Nokia Corporation announced its Financial Report for Q2 last week, delivering what it termed as stable net sales in constant currency compared to the prior year and a solid comparable operating margin of 11 percent “despite the regional mix headwinds faced in our Mobile Networks business,” Pekka Lundmark, President and CEO said. “Considering the significant decline in major North American operators’ investments, our operating margin has proved resilient, even adjusting for the $89 million of catch-up net sales in Nokia Technologies,” he said.
Nokia’s Network Infrastructure business saw a six percent decline in net sales in constant currency as macro uncertainty impacted the business, particularly in IP Networks, which declined 11 percent. The company also saw a decline in Fixed Networks, driven by Fixed Wireless Access and some modest inventory management, nonetheless, Lundmark said fiber demand remains robust. In Optical Networks Nokia saw continued strength with 16 percent growth. Supportive product mix in the quarter along with good cost discipline led to operating margin improving 160 bps year-on-year.
Highlights included:
- Q2 net sales flat YoY in constant currency
- Enterprise net sales grew 27 percent YoY in constant currency
- Comparable gross margin declined 180 bps YoY to 38.8 percent due to regional mix in Mobile Networks, partly offset by a strong Network Infrastructure margin and catch-up net sales in Nokia Technologies.
- Comparable operating margin declined YoY by 120 bps to 11.0 percent, due to the above mentioned gross margin factors, partly offset by lower operating expenses and higher other operating income.
“Looking beyond 2023,” Lundmark said, “in Network Infrastructure we believe these impacts are mostly short-term in nature and that moving forward we see growth opportunities supported by the work we have been doing to diversify our customer base by growing in enterprise and webscale. In Mobile Networks there is still substantial need for operators to invest in 5G globally with only approximately 25 percent of the potential mid-band 5G base stations so far deployed outside China. We also remain focused on taking the necessary actions to improve our operating margin to double-digit. For the Group we remain committed to achieving at least 14 percent comparable operating margin longer-term.”
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