Finnish telecommunications equipment maker Nokia reported a sharp drop in second-quarter profit on Thursday, dragged down by a drop in investment from North American mobile phone operators.
The company, which competes with Swedish rival Ericsson and China’s Huawei in the global rollout of 5G equipment, said the rollout in India boosted growth in its mobile network business.
But net sales fell in North America as customers continue to revise their spending and reduce their inventory levels.
Nokia said its net profit fell 37 percent to 289 million euros (about Rs 2,653 crore) in the second quarter compared with the same period last year, well below the 2 billion euros expected in a Bloomberg analyst survey.
Net sales reached EUR 5.7 billion (roughly Rs. 52,340), down three percent, though flat in constant currency.
Net sales fell 42 percent in North America alone, while they rose 333 percent in India. Macroeconomic “uncertainty” weighed on sales of network infrastructure.
“Considering the significant decline in investments from major North American carriers, our operating margin has proven resilient,” Chief Executive Pekka Lundmark said in an earnings report.
Nokia was able to deliver an operating margin of 11 percent “as a result of prudent management of our costs.
Nokia last week issued a statement lowering its outlook for the year and warning that high inflation and rising interest rates were increasingly affecting customers’ spending plans, especially in North America.
Its rival Ericsson reported a rare quarterly net loss as mobile phone operators cut investment in 5G networks.
“I highlighted earlier in the year that we were starting to see signs of macroeconomic challenges along with inventory digesting affecting customer spending and this intensified during the second quarter,” Lundmark said.