Nokia warns of tough times despite profit hike - Mobile World Live

Nokia warns of tough times despite profit hike

06 FEB 2020

Nokia was boosted by profit which more than doubled in Q4 2019, but the company’s joy looked to be short-lived as CEO Rajeev Suri (pictured) warned of challenges for the majority of 2020.

In a statement, Suri said the company’s Q4 numbers were “a strong end to a challenging year”, as it posted a profit of €563 million, up from €203 million in Q4 2018.

A positive end to the year was needed for the Finnish vendor, which was forced to cut its outlook in October 2019 and put a stop on dividend payments, stating it needed to make investments in a number of areas.

Suri said he expects a similar trend in 2020, with the majority of profit to be generated in Q4, while adding the company did not expect to resume dividend payments until its cash position improves to about €2 billion.

“Given typical cash seasonality, we would not expect to reach that level in the first three quarters of this year,” he said. “Should we exceed the €2 billion level after that point, the board will assess the possibility of proposing a dividend distribution for financial year 2020.”

China and 5G
In Q4, revenue was flat at €6.9 billion, despite strong growth in sales to enterprise customers.

Asia-Pacific was its strongest region, with sales up 16 per cent to €1.4 billion, however this was offset by a 25 per cent decline in greater China to €469 million.

Its struggles in China are expected to continue.

Nokia said in a statement it excluded the market from its outlook “given that pursuing market share in China presents significant profitability challenges and the region has some unique market dynamics”.

Momentum in 5G continued, with 66 commercial deals in place by the close of the quarter. However, it expects to see a high level of competition for 5G deals in 2020, which will continue to impact the mobile access unit within its Networks segment.

Suri added company recognised it “faced challenges in mobile access and in cash generation,” promising the company would “have a sharp focus on these two areas over the course of 2020”.

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Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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