Third Quarter Results from Nokia Decline, Cutting Up to 14,000 Jobs; Stock Falls
19 Outubro 2023 - 7:36AM
IH Market News
Nokia Corp’s (NYSE:NOK) shares were losing about 4 percent in
morning trading in Helsinki, as well as approximately 3 percent in
pre-market activity on the NYSE, after the leading Finnish
telecommunications company reported a sharp drop in its
third-quarter profit and revenue on Thursday amid ongoing
macroeconomic challenges.
Additionally, the company maintained its financial outlook for
2023 but at the lower end of the net sales range. The company also
reaffirmed its long-term comparable operating margin target of at
least 14%, to be achieved by 2026.
Separately, Nokia announced a cost-reduction program, planning
to cut up to 14,000 jobs to navigate the current market
uncertainty. The company is streamlining its operational model by
integrating sales teams into business groups.
The new cost-reduction program is designed to reduce the cost
base by 800 million euros, to 1.20 billion euros on a gross basis
over a three-year period. This represents a reduction of 10% to 15%
in personnel expenses. Cost savings are expected to be primarily
achieved in mobile networks, cloud services, and network, as well
as corporate functions at Nokia.
Nokia anticipates savings of at least 400 million euros in 2024
and an additional 300 million euros in 2025. The program is
expected to result in an organization with 72,000 to 77,000
employees, compared to Nokia’s current 86,000 employees.
The company emphasized that the exact scale of the program will
depend on market demand evolution and that cost savings are
expected to be achieved on a net basis, but the magnitude will
depend on inflation rates.
Looking ahead, for the full year 2023, the telecommunications
company continues to expect net sales in the range of 23.2 billion
euros to 24.6 billion euros, reflecting a variation of 4% lower to
2% higher year-over-year in constant currency terms.
Comparable operating margin is expected to remain in the range
of 11.5% to 13%, assuming the closing of pending deals in Nokia
Technologies.
Regarding Nokia Technologies, the company remains confident that
the business group will return to an annual net sales rate of 1.4
billion euros to 1.5 billion euros.
Additionally, the Board decided to distribute a dividend of 0.03
euros per share. The dividend record date is October 24, and the
dividend will be paid on November 2.
Pekka Lundmark, President and CEO, commented: “Looking ahead,
while our third-quarter net sales were impacted by ongoing
uncertainty, we expect a more typical seasonal improvement in our
network business in the fourth quarter. Based on this and assuming
we resolve the pending renewals affecting Nokia Technologies, we
are approaching the lower end of our net sales guidance for 2023
and the midpoint of our comparable operating margin guidance.”
In the third quarter, Nokia’s profit dropped by 69% to 133
million euros, compared to 428 million euros in the previous year.
Earnings per share decreased by 75% to 0.02 euros, down from 0.08
euros in the previous year.
On a comparable basis, profit was 299 million euros or 0.05
euros per share, down from 551 million euros or 0.10 euros per
share in the previous year.
Operating profit decreased by 53% to 241 million euros, and
comparable operating profit declined by 36% to 424 million euros.
Comparable operating margin decreased by 350 basis points compared
to the previous year, to 4.8%.
In the quarter, net sales decreased by 20% to 4.98 billion
euros, down from 6.24 billion euros in the previous year. Net sales
decreased by 15% in constant currency, as macroeconomic uncertainty
and higher interest rates continued to pressure operator
spending.
Network infrastructure declined by 14% in constant currency, due
to weaker spending impacting IP Networks. In Mobile Networks, net
sales decreased by 19%. In Helsinki, Nokia’s shares are currently
trading at 3.118 euros, a drop of 4.36%. In pre-market activity on
the NYSE, shares were trading at $3.28, a decrease of 3.24%.
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