Nokia Q2 profit beats estimates in growing market for 5G gear

NOKIA reported better than-expected earnings and indicated it’s on track to meet full-year guidance amid strong demand for 5G gear from phone carriers.

The Finnish maker of mobile networks on Thursday (Jul 21) reported an adjusted operating profit of 714 million euros (S$1 billion) for the second quarter, beating an average analyst estimate of 640.5 million euros. Adjusted earnings per share came to 0.10 euros, more than estimated by analysts.

Nokia said its Mobile Networks unit returned to growth and “executed well” against supply-related challenges, which have continued to cause disruptions for 5G equipment vendors over the quarter. Last week, competitor Ericsson tumbled as much as 12 per cent after a mixed quarterly report with revenue ahead of expectations but margin and earnings missing estimates, partly due to increasing component and logistic costs in the networks segment.

“We are currently tracking toward the higher end of our net sales guidance and toward the midpoint of our operating margin guidance as we manage ongoing inflation and currency headwinds,” chief executive Pekka Lundmark said in the statement. “There remain risks around timing of Nokia Technologies’ contract renewals, potential Covid-19 lockdowns and the supply chain which remains challenging but is showing signs of improvement.”

Nokia kept its full-year net sales outlook unchanged in constant currency, guiding for sales of 23.5 billion euros to 24.7 billion euros using exchange rates as of Jun 30. Its comparable operating margin guidance remains at 11 per cent to 13.5 per cent.

In line with its peers, the performance of Nokia’s share has been weak with a decline of 18 per cent in the 12 months to Wednesday’s close. 22 analysts tracked by Bloomberg recommend buying the stock, 9 had a “hold” recommendation and none recommended selling. BLOOMBERG