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Nokia expects a second year of declining revenues with the telecommunications equipment maker warning of a difficult 2021 as it struggles to assert itself in the 5G market against rivals Huawei and Ericsson.
The Finnish group said on Thursday it expected turnover this year of 20.6-21.8 billion euros compared to 21.9 billion euros in 2020 and warned it would suffer a “Significant decline” in its core business of mobile networks due to fierce competition in the US.
“We expect 2021 to be difficult, a year of transition, with significant headwinds due to loss of market share and price erosion in North America,” said Pekka Lundmark, chief executive of Nokia since August .
He told the Financial Times the group was “willing to sacrifice some profitability” in an attempt to regain leadership in 5G technology by increasing its R&D spending as it seeks to recapture lost ground to China’s Huawei. and Swedish Ericsson.
Nokia was caught off guard by the early start in sales of 5G networks as it still digested its € 15.6 billion acquisition of Alcatel-Lucent. He replaced both its chief executive and chairman last year as he wondered why he hadn’t been able to take advantage of the United States’ campaign against Huawei.
Fourth-quarter sales and profits fell, but less than analysts expected. Revenue fell 5% to 6.57 billion euros from a consensus forecast of 6.42 billion euros, according to data from Refinitiv, while operating profit per share was 0.14 € , down from € 0.15 a year earlier but ahead of analysts’ estimate of € 0.11.
Nokia has said it expects its comparable operating margin to be 7-10 percent from 9.7 percent in 2020. It will not pay a dividend for 2020 but will assess at the end of the year. ‘he has to pay one for 2021 taking into account his net cash position and outlook for 2022.
Mr. Lundmark pledged to “invest whatever it takes to win in 5G”, a sign of the seriousness with which Nokia takes the fight. But it expects its 5G market share this year outside of China – where it has struggled to win deals, unlike Ericsson – to be 25-27%, down from 27-28%. in 2020. “It will be a year where we are resetting the baseline, getting the right technology,” he added.
Nokia shares have risen by more than a fifth this year. It was one of the stocks pushed by amateur traders on Reddit, but it is down 14% from a recent high last week.
Mr Lundmark said that unlike other stocks targeted by traders on Reddit, Nokia did not have a significant number of short sellers betting against it, and added that the company was ready to help regulators who wanted to address the issue. market convulsions.
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