Nokia, the Finnish telecoms equipment maker, announced a 32% increase in net profit for the third quarter on Thursday, although sales fell due to a slowdown in India.
Nokia reported sales of 4.3 billion euros ($4.7 billion), down 8% from the previous year and lower than expected by Bloomberg analysts.
The business stated that sales growth “was offset by decline in Mobile Networks, primarily in India” as well as a divestment in cloud and network services.
Profits increased 32% to 175 million euros, “driven by a combination of improved product mix, regional mix, and actions to reduce product costs,” Nokia CEO Pekka Lundmark said in a statement.
According to Lundmark, Nokia is “now turning the corner in many parts of our business, even if some continue to experience market weakness.”
The company maintained its operational profit forecast of 2.3 billion to 2.9 billion euros, despite the fact that net sales recovery is “taking longer than we expected,” according to Lundmark.
Atte Riikola, an analyst at Finnish market research firm Inderes, told AFP that Nokia’s earnings growth was almost in line with predictions, with a few exceptions.
“Nokia’s net sales has been declining for one year and now minor recovery was expected, but net sales still came down because market recovery has not been as fast as expected,” Riikola said.
Riikola said next year was expected to be tough for Nokia, citing challenges in the network business.
“At this point the expectation is that earnings will not grow next year,” he said.
Major telecoms equipment manufacturers, such as Nokia, Sweden’s Ericsson and China’s Huawei, have endured a slowdown in investment by their customers — telecom operators — and slackening growth in India.
“It will be a tough market to maintain growth in for many years,” Riikola said.
Ericsson and Nokia are cutting costs and jobs as demand for 5G equipment has slowed.
Nokia announced in October last year that it would cut up to 14,000 jobs out of 86,000 employees, mainly due to weakening demand in the United States.
Ericsson posted a four-percent drop in sales for the third quarter this week.