Nokia recovers in Q4 but cautious on outlook

HELSINKI, Finland (AFP) — Finnish telecom equipment provider Nokia beat expectations in a “challenging” 2019 as a strong fourth quarter enabled it to post its first full-year net profit since 2015, of 7.0 million euros.

For the three months to December, it chalked up net profit of 563 million euros ($620 million), sparking sharp gains in the share price.

Nokia was up more than 2.05 percent on the Helsinki Stock Exchange around early afternoon at 3.70 euros — but that was still well short of October’s 4.73 euros, when Nokia reduced its 2020 outlook and sent its stock plummeting.

Nokia, which has remade itself as a 5G network systems company since its mobile phone business was wiped out by Apple and Samsung, said it would stick by its 2020 forecasts until net cash holdings hit 2.0 billion euros.

“We would not expect to reach that level in the first three quarters of this year,” CEO Rajeev Suri said on Thursday.

“In October the decision was communicated like ‘We’re putting dividends on pause,'” analyst Mikael Rautanen of Inderes told AFP.

“But now the pause is going to take 1.5 years so it’ll be a pretty long pause for the shareholders.”

Suri insisted the firm was “making progress in addressing our challenges in Mobile Access,” after struggling last year in the face of fierce competition from 5G rivals Huawei and Ericsson and with rollout delays.

Nokia announced Thursday that its tally of 5G orders stands at 66, giving the firm a 27 percent share of markets excluding China across 4G and 5G.

Suri said he expected this figure to remain stable for 2020.

In mid-January, Ericsson told AFP it had signed 79 contracts for 5G while Huawei told AFP in December it had secured 65 orders.

“It seems Nokia is finally on track to gradually improve during this year,” Rautanen said.

“In 2021 Nokia should be in a much better position to do profitable business, and regarding cash flow as well.”

Nokia also highlighted a risk of “temporary disruption, particularly in our supply chain, due to the coronavirus outbreak”, announcing that some of its suppliers’ factories in China were currently closed.

“We have alternative sources for supply and we are now utilizing that global supply chain to ensure we can deliver on the customer commitments that we have,” Chief Financial Officer Kristian Pullola told a teleconference.

© Agence France-Presse