Nokia reported a 20% decline in Q1 2024 net sales
Nokia has reported a “slow start” to 2024 but said this was expected, and that it anticipates things to pick up in the second half of the year. Company President and CEO Pekka Lundmark pointed to weak demand for 5G equipment in North America and India as a major contributor to the 20% y-o-y decline in net sales.
Towards the end of last year, Nokia announced plans to cut 14,000 jobs — about 16% of its workforce — worldwide as part of broader cost reduction efforts, stemming from a poor Q3 2023, primary due to plummeting 5G equipment demand, particularly in the United States, where its sales dipped a staggering 45% from the previous quarter. In response, Nokia said it is aiming to cut 800 million to 1.2 billion euros in costs by the end of 2026.
More specifically, Nokia — like Ericsson — experienced a significant decline in network infrastructure sales in Q1 2024, which fell 26%. However, Lundmark remained optimistic: “While we are conscious of the broader economic environment, considering the on-going order intake strength, we expect Network Infrastructure will return to net sales growth for full year 2024 with a stronger second half performance,” he said.
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In addition, Lundmark noted “improving order intake and pipeline momentum,” as well as “good progress” with [the company’s] Network as Code platform. “This platform enables operators to monetize their 5G investments, creating new revenue streams by offering developers advanced API access to the network,” he continued, noting that 11 operators have already signed up for the platform.
The outlook for Fixed Networks for 2024 has improved, shared Lundmark, but added that Optical Networks will likely taker longer to recover.
Nokia also reported a comparable operating margin of 12.8% for the quarter — compared to 8.2% the year before — and generated almost EUR 1 billion in free cash flow. The vendor’s full year 2024 outlook is unchanged with its expected comparable operating profit remaining between EUR 2.3 billion to 2.9 billion and free cash flow conversion from comparable operating profit of between 30% and 60%.