Nokia reported a significant decline in its second-quarter operating profit, falling 32% year-on-year to €423 million. The Finnish telecoms equipment maker attributed the drop to weakening demand for 5G equipment, a trend impacting the entire industry. Despite the downturn, Nokia remains optimistic about the second half of 2024, forecasting a significant acceleration in sales driven by the improving US fiber market and potential opportunities in Europe.
The company is well-positioned to benefit from a $42 billion US government program aimed at boosting citizens’ access to high-speed broadband. Additionally, Nokia expects to capitalize on Germany’s decision to exclude Chinese vendors from its 5G network, potentially leading to increased market share for Nokia and Ericsson. However, analysts note that sales and earnings missed forecasts, and Nokia’s share price fell 8% following the report.
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Despite the Q2 slump, Nokia maintains its full-year guidance for comparable operating profit, suggesting confidence in the anticipated recovery. Nevertheless, Inderes analysts believe the outlook will remain under pressure until the end of the year. While Nokia navigates a challenging market environment, its strategic focus on the US and European markets, combined with its strong position in the fiber market, could drive a turnaround in the coming months.