Nokia Gets on 5G Growth Path as New Strategy Takes Shape

By Supantha Mukherjee

Nokia and Swedish rival Ericsson have been gaining more customers as telecom operators start rolling out 5G networks and China’s Huawei faces curbs from a growing number of governments over security concerns.

“We expect our typical quarterly earnings seasonality to be less pronounced in 2021,” Chief Executive Pekka Lundmark said in a statement, adding that sales growth was strong across its network infrastructure business.

After taking the top job last year, Lundmark has streamlined Nokia’s operation, cut jobs, and made changes to recover from product missteps under the company’s previous management that hurt its 5G ambitions and weighed on its shares.

Quarterly revenue rose 3% to 5.08 billion euros ($6.16 billion), beating a consensus figure of 4.72 billion, , according to IBES data from Refinitiv.

“Overall a surprisingly good start to the year,” said Mads Rosendal, an analyst at Danske Bank Credit Research.

“The good result was driven by strong growth in network infrastructure as well as mobile networks and on a constant currency basis total group sales were up 9% y/y,” he said.

Sales at Nokia’s network infrastructure business, which includes optical and fixed network products, grew 28% to 1.73 billion euros, helped by demand from enterprise customers.

Quarterly profit rose to 5 euro cents per share while adjusted profit was 7 euro cents per share. Analysts had expected 1 euro cents.

Its comparable gross margin rose to 38.2% from 36.4% a year earlier, mainly driven by 5G growth.

Nokia maintained its full year net sales forecast of between 20.6 billion euros to 21.8 billion euros, largely in line with expectations.

Ericsson last week reported quarterly core earnings above market estimates, helped by higher margins and 5G rollout. ($1 = 0.8244 euros)

(Reporting by Supantha Mukherjee, European Technology & Telecoms Correspondent, based in Stockholm, additional reporting by Essi Lehto in Helsinkiediting by Niklas Pollard and Keith Weir)