The Finnish telecom equipment manufacturer Nokia is launching a new savings program. He wants to spend at least 800 million euros less by the end of 2026. Thousands of jobs in the group could be lost.
The mobile communications equipment manufacturer Nokia has to make savings due to weak sales and therefore wants to cut up to 14,000 jobs. CEO Pekka Lundmark wants to save between 800 million and 1.2 billion euros by the end of 2026 in order to achieve the long-term goal of an operating margin of 14 percent, as the company announced today. “Nokia expects the program to be implemented quickly with savings of at least 400 million euros in 2024 and a further 300 million euros in 2025,” the group said.
In order to achieve the savings targets, job cuts of up to 15 percent are possible. Nokia currently employs 86,000 people. The program is expected to lead to a reduction in the number of employees to between 72,000 and 77,000, it said.
Bad business in North America
In the third quarter, Nokia’s net sales fell by a fifth compared to the previous year to just under five billion euros. The adjusted operating result fell by more than a third to 424 million euros. The bottom line is that Nokia earned 299 million euros on a comparable basis after 551 million in the previous year.
In particular, sales of equipment for the 5G mobile communications standard have been slow in markets such as North America. “While our sales in the third quarter were impacted by ongoing uncertainty, we expect a more normal seasonal improvement for our network business in the fourth quarter,” said Nokia CEO Pekka Lundmark.
Expectations lowered again
Due to a lack of business, the manager is also only expecting the minimum of his annual sales target. “We are targeting the lower end of our sales range for 2023,” he said, according to the statement. So far, Nokia wants to generate 23.2 to 24.6 billion euros. If the group only generates sales at the lower end, this would correspond to a decline of four percent compared to the previous year at constant exchange rates. Due to the current cost-cutting measures, the adjusted operating margin is likely to be in the middle of the targeted range of 11.5 to 13.0 percent.
Nokia had already lowered its annual targets in the first half of the year. Just at the beginning of the week, Swedish competitor Ericsson reported a billion-dollar loss in the third quarter and warned that customers’ willingness to invest would continue to be subdued.