Nokia said it is targeting “synergies” resulting from its mega €15.6 billion Alcatel-Lucent acquisition “both more than and faster than our original plan”, as it reiterated its warning of challenges in the mobile sector in 2016.
The company said that it has already agreed transition plans that cover “the most pressing areas of portfolio overlap with most of our top customers”, and has begun the process of job cuts in the US and several other countries. It is also working to trim its real estate portfolio and make procurement savings.
Nokia nudged up its cost-cutting target for the merger, seeking savings of “above” €900 million in full year 2018, compared with “approximately” €900 million before.
Rajeev Suri (pictured), CEO, said that Nokia is seeing strong support from customers, including those from Alcatel-Lucent. “We are focused on capitalising on these opportunities through strengthening our sales execution, as well as bringing unique innovation rapidly to market.”
9% revenue fall
The company’s Q1 results featured a decline in revenue, which Suri described as “disappointing”, driven largely by its Mobile Networks unit, “where the challenging environment is not a surprise”.
On a combined company basis, Mobile Networks revenue of €3.1 billion was down 15 per cent year-on-year, which was not offset by a 13 per cent increase in fixed revenue to €613 million. Lower levels of networks and services spend by “certain North American customers” was noted.
North America sales decreased 17 per cent compared with the prior year to €1.6 billion, with it still remaining the combined business’ biggest market.
Using the same measure, non-IFRS group operating profit of €345 million was up 25 per cent, while total revenue decreased 9 per cent to €5.6 billion.
On a reported basis, the company saw a Q1 loss of €613 million, compared with a prior-year profit of €169 million, on revenue of €5.5 billion, up from €2.94 billion.
The company gave a non-IFRS profit figure for Q1 of €152 million when excluding costs related to the Alcatel-Lucent deal, goodwill impairment, amortisation, restructure, and some other costs.