Nokia cut its projected net sales and operating margin for the year ahead of the release of its Q2 results, citing weaker demand partly caused by the impact of high inflation and rising interest rates on customer spending.

In a stock market statement, the vendor revealed a reduction in its annual sales outlook from €24.6 billion to €26.2 billion to between €23.2 billion and €24.6 billion. It also narrowed its expected operating margin range for the year.

The changes were attributed to issues impacting its Network Infrastructure and Mobile Networks business groups.

It blamed expected weaker demand in H2 on the macroeconomic environment and “customers’ inventory digestion”.

Similar factors were reported by peer Ericsson in its Q2 report released earlier today (14 July), with both coming as analysts offer gloomy forecasts for the RAN market.

“Customer spending plans are increasingly impacted by high inflation and rising interest rates along with some projects now slipping to 2024, notably in North America,” Nokia noted.

It added there is also “inventory normalisation happening at customers after the supply chain challenges of the past two years”.

Nokia is due to release its Q2 numbers next week. Based on its preliminary forecasts, these are expected to show flat sales of €5.7 billion on a constant currency basis.

“Across the group Nokia has been proactively managing costs to protect profitability,” the vendor said.

“As it progresses through this period of uncertainty, Nokia will continue to take measures to ensure it remains on track towards its long-term targets of growing faster than the market.”