporation and Nokia Networks in Espoo, Finland.

Nokia performed better than expected in the second quarter of 2019.

The Finnish telecom network equipment maker reported a rise in second-quarter profit, driven by end-to-end 5G demand and improved operational execution.

EUR million (except for EPS in EUR)Q2’19Q2’18YoY change
Net sales5,6945,3137%
Operating profit/(loss)(57)(221)
Operating margin %(1.0%)(4.2%)320bps
EPS, diluted(0.03)(0.05)

 

In the April-June period Nokia reported earnings per share of 0.05 euros.

Revenue in the second quarter rose to 5.69 billion euros ($6.34 billion), a 7% rise compared to the year-ago period. Analysts had forecast revenue of 5.43 billion euros, according to Reuters.

According to Rajeev Suri, Nokia President and CEO, the company continued to enhance its position in 5G in the second quarter. It now has 45 commercial 5G deals and 9 live networks.

Suri noted there are some risks that remain in the year, including execution demands in the second half, trade-related uncertainty and challenges in the China market.

“Given these risks, we will continue to focus on tight operational discipline, delivering on our EUR 700 million cost-savings program, improving working capital management and advancing the implementation of our strategy,” Suri said.

Nokia forecasts full-year earnings per share at 0.25-0.29 euros, and 2020 earnings per share of 0.37-0.42 euros.

Nokia’s main rivals are Sweden’s Ericsson and the Chinese telecom giant Huawei. Some analysts believe that the challenged Huawei faces in the US could benefit its Nordic rivals.

US officials have become increasingly concerned that Huawei’s technologies could pose a threat to national security – an allegation that Huawei strongly denies.

“Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits,” Nokia said.