India’s economic slowdown brings down Nokia sales

Finnish telecoms equipment maker Nokia on Thursday reported a 32-percent rise in net profit for the third quarter but sales dropped due to a slowdown in India.

Nokia announced sales of 4.3 billion euros ($4.7 billion), down eight percent compared to a year ago and lower than forecast by analysts surveyed by Bloomberg.

The company said sales growth "was offset by decline in Mobile Networks primarily in India" as well as a divestment in cloud and network services.

Profits were up 32 percent to 175 million euros, "driven by a combination of improved product mix, regional mix and actions to reduce product cost", Nokia chief executive Pekka Lundmark said in a statement.

Lundmark said Nokia was "now turning the corner in many parts of our business, even if some continue to experience market weakness."

The company kept its operating profit outlook at between 2.3 billion to 2.9 billion euros, although the recovery of net sales "is happening slower than we expected", Lundmark stated.

Atte Riikola, analyst with Finnish market research firm Inderes, told AFP Nokia's earnings development was nearly in line with the expectations, with a few exceptions.

"Nokia's net sales has been declining for one year and now minor recovery was expected, but net sales still came down because market recovery has not been as fast as expected," Riikola said.

Riikola said next year was expected to be tough for Nokia, citing challenges in the network business.

"At this point the expectation is that earnings will not grow next year," he said.

Major telecoms equipment manufacturers, such as Nokia, Sweden's Ericsson and China's Huawei, have endured a slowdown in investment by their customers -- telecom operators -- and slackening growth in India.

"It will be a tough market to maintain growth in for many years," Riikola said.

Ericsson and Nokia are cutting costs and jobs as demand for 5G equipment has slowed.

Nokia announced in October last year that it would cut up to 14,000 jobs out of 86,000 employees, mainly due to weakening demand in the United States.

Ericsson posted a four-percent drop in sales for the third quarter this week.