Nokia sees higher savings from AlcaLu deal - Mobile World Live

Nokia sees higher savings from AlcaLu deal

04 AUG 2016

Nokia raised its 2018 cost saving target following its Alcatel-Lucent buy to €1.2 billion, citing greater visibility as its integration works continues, yet Q2 numbers showed consolidation leaves the Finnish vendor far from immune to market conditions.

The company previously specified savings of “above” €900 million for 2018, so the new target is about 33 per cent higher.

“As our successful integration work continues and as we get increased granular visibility into the business, our confidence in our ability to deliver cost savings also increases,” said CEO Rajeev Suri.

It was not spelled out where the company would find savings, although recent reports have cited job cuts. Rival Ericsson also recently upped its cost cutting targets.

Net sales trip up
Nokia’s Q2 net sales, expressed on a combined company basis, fell by 11 per cent to €5.7 billion compared with the year ago quarter. Mobile Networks fell by 14 per cent to €3.19 billion, not offset by a seven per cent gain for fixed networks.

Geographically the worst falls in the networks business were Latin America (16 per cent) and Middle East & Africa (24 per cent). The company noted “meaningful negative impact from one of our major customers in Latin America”.

Suri described the topline decline as “a concern”, and a reflection of “challenging market conditions”, a seeming constant in the mobile infrastructure business.

Investors should not expect an improvement in the near term, he said, but the company belieives it is well-positioned given the combined portfolio, operational discipline, sales execution and opportunities in the transition from 4G to 5G.

Using the same combined company (non-IFRS) measure, operating profit fell by 49 per cent to €332 million.

On a reported basis, the company made a loss of €726 million, compared with a year earlier profit of €338 million. Reported net sales were €5.6 billion, up from €2.9 billion.

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Richard Handford

Richard is the editor of Mobile World Live’s money channel and a contributor to the daily news service. He is an experienced technology and business journalist who previously worked as a freelancer for many publications over the last decade including...

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