Nokia shares rise as earnings beat expectations

Nokia shares are trading higher Thursday as the telecoms firm reported better than expected earnings results. It's forward looking outlook was also upbeat on the future 5G roll out.

Nokia shares rise as earnings beat expectations

Nokia shares are trading higher Thursday, as the telecoms business announced earnings that beat forecasts. Meanwhile, Nokia’s outlook was upbeat as the 5G roll out should support its business in 2019 and 2020.

By 1130 BST, Nokia shares were trading 8.85% higher at €4.22. That’s the highest level for the Nokia stock price since November 2017.

Nokia earnings boosted by one-off payment

Nokia’s total fourth quarter net sales fell 1% in constant currency, while its full year sales were down 3%.

Meanwhile, the telecoms equipment maker’s fourth quarter net profits hit €1 billion, a 7% rise from a year earlier and comfortably above expectations for €888 million, according to Reuters poll. That profit gained a boost from a one-off payment from Chinese mobile business HuaWei.

Nokia networks profits, however, were less positive. The operating profit there tumbled 25% in the fourth quarter compared with the final three months of 2016. The network business full year operating profit decline was 12%.

“I am pleased that Nokia ended 2017 with a strong fourth quarter,” said Nokia CEO Rajeev Suri.

“Group profitability increased in both the quarter and the full year, and gross margin remained resilient in Networks despite the dilutive impact of robust competition in China,” Suri added.

Improved Nokia outlook

Looking ahead, Nokia also said it anticipates that global network sales will likely remain weak – although the expected losses in 2018 are smaller than previously anticipated. However, looking towards the 5G roll out should help boost profits in 2019 and 2020.

Suri said in his statement that Nokia is now well-positioned for the event of 5G.

“For 2019 and 2020, we expect market conditions to improve markedly, driven by full-scale rollouts of 5G networks,” Suri said.

“As those rollouts occur, Nokia is remarkably well-positioned…. 5G requires a coordinated, holistic approach across all network elements, far beyond radio. That requirement plays to the strength of our end-to-end portfolio and our 5G Future X architecture,” Suri added.

He also stated, however, that Nokia’s operating margins “will be under pressure” in 2018.

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