Nokia (NOK) shares fell more than 1% in European trade Thursday after the company posted a smaller-than-expected increase in Q1 profit, as continued weak demand for 5G equipment in North America and India impacted sales.
The Finnish telecom equipment manufacturer reported a first-quarter operating profit of 597 million euros, a rise from 479 million euros a year earlier, despite a 19% drop in constant-currency sales. Analysts surveyed by LSEG had anticipated a profit of 663 million euros on average.
On a per-share basis, Nokia Q1 earnings stood at 0.09 euros, just above the 0.08 consensus projection Revenue came in at 4.67 billion euros, missing the projected 5.41 billion.
However, Nokia’s comparable gross margin rose significantly to 48.6% from 37.7% in the year-ago quarter.
The company's Mobile Networks segment, responsible for 5G equipment orders, experienced a 37% decline in local-currency sales during the quarter. Nokia noted this as the year's low point and anticipates a recovery through the remainder of 2024.
Nokia reiterated its January forecast for a comparable operating profit in 2024 ranging between 2.3 billion and 2.9 billion euros.
Commenting on a potential investor reaction to Nokia’s print, UBS analysts said although the performance excluding the Technologies segment remains sluggish, “improving trend and reiterated guidance might somewhat bring some relief today,” they wrote.
“Given unchanged guidance, we expect minor changes to cons FY'24 numbers although we would point out that there is downside to EBIT excluding Technologies,” analysts said.
In contrast, analysts at Jefferies believe the market “is likely to be more focused on the uncertain outlook in Mobile Networks” rather than encouraging signs in the company’s Technologies and Network Infrastructure units.