Nokia’s new President and CEO Pekka Lundmark (C) shakes hands with resigning President and CEO Rajeev Suri after a press conference at the Nokia headquarters in Espoo, Finland on March 2, 2020.
Markku Ulander | Lehtikuva | AFP via Getty Images
Nokia saw its profits rise 22% to 316 million euros ($376 million) in the second quarter despite quarterly revenues falling 11% to 5 billion euros.
The mobile network equipment maker, which posted financial results for the April to June period on Friday, said the coronavirus crisis has reduced net sales by about 500 million euros for the first half of the year. However, it expects most lost sales to move to future periods.
The Finnish firm, which is headquartered in Espoo, said it was able to boost profitability for the second quarter, and upgrade its earnings outlook for 2020, by scaling back on its service business and signing fewer 5G deals in the highly competitive Chinese market.
Rajeev Suri, president and chief executive of Nokia, said most of the company’s revenue decline 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.”
He added: “We also saw a reduction driven by our proactive steps to reduce the volume of low margin services business.”
Incoming Chief Executive Pekka Lundmark is set to take over Nokia this weekend, and the company is in a better position than analysts anticipated.
Nokia’s second-quarter underlying earnings rose to 0.06 euros per share, up from 0.05 euros a year ago, beating the 0.03 euros consensus in a Refinitiv poll.
The company upgraded its forecast for 2020 underlying earnings per share from 0.18 to 0.28 euros up to between 0.20 and 0.30 euros.
Rival firm Ericsson, which is headquartered in Stockholm, Sweden, reported a rise in 5G network sales and software revenue earlier this month.
Both Nokia and Ericsson are poised to take advantage of Huawei’s uncertain future in the West as government’s clamp down on the Shenzhen tech giant amid fears that the company could spy for the Chinese government. Huawei has repeatedly denied the allegations.