Finnish telecom equipment maker Nokia reported a drop in second-quarter profit due to a decline in margins as growth in 5G equipment sales in low-margin markets like India failed to offset slowing demand in North America.
Nokia CEO Pekka Lundmark said the company was expecting a slowdown after a strong 2021 and early 2022, but signals from North American operators showed they were slowing investments more than expected.
Nokia cut its full-year sales and profit margin outlook last week. Lundmark said the demand impact was "mostly short term" but Nokia sees "this primarily as a question of timing."
Comparable operating profit fell to €626 million from €714 million a year earlier, but beat analyst estimates. A new patent deal with Apple boosted results.
The decline in North America was offset to some extent by India but at a lower margin. Gross margin declined 180 basis points to 38.8% due to the regional mix shift.
Nokia gained market share with Indian operators like Reliance Jio, which was previously dominated by Samsung for 4G. But Lundmark said the fast rollout in India will likely moderate next year.
