Nokia profit up despite pandemic as new CEO takes over

HELSINKI (AP) — Nokia has reported better than expected second-quarter earnings on the back of improved margins for telecoms equipment and software despite the coronavirus crisis causing a substantial drop in revenue.

The Espoo, Finland-based maker of new-generation 5G mobile and other networks said yesterday that its net profit for the April-June period was up 22 per cent at EUR316 million (USD376 million). Sales were down 11 per cent at EUR5.1 billion.

CEO Rajeev Suri said in a statement that the majority of the drop in revenue was “the result of COVID-19 as well as a sharp decline in China based on the prudent approach we have taken in that market”.

Nokia estimated that the COVID-19 crisis hurt its net sales by about EUR300 million in the second quarter and about EUR500 million in the first half of the year.

“We expect that the majority of sales missed in the (second) quarter due to COVID-19 will shift to future periods,” Suri said.

Suri said that Nokia has now concluded 83 commercial deals for 5G, the new network technology that allows ultra-fast downloading speeds among other things. Along with China’s Huawei and Sweden’s Ericsson, Nokia is one of the three main providers of 5G networks. Huawei is at the centre of a United States (US)-China dispute over technology, with the Trump administration saying it can help the Chinese government spy on people, a claim the company denies.

Yesterday marked the last day as a CEO for Suri, a Nokia veteran with 25 years in service and the head of the company since 2014, as his appointed successor Pekka Lundmark takes over today. Lundmark, 56, is the former CEO of the Finnish energy group Fortum who has earlier worked at Nokia in various executive positions between 1990 and 2000. In May, Nokia’s shareholders approved the appointment of Sari Baldauf, who also has an extensive Nokia background, as the company’s new chair.