Nokia, a global leader in technological innovation, has revealed a 22% increase in net profit, amounting to EUR 358 million (USD 389 million) amid its 8% sales decline, according to its Q3 Interim Report for 2024.
This marks a significant improvement in the company’s gross margin from last year’s net profit of EUR 293 million, driven by a better product and regional mix, and effective product cost reduction.
Nokia’s Q3 2024 financial report also indicated a decline in net sales amounting to EUR 4.326 billion (USD 4.7 billion), largely attributed to a drop in mobile network sales, particularly in India, and the impact of divestment in its cloud and network services.
Reflecting on Nokia’s performance in the third quarter, Pekka Lundmark, the company’s President and CEO, highlighted the company’s return to net sales growth in the network infrastructure segment. He noted that the fixed network segment reached 9% in constant currency and the IP networks segment reached 6%.
“I am optimistic we are now turning the corner in many parts of our business, even if some continue to experience market weakness,” the Nokia CEO stated, conveying his optimism.
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Nokia’s Risk Factors
Nokia’s interim report outlined several risk factors and uncertainties, including competitive intensity, changes in customer network investments, disturbances in the global supply chain, the impact of inflation, and the competitiveness of its product roadmaps. Geopolitical conflicts, economic impacts, and industry developments also pose risks.
In addition, Nokia’s ability to meet sustainability and other environmental, social, and governance (ESG) targets, including greenhouse gas (GHG) emissions, appears uncertain.
Other risk factors and uncertainties include concerns regarding product and regional mix, brand and technology licensing, costs for intellectual property rights protection, the timing of completions and the acceptance of certain projects, and the uncertainty in forecasting long-term income tax expenses and cash outflows.
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Q4 2024 Expectations
Lundmark emphasized that Nokia anticipates significant growth acceleration during Q4 in the network infrastructure segment. In the mobile networks segment, the Finnish company remains assertive in its market position to improve gross margin despite the challenges it is facing in terms of market dynamics.
Touching on Nokia’s performance in the cloud and network services segment, Lundmark underscored the company’s remarkable progress in 5G Core, network automation, cloudification, and network application programming interfaces (APIs).
The Nokia CEO mentioned that the company is exploring new growth opportunities beyond traditional communications to expand its presence and broaden its portfolio, including integrating 5G technology into the defense market and investing in private wireless networks.
Underscoring Nokia’s commitment to expansion and growth, Lundmark stated, “Our pending acquisition of Infinera will also bolster our optical networks exposure to this market and accelerate our growth opportunities.”
Lundmark stressed that Nokia’s comparable operating profit outlook for the full year 2024 remains between EUR 2.3 and 2.9 billion. Despite a slower-than-expected sales recovery, Nokia expects to close at the high end of its free cash flow target, with a conversion rate of 30% to 60%.
Following the release of its Q3 financials, Nokia plans to publish the Q4 and full-year 2024 report by January 30, 2025.
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