Nokia suffered a “challenging Q1” as lower income from North America resulted in a hit to earnings, but CEO Rajeev Suri (pictured) remained bullish about a strong full year performance as momentum for 5G builds.
The Finland-based vendor said it was seeing “further acceleration of 5G”, and an “excellent” order intake and backlog in Q1 2018, leaving it confident net sales in North America and overall profitability will “improve significantly in the second half of 2018”.
North America is expected to be among the first regions to deploy 5G, with commercial rollouts set to begin at the end of 2018.
Suri said in a statement Nokia had considerable confidence the company is “well-positioned” to “out perform” a strengthening networks market and meet its full year 2018 guidance.
“Our end-to-end portfolio positions us very well for 5G and our efforts to accelerate global 5G adoption are clearly delivering results,” he said. “We will fuel that adoption in 2018 with investments in trial costs, as needed.”
He added those investments “will position us to capture opportunities in a 5G market that we believe will substantially accelerate this year in the United States, followed by large scale commercial 5G rollouts starting in 2019 in multiple geographies”.
“Given these developments, we expect to see continued softness in the first half of 2018, followed by a much stronger second half.”
The “softness” referred to by Suri was highlighted by an 8 per cent drop in sales, reducing revenue from €5.4 billion in Q1 2017 to €5 billion in the recent quarter. Its loss for the period did, however, narrow 26 per cent from €435 million to €351 million.
The company’s Networks business recorded a 12 per cent drop in net sales to €4.3 billion. Breaking out the unit, net sales at its Ultra Broadband Networks unit – which covers fixed and mobile products – slipped 17 per cent, from €2.2 billion to €1.9 billion. Mobile Networks dropped 19 per cent to €1.4 billion, attributed to lower sales in North America and reduced demand for radio networks.
Fixed networks revenue dropped 11 per cent to €445 million because of lower sales in broadband access, services and digital home.
A bright spot for the company in the quarter was Nokia Technologies, with net sales for the unit rising 48 per cent to €365 million due to new patent licensing agreements, along with brand and technology agreements.
In an earnings call, Suri also suggested a US ban on ZTE on buying equipment from US companies could also help Nokia’s long-term opportunities, “particularly in the areas of mobile and optics”.