Nokia’s revenue falls 2% in Q1 as Coronavirus disrupts supply chain in China

In its announcement on Thursday, Nokia Corp. (HEL: NOKIA) said that its revenue in the first quarter came in 2% lower as the Coronavirus pandemic disrupted its supply chain in China that cost £173.58 million to the company in Q1.

Thanks to a higher demand for its telecommunication equipment for the upcoming global 5G network, the company still managed to make a £28.70 million profit in the recent quarter versus £101 million loss in the same quarter last year.

The Finnish company is currently competing with Sweden’s Ericsson and China’s Huawei as it aims to strengthen its contribution to the global 5G network. Nokia is particularly seeking deployment by the telecom firms in the U.S for growth.

Nokia’s Q1 revenue falls short of experts’ forecast

In the quarter that ended in March, the company reported its revenue at £4.26 billion that fell short of experts’ forecast of £4.43 billion, according to Refinitiv. Both its rivals, on the other hand, recently noted growth in Q1 revenue backed by solid demand for telecom services as global businesses rely on work from home arrangements amidst the health crisis.

Nokia, however, expressed confidence that the impact of COVID-19 on its financial performance will be confined to the first quarter with recovery expected in Q2. The company forecasts a seasonally strong performance in the 2^nd half of 2020. Nokia has signed 70 commercial 5G agreements so far with 21 networks, as per the company, going live. CEO Rajeev Suri was reported quoting on Thursday:

“We did no see a decline in demand in the first quarter. As the COVID-19 situation develops, however, an increase in supply and delivery challenges in a number of countries is possible and some customers may re-assess their spending plans.”

Nokia tops analysts’ estimate for earnings per share

Nokia said that it made an underlying 0.87 pence of profit per share in the first quarter. Analysts had anticipated the company to breakeven in Q1. In the comparable quarter last year, Nokia made 1.74 pence of loss per share.

The telecoms company also slashed its full-year guidance for earnings to 20 pence to 22 pence per share. Experts’ forecast of 21 pence per share lies within this range.

At £3 per share, Nokia is currently a little over 1% down year to date in the stock market. In 2019, the stock registered an annual loss of around 30%. Nokia is currently valued at £16.77 billion.