News
Sales from networks business fall 8% due to ‘challenging environment’ in mobile networks.
Nokia reported a loss of €513 million in the first quarter of 2016 amid declining sales that also failed to meet analyst estimates.
The Q1 results are the company’s first set of unified figures after it bought Alcatel-Lucent for €15.6 billion earlier this year. Bloomberg reported that the results have largely disappointed investors, with the company’s share price falling 2.4% in reaction to the announcement.
Q1 sales fell by 9% year on year to reach €5.6 billion, the Finland-based vendor said in a statement. Bloomberg reported that analysts had predicted sales of €5.76 billion. First-quarter network sales dropped 8% to €5.18 billion, missing analysts’ average forecast of €5.51 billion in a Reuters poll.
The company posted an operating profit of €345 million, while the €513 million loss attributable to shareholders followed a profit of €177 million posted by Nokia as a standalone company in the previous year. This was due to a charge related to the merger.
Reuters quoted Nokia CFO Timo Ihamuotila as saying that mobile network equipment sales fell more than expected in the first quarter and will continue to decline this year, as customers wait while it combines formerly separate product offerings.
Nokia CEO Ravi Suri said that while the revenue decline was disappointing, he noted that the challenging environment in mobile networks is “not a surprise.”
“We noted in our Q4 2015 earnings release that we expected some market headwinds in 2016 in the wireless sector and we continue to hold that view today,” Suri said.
Looking ahead to the full year, the company said it expects a full-year 2016 non-IFRS operating margin above 7% in the networks business.
Suri added that the integration of Alcatel-Lucent was “complex”, but said Nokia was “sufficiently confident in its progress that it is targeting synergies that are both more than and faster than its original plan.”
Savings from the merger are now expected to be above €900 million in 2018, which exceeds the company’s previous estimate.
The company also launched a programme to reduce the number of employees globally between now and the end of 2018. Nokia plans eliminate about 10,000 to 15,000 positions from the combined staff of 104,000.
