NSN reports profit, despite sales decline

NSN reports profit, despite sales decline

08 AUG 2013

Newly-renamed Nokia Solutions and Networks (NSN) reported a profit for the second quarter of 2013, despite a year-on-year drop in sales, as its cost saving efforts took effect.

The company reported net sales of €2.76 billion for Q2 2013, down 14.7 per cent on the €3.23 billion for the equivalent period in 2012. Its net profit of €15 million was a significant improvement on the €260 million loss a year ago.

Excluding divested businesses and exits from some customer contracts and markets, net sales were down 11 per cent year-on-year. The drop in sales was largely attributed to reduced wireless infrastructure deployment activity around the world.

Mobile broadband net sales for the period were €1.28 billion, down 10.1 per cent on €1.42 billion a year ago. Global services declined 14.7 per cent to €1.46 billion.

However, mobile broadband made up a larger proportion of the sales mix, representing 46 per cent of sales, up two percentage points from Q2 2012. Global Services accounted for 53 per cent of sales, as it did a year ago.

The company saw lower cyclical sales in Japan after particularly high levels last year, while sales also fell in Europe due to limited operator spending. There was also a spending decline in China as operators held back in anticipation of the shift to TD-LTE.

Net sales in Asia, Middle East and Africa declined 20.6 per cent to €1.29 billion, while Europe declined by 15.2 per cent to €1.12 billion. North America on the other hand saw sales increase by 22.1 per cent to hit €343 million.

Operating expenses before specific items was €722 million, down from €820 million in 2012. This change was largely due to reduced investment in business activities not consistent with the company’s strategy as well as structural cost savings through the company’s transformation and restructuring programme. The company did increase its investment in areas consistent with its strategy, such as LTE.

As a result of the restructuring, NSN had 50,500 employees at the end of the second quarter, a 12,900 year-on-year reduction.

Such has been the success of the cost cutting programme that NSN increased its operating expenses savings target to more than €1.5 billion by the end of 2013 compared to 2011. The original target, announced in late 2011, was €1 billion.

“As a result of our focused strategy and strong financial position, we believe NSN is very well positioned to build on its leadership position in LTE as our customers build the next generation of mobile broadband networks,” NSN CEO Rajeev Suri.

The period also saw Nokia take full ownership of NSN by acquiring the 50 per cent stake owned by Siemens for €1.7 billion. A change of name from Nokia Siemens Networks to Nokia Solutions and Networks was announced earlier this week, while rumours surfaced of further job cuts.

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Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

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