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Nokia second quarter beats forecasts on solid demand; maintains outlook

Nokia second quarter beats forecasts on solid demand; maintains outlook
FILE PHOTO: Flags with the Nokia logo flutter at company's headquarters in Espoo, Finland, May 5, 2017. REUTERS/Ints Kalnins -
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Ints Kalnins(Reuters)
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By Tarmo Virki

(Reuters) – Finnish telecom network equipment maker Nokia <NOKIA.HE> on Thursday reported a surprise rise in second-quarter profit, citing higher demand, while maintaining its 2019 profit outlook.

Nokia reported April-June underlying earnings per share of 0.05 euros, compared with an average forecast of 0.03 euros in a Refinitiv poll.

The company said its second-quarter revenue rose 7% from a year ago to 5.69 billion euros ( £5.08 billion ), boosted by growth in North America.

The equipment maker’s quarterly revenue beat analysts’ average forecast of 5.43 billion euros.

The telecom network industry has faced slowing demand since 4G network sales peaked in the middle of the decade, but a new cycle of network upgrades appear to be kicking in as demand for 5G technology increases.

Nokia maintained its forecasts of full-year earnings per share at 0.25-0.29 euros, and 2020 EPS of 0.37-0.42 euros. Analysts’ average forecast stands at 0.23 euros for 2019 and 0.36 euros for 2020, according to Refinitiv data.

The Finnish company said it now expects slight market growth in 2019, while its earlier forecast was based on a flat market.

Nokia counts Sweden’s Ericsson <ERICb.ST> and China’s Huawei as its main rivals, and some analysts say Nordic firms may benefit from challenges faced by the Chinese group after Washington accused Huawei of activities contrary to national security, a charge Huawei denies.

“Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits,” Nokia said.

Last week, its rival Ericsson <ERICb.ST> said the company expected a battle for new contracts to hit profit margins in the second half of the year.

“Competitive intensity could increase in some accounts as some competitors seek to take share in the early phases of 5G,” Nokia added.

(Reporting by Tarmo Virki; Editing by Uttaresh.V and Sherry Jacob-Phillips)

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