Nokia lowers outlook on sales and operating margin

Nokia said it is lowering outlook on sales and operating margin for 2023 due to the macro-economic environment and customers’ inventory digestion.
Nokia @ MWC 2023 in BarcelonaNokia, one of the leaders in the global telecom market, has lowered its full year net sales outlook to a range of EUR 23.2 billion to EUR 24.6 billion as compared with the previous guidance of EUR 24.6 billion to 26.2 billion.

Nokia is also narrowing its comparable operating margin range outlook to 11.5 percent to 13 percent (previously 11.5 percent to 14 percent). The changes are related to Nokia’s Network Infrastructure and Mobile Networks business groups.

The weaker demand outlook in the second half is due to both the macro-economic environment and customers’ inventory digestion.

The RAN market is projected to decline at a 1 percent CAGR over the next five years, according to Dell’Oro Group. Despite the growth in 5G RAN, it is not enough to offset the declining LTE investments. The report also mentions that the more developed 5G regions, such as North America and China, are expected to record steeper declines.

“Customer spending plans are increasingly impacted by high inflation and rising interest rates along with some projects now slipping to 2024 – notably in North America. There is also inventory normalization happening at customers after the supply chain challenges of the past two years,” Nokia said in a news statement.

Nokia said it expects to report sales of  EUR 5.7 billion (nil growth) with an operating margin of 11 percent in the second quarter. Nokia’s operating profit in Q2 benefitted from approximately EUR 80 million related to catch-up net sales in Nokia Technologies.

Nokia will release its second quarter and half year 2023 financial results on Thursday 20 July 2023.