Is Nokia finally on the road to recovery? The Finnish telecoms equipment maker on Thursday published quarterly results above expectations. Its turnover increased by 3% to almost 5.1 billion euros compared to the same period last year. Net profit amounted to 263 million euros, against a loss of 115 million in the first quarter of 2020. Figures welcomed by the CEO of Nokia, Pekka Lundmark, who took office last August. “We had a strong start to the year, he says in a press release. I was particularly pleased with the strong growth in network infrastructure revenues, driven by the growing demand for next-generation connectivity. “
Nokia is thus benefiting from major 5G deployment programs in developed countries. This is particularly true in the United States and Europe, knowing that Nokia has little presence, unlike its great Swedish rival Ericsson, in China. In North America, its sales rose 13% to 1.66 billion euros. And on the Old Continent, it increased slightly by 3%, to 1.47 billion euros.
Nokia owes its honorable financial results largely to its broad policy of cutting costs. In March, the industrialist announced yet another plan to cut 5,000 to 10,000 jobs over the next two years. This represents up to 11% of its overall workforce. France suffers greatly from this strategy. Last year, Nokia decided to cut nearly 1,000 jobs in France. This social plan is nothing less than the fourth in four years, since the acquisition of Alcatel-Lucent in 2016.
Nokia is also benefiting from the woes of its rival Huawei, the leader in the sector. Suspected of espionage on behalf of Beijing by Washington, the Chinese giant was excluded from many markets. In the United States, of course, but also in Europe. France, Great Britain and Sweden have taken measures to gradually exclude it from the 5G market. This is an opportunity for Nokia to fill its order book. Huawei’s difficulties are also set to last. The Biden administration is as inflexible as that of Donald Trump vis-à-vis the Shenzhen group. It still does not have the right to source American technologies, which weighs on its sales. In this context, Huawei reported on Wednesday a significant drop in turnover in the first quarter.
Huawei’s difficulties will perhaps allow Nokia to revive itself. The Finnish group had notably fallen behind in 5G compared to its Chinese rival and Ericsson in recent years. Today, however, Nokia must deal with a newcomer with long teeth. This is the South Korean Samsung, which is determined to carve out croupiers to historical players. A big warning signal occurred last September. This month, Samsung landed a massive $ 6.6 billion 5G contract with U.S. operator Verizon. A sign that the South Korean group is progressing and is giving itself the means to shake up the hierarchy.