Nokia Cuts Operating Margin Guidance Amid Challenging Market -- Update
12 Décembre 2023 - 9:23AM
Dow Jones News
By Dominic Chopping
Nokia cut its operating margin guidance, with market conditions
in its mobile networks business remaining challenging due to
falling operator spending and the Indian market normalizing after a
period of rapid 5G roll-outs.
The Finnish telecom equipment maker said Tuesday that it now
targets a comparable operating margin target of at least 13% by
2026, from at least 14% previously.
The company has been experiencing a tough time, with demand
weakening due to customers facing a tough macroeconomic environment
beset by high inflation and rising interest rates. This sharp
downturn in telecom operator spending has seen Nokia recently
outline plans to cut as much as 16% of its workforce as it seeks to
save up to 1.2 billion euros ($1.29 billion).
Last week it cautioned that revenue was set to fall after U.S.
operator AT&T selected Ericsson and other vendors to build out
a new network.
"Nokia still sees a path to achieving the at least 14%
comparable operating margin target but considering the current
market conditions in mobile networks, this is deemed a prudent
change," the company said.
However, the company said it sees further opportunities to
increase margins beyond 2026 and believes the 14% target remains
achievable over the longer term.
It expects both its network infrastructure and cloud and network
services business to grow faster than the market through 2026 while
mobile networks will face challenges in 2024 and 2025 before
returning to grow faster than the market in 2026.
In a statement released ahead of an investor event, Nokia said
it expects mobile networks net sales to decline next year, with a
low-single digit operating margin. It has begun to shore up the
unit for resilience and profitability which will enable it to hit a
double-digit operating margin on net sales of around 10 billion
euros ($10.77 billion), compared with the EUR11.5 billion sales
level that would be required today.
The mobile networks unit will now also seek to accelerate its
offerings to faster-growing segments, such as enterprise, cloud
networks, open networks and the defense sector.
As part of these plans to increase its portfolio of products to
defense customers, it said separately Tuesday that it has agreed to
acquire military communication provider Fenix Group from
Enlightenment Capital. Financial terms of the deal weren't
disclosed.
Outside of mobile networks, the company's other business groups
continue to make good progress toward their long-term targets, it
said.
Moving forward, the company said its business groups will have
increased strategic autonomy to pursue investment that supports
growth, portfolio management, and deeper strategic
partnerships.
Write to Dominic Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
December 12, 2023 03:08 ET (08:08 GMT)
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