Nokia Reports Significant Decline in Q2 Operating Profit Amid Market Challenges

Nokia has announced a notable decline in its comparable operating profit for the second quarter of 2024, reporting 423 million euros ($462 million), a decrease of nearly 33% from 619 million euros in the same period last year. The company's stock fell by 8% shortly after the market opened in London, reflecting investor concerns over the disappointing earnings. CEO Pekka Lundmark attributed the decline primarily to a challenging comparison with the previous year, particularly due to the peak of 5G deployment in India, which accounted for a significant portion of the downturn. Lundmark highlighted that the current market environment remains difficult, as mobile network operators are exercising caution in their spending. He noted that while there are signs of improvement, the recovery in net sales is occurring later than anticipated, which has affected the company's sales projections for 2024. This cautious outlook comes in the wake of Nokia losing a major contract with AT&T, which opted for Ericsson to supply its telecom network infrastructure. In response to these challenges, both Nokia and Ericsson have initiated aggressive cost-cutting measures. Nokia previously announced plans to eliminate up to 14,000 jobs to reduce gross costs by 800 million to 1.2 billion euros by 2026. The company reported making "significant progress" in its cost-saving initiatives, having already implemented measures to cut costs by 400 million euros to date, as it navigates the ongoing pressures in the telecommunications sector.