Nokia, a major player in the telecommunications industry, recently reported a smaller-than-expected profit and a significant decrease in sales for the first quarter of 2023. The drop was largely attributed to a lack of investment in 5G technology by clients, which weakened the market overall.
Nokia disclosed that it earned a net profit of 501 million euros ($535 million) during the January to March period, representing a 46% increase from the previous year but still falling short of analysts’ expectations. Net income attributable to shareholders rose to 497 million euros from 332 million euros year-over-year. Additionally, one-off gains from Nokia’s licensing business contributed to the profit.
Sales also experienced a significant decline of 20% to 4.7 billion euros due to ongoing weakness in the telecom equipment market. Operators are cutting back on investments in 5G and other technologies due to economic uncertainty and high financing costs, which has negatively impacted Nokia’s performance in the first quarter.
Despite these challenges, Nokia CEO Pekka Lundmark expressed confidence in a stronger second half of the year and achieving the full-year outlook. He highlighted continued improvement in order intake as a positive sign for the company’s future prospects.
Nokia is heavily invested in 5G technology and is considered a key player alongside competitors Ericsson, Huawei, and Samsung. Lundmark acknowledged low levels of spending on 5G technology in North America and India during the first quarter, which affected Nokia’s mobile network unit performance. However, looking ahead, Lundmark remains optimistic about growth opportunities for Nokia’s Network Infrastructure unit in the second half of this year and expects net sales growth for the full year despite challenging market conditions.
In conclusion, while Nokia faced several challenges including weak demand for their products due to economic uncertainty and high financing costs during Q1 2023, CEO Pekka Lundmark expressed confidence that they would recover from this setback with strong order intake expected for Q2 & Q3
