by Tarmo Virki and Supantha Mukherjee
HELSINKI (Reuters) – Nokia on Thursday warned of a difficult 2021 as the telecoms supplier tries to catch up with 5G rivals and had a better-than-expected end to 2020.
The Finnish company and its rival Ericsson have seen customer numbers soar as operators begin to roll out 5G networks, aided by Huawei being sidelined by many governments over security issues, a circumstance that Ericsson however seems to have benefited more.
“We have not yet made a breakthrough in 5G (in China) but of course we are not ruling out that possibility for the future,” new managing director Pekka Lundmark told Reuters. “But we want to be careful not to be there at all costs.”
Nokia reported better-than-expected revenue and underlying profit in the fourth quarter but warned that its revenue would decline in 2021 to between € 20.6 billion and € 21.8 billion , against 21.9 billion in 2020.
He also said he expected an underlying operating margin in a range of 7% to 10% in 2021, against a rate of 9.7% for the past year.
“We expect a difficult year 2021, a year of transition, with significant headwinds due to the loss of market share and the erosion of prices in North America”, explained Pekka Lundmark which triggered a significant strategic reorganization since taking office last August.
Nokia in particular indicated that it had lost a contract with the operator Verizon which chose Samsung Electronics in its place to provide 5G equipment.
In the fourth quarter, the growth in sales of 5G equipment was partially offset by a decrease in radio access networks (RAN). The turnover of this activity fell by 7% to 5.04 billion euros.
In total, Nokia’s revenue fell 5% to 6.57 billion euros in the period from October to December, while analysts expected an average of 6.42 billion euros, according to the data. by Refinitiv Eikon.
Underlying profit stood at 0.14 euro per share, compared to 0.15 euro in the fourth quarter of 2019, and a less optimistic consensus of 0.11 euro.
On the Helsinki Stock Exchange, the Nokia title fell 1.52% at midday.
Nokia shares have seen big swings over the past two weeks as they have been the subject of a speculative frenzy in the markets that has also affected companies like Gamestop and other tech groups.
(French version Diana Mandiá, edited by Blandine Hénault)