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Nokia on Thursday said that it’s going to begin a two-year 600 million euro ($653 million) share buyback this quarter, after reporting that its profit plunged in 2023.
Nokia shares were 7% higher at around 8.19 a.m. London time on Thursday.
One in all the world’s largest mobile network equipment makers, Nokia posted fourth-quarter net sales of 5.7 billion euros, a 23% year-on-year decline. Comparable operating profit fell 27% year-on-year to 846 million.
“In 2023 we saw a meaningful shift in customer behavior impacting our industry driven by the macro-economic environment and high rates of interest together with customer inventory digestion,” Nokia CEO Pekka Lundmark said in an announcement.
Inventory digestion refers to customers, comparable to telecommunications networks, using gear that they’ve already bought, relatively than purchasing recent equipment.
Lundmark said the “difficult environment” of 2023 will proceed into 2024.
The corporate forecast comparable operating profit will reach between 2.3 billion euros and a pair of.9 billion euros in 2024. Analysts expect operating income to sit near 2.4 billion euros in 2024, according to LSEG consensus estimates.
Nokia has been hurt by telecommunications operators cutting back on spending on their networks. India, which has been investing heavily in its next-generation mobile networks over the past couple of years, is starting to decelerate.
Mobile networks, Nokia’s biggest division by revenue, saw sales fall 17% year-on-year to 2.5 billion euros within the fourth quarter.
“In Mobile Networks, we expect top line challenges in 2024 related to a more normalized pace of investment in India and the AT&T decision,” Lundmark said.
The corporate suffered an enormous deal in December, when U.S. mobile carrier AT&T signed a cope with Nokia rival Ericsson to construct a recent form of 5G network within the U.S. AT&T’s network will rely heavily on Ericsson, relatively than on Nokia.
That deal has had an impact on Nokia whose shares have fallen around 25% during the last 12 months.
Lundmark called this a “disappointing development” that “doesn’t reflect the technological competitiveness” of Nokia.
On Thursday, the corporate said it’s now lowering its comparable operating margin goal to be achieved by 2026 from at the very least 14% to at the very least 13%.
“Nokia still sees a path to achieving the at the very least 14% comparable operating margin goal but considering the present market conditions in Mobile Networks, this was deemed a prudent change,” Nokia said.
The firm’s warnings in regards to the outlook for 2024 come after rival Ericsson also reported a fall in sales and operating profit for the fourth quarter. Ericsson also signaleda difficult 2024 ahead, noting customers cutting spending and investment in India slowing down.