Nokia has announced a two-year share buyback program amounting to 600 million euros ($653 million) starting this quarter, following a significant profit decline in 2023. The company’s shares experienced an 8.5% increase in London trading. Nokia, one of the largest mobile network equipment manufacturers globally, reported a 23% year-on-year decrease in fourth-quarter net sales to 5.7 billion euros, with comparable operating profit falling 27% to 846 million euros. Nokia CEO Pekka Lundmark attributed these challenges to shifts in customer behavior influenced by the macro-economic environment, high interest rates, and customer inventory digestion. The company anticipates the challenging environment to persist into 2024, projecting a comparable operating profit between 2.3 billion and 2.9 billion euros for the year. Nokia has faced setbacks due to reduced spending by telecommunications operators on networks, particularly in India, where investment in next-generation mobile networks is slowing down. The company’s mobile networks division, its largest revenue contributor, experienced a 17% year-on-year sales decline to 2.5 billion euros in Q4. Nokia’s shares have fallen approximately 25% over the past year, influenced by a significant deal loss to Ericsson in December, where AT&T chose Ericsson over Nokia to build a new type of 5G network in the U.S. Nokia is now revising its comparable operating margin target for 2026 from at least 14% to at least 13%, reflecting current market conditions in the Mobile Networks segment. The company’s cautionary outlook for 2024 aligns with its rival, Ericsson, which reported a decline in sales and operating profit for Q4 and also highlighted challenges ahead, including reduced customer spending and slowing investment in India.
