In a challenging global market environment, Nokia Corporation has maintained its full-year outlook for 2024, signaling resilience and strategic foresight despite an 18% year-on-year decline in Q2 net sales. The Finnish telecommunications giant attributed the sales dip primarily to a tough comparison with a strong quarter in India the previous year, with the Submarine Networks business now treated as a discontinued operation.

Key Financial Highlights

– Net Sales: Nokia reported a significant 18% decrease in constant currency net sales for Q2, totaling EUR 4.466 billion.

– Gross Margin: There was a notable increase in the gross margin, up by 450 basis points to 44.7% in Q2, driven largely by performance improvements in Mobile Networks.

– Operating Margin: The Q2 comparable operating margin saw a decrease of 190 basis points year-over-year, settling at 9.5%.

– Earnings Per Share: The quarter reported a comparable diluted EPS of EUR 0.06, though the reported diluted EPS was negatively impacted by a EUR 514 million non-cash impairment charge related to the Submarine Networks.

– Cash Flow: Free cash flow remained strong at EUR 0.4 billion, with a healthy net cash balance of EUR 5.5 billion.

Strategic Developments and Future Outlook

Nokia’s President and CEO, Pekka Lundmark, emphasized the continued improvement in order intake across all sectors, particularly in Network Infrastructure, which is expected to drive a substantial sales increase in the latter half of the year. “The market remains uncertain, yet the increasing backlog from continued strong order intake provides a basis for future growth,” stated Lundmark.

In line with its strategic focus, Nokia announced significant transactions aimed at bolstering its Network Infrastructure business, including the sale of its Submarine Networks to the French State and the intended acquisition of Infinera. These moves are expected to enhance Nokia’s position in Optical Networks, particularly in North America, aiming for mid-single digit sales growth and improved profitability.

Despite the overall market slowdown and the substantial impact from a challenging year-ago comparison in India, Nokia’s robust cost management and strategic portfolio adjustments have positioned it well to navigate current market volatilities. The company’s comprehensive cost savings program has already realized EUR 400 million in run-rate savings, contributing to a strong financial standing as Nokia moves forward.

Nokia’s approach of balancing strategic investment with careful cost management is essential in today’s volatile market. The strategic divestitures and acquisitions signal a clear focus on strengthening core areas that promise growth, particularly in Network Infrastructure. Furthermore, the accelerated buyback program reflects confidence in the company’s financial health and commitment to shareholder value.

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