Nokia records "strong" growth in the second quarter: net profit exceeds $100 million
newsFriday, 31 July 2020 at 16:36
Finnish manufacturer, Nokia, officially announced its second-quarter financial performance today. Due to the coronavirus pandemic and the performance of the Chinese market, Nokia’s second-quarter revenue hit 5.092 billion euros. This is an 11% year-on-year decrease. However, its net profit shows strong growth, reaching 99 million euros ($116.5 million). This is quite impressive relative to its 193 million euros ($227.2 million) loss in the same period last year. Furthermore, Nokia's shipment in Q2 2020 continues to increase. By the end of the year, Nokia's growth could be over 35%.
Rajeev Suri, President and CEO of Nokia said: “Despite the challenges of COVID-19, Nokia achieved strong growth in the second quarter. Profitability was better than expected, cash flow improved significantly, mobile business strength increased significantly, and earnings per share is good. We also have year-on-year growth."
Since profitability is significantly better than market expectations, Nokia will have stronger financial strength by the end of the year. Its better cash flow will also boost its overall financial strength. Nokia raised its 2020 full-year adjusted earnings per share forecast to 0.25 euros ($0.29). Also, it increased its full-year adjusted operating interest rate to 9.5%.
Nokia to focus on its smartphone business
At the beginning of this year, Nokia said it will focus on mobile business and improve cash generation. The company believes that it will make good progress in these areas. According to Rajeev Suri, Nokia's free cash flow for the quarter is 265 million euros ($312 million), this is better than its 1 billion euros ($1.1 billion) loss a year ago. At the end of the second quarter, Nokia had 1.6 billion euros ($1.8 billion) in net cash and 7.5 billion euros ($8.8 billion) in total cash. Taking into account the strong growth in the first half of the year, we expect its full-year free cash flow in 2020 to perform better than previous predictions.
"In the second quarter, Nokia's wireless product portfolio continues to evolve. The roadmap is constantly improving, costs are falling, and product performance is constantly improving." Rajeev Suri said that Nokia has a particularly strong product portfolio in 5G mid-band and has helped 55 customers deploy proven products". Rajeev Suri particularly emphasized that Nokia's 5G product shipments will continue to increase in Q2. Nokia now has 83 5G contracts."
Nokia's "excellent" performance in the Q2 quarter will also probably continue. The company's software plans to accelerate its leadership in Open RAN in the next step. Nokia is the only global supplier dedicated to O-RAN and commercial 5G Cloud-RAN networks. In addition, Nokia's IP routing business has also expanded to the data center market.
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