Nokia (NOK) shares dropped sharply on Thursday after the company posted a substantial decline in operating profit and missed revenue expectations in Q2.
The telecom equipment maker reported Q2 earnings per share (EPS) of EUR 0.06, exceeding analyst expectations of EUR 0.01. However, revenue for the quarter was EUR 4.47 billion, falling short of the consensus estimate of EUR 5.18 billion.
The company noted that its net sales decreased by 18% year-on-year in constant currency.
Moreover, operating profit plummeted 32% in the second quarter due to ongoing weak demand for 5G telecom equipment. Comparable operating profit was reported at EUR 423 million ($462.38 million), down from EUR 619 million in the same quarter last year.
Nokia stock fell 7% in premarket trading.
Nokia maintained its full-year 2024 outlook, expecting comparable operating profit to be between EUR 2.3 billion and 2.9 billion, with free cash flow conversion from comparable operating profit ranging from 30% to 60%.
The company expects a return to growth in the latter half of the year.
"While the dynamic is improving, the net sales recovery is happening somewhat later than we previously expected," said CEO Pekka Lundmark.
"Looking forward, we believe the industry is stabilizing, and given the order intake seen in recent quarters, we expect a significant acceleration in net sales growth in the second half," he added.
Analysts said the results show that sales pressures remain.
"We continue to have the view that the industry environment is having a bigger negative impact than the company can offset by its own actions in the near-term," they said.