Nokia profits up despite COVID supply chain challenges

Nokia CEO says the company has 70 5G deal wins and 21 live networks deployed

On its Q1 earnings call, Nokia President and CEO Rajeev Suri said that while the company’s revenues took a small hit — EUR200 million in net sales — due to Coronavirus-related supply chain disruption in China, it didn’t experience a demand decline in the quarter.

Suri also revealed that Nokia managed to secure a profit in the last quarter, but added that the majority of the impact of the COVID-19 pandemic will most likely arrive in Q2.

“We expect the majority of this COVID-19 impact to improve and believe that our industry is fairly resilient to the crisis, although not immune,” he commented.

In Q4 2019, Suri had expected Nokia to stabilize its 4G plus 5G market share approximately 27% by the end of 2020 excluding China, and after reviewing the Q1 results, claimed this is still achievable.

“We believe we remain on track,” he said during the call. “We continue to have the scale necessary to remain competitive.”

In addition, Suri pointed to a reduced 5G footprint with a customer in the Asia Pacific, but added that it has been offset by gains with a North American customer.

“As of today, with our recent win with Taiwan Star, we have 70 5G deal wins and 21 live networks deployed,” he shared.

Further, a recent $1 billion contract with Bharti Airtel to supply its Single Radio Access Network (SRAN) solution across nine geographic regions in India, which was a big win for Nokia, who spent much of April missing out on massive 5G opportunities in China.

For Nokia Technologies, specifically, Q1 net sales declined 7% in constant currency, largely reflecting lower one-time sales in the quarter and lower brand licensing net sales, Q1 operating margin in Nokia Technologies improved 200 basis points year-on-year to 83.6%, due primarily to improved gross margin.

When asked on the earnings call about the prospect of divesting units, CEO Rajeev Suri replied, “No, our end-to-end strategy is intact at this point and there’s no change to that.”

 

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