Nokia profit increases to €486m in Q3

Finland-based telecommunications network equipment manufacturer Nokia improved its profits during the third quarter (Q3) of 2020, and pledged more investment in 5G research, said the company here on Thursday.

According to a media release from Nokia, its operating profit during Q3 this year increased to 486 million euros from 478 million euros of the same period last year, reported Xinhua.

However, the company's net sales declined in July-September to 5.29 billion euros from 5.69 billion euros in the corresponding quarter of 2019, largely driven by lower services within Mobile Access, the company said in the media release.

Within the corporation, the operating profit in the networks sector increased by 105 percent to 263 million euros from 128 million euros a year ago, while the net sales of the sector declined from 4.43 billion euros to 4.11 billion euros.

Pekka Lundmark, president and chief executive officer (CEO) of Nokia, who started his work in August, said in the release that Nokia will do "what it takes" to win the 5G development. Lundmark said Nokia had lost "share at one large North American customer" and now sees some margin pressure in that market.

Lundmark noted that the solid Q3 results demonstrated Nokia is making good progress in many parts of its business, but it needs to increase research and development investments to pursue leadership in 5G.

"Profitability was up on a year-on-year basis, we had the fifth consecutive quarter of solid free cash flow, Nokia Enterprise maintained its double-digit growth, and we continued to strengthen the competitiveness and cost position of our mobile radio products," he elaborated.

In the Q3 listing of key drivers for the outlook, Nokia Networks excluded China from markets expected to see decline. China was also excluded from the category of lower expectations based on the impact of COVID-19.

Nokia also announced changes in its operating model. Each business group will have clear responsibility for economic results and aim at being market leaders in their own sectors. The groups were given as Mobile Networks, IP and Fixed Networks, Cloud and Network Services and Nokia Technologies. Additionally a customer experience unit will be launched. More details of the strategy would be given in December.

Lundmark said the changes mark a shift from end-to-end as a strategic principle to a more focused approach with each business group in Nokia having a distinct role in the overall strategy.

The CEO noted that Nokia is to stabilize its financial performance in 2021 and deliver progressive improvement towards its long-term goal after that.