Helsinki, Finland – Finnish telecom giant Nokia reported Thursday a lower-than-expected rise in earnings in the first quarter as economic headwinds affect spending by its customers.
After the results were published, Nokia’s share price was down seven percent at 3.97 euros ($4.35) around 1100 GMT.
The telecommunications equipment maker, which is locked in a battle for 5G networks with Swedish rival Ericsson and China’s Huawei, said its net profit jumped 32 percent to 289 million euros ($317 million).
But its earnings per share amounted to six cents, weaker than the seven cents expected in a survey of analysts by financial data firm FactSet.
“We are starting to see some signs of the economic environment impacting customer spending,” chief executive Pekka Lundmark said in a statement.
“Given the ongoing need to invest in 5G and fiber, we see this primarily as a question of timing; nevertheless we will maintain our cost discipline to ensure we can successfully navigate this uncertainty,” Lundmark added.
The deployment of 5G infrastructure in India offset a slowdown in North American spending, helping net sales grow 10 percent to 5.9 billion euros.
Its comparable operating margin — a profitability yardstick — declined to 8.2 percent, down from 10.9 percent the year before.
“The results were a little bit of a mixed bag. It was under consensus estimates,” Atte Riikola, an analyst at equity analysis firm Inderes, told AFP.
The mobile networks unit performed in line with expectations while network infrastructure did better than expected, he said.
But, he added, “all in all, I think it was a little bit of a disappointment.”
Despite the mixed results, Lundmark said Nokia remains on track to “deliver another year of growth in 2023.”
“Our outlook is unchanged with the expectation that profitability in the second half of the year will be stronger than the first half,” Lundmark said.
In its own results statement on Tuesday, Ericsson said it would step up its cost-cutting plan as it expects customers to “remain cautious” amid a “choppy environment”.
Nokia and Ericsson have faced stiff competition from Huawei but the Chinese company has faced restrictive measures in Western countries, led by the United States.