News: Nokia sees pick up in margins as turnaround takes shape.
HELSINKI (Reuters) – Telecommunications equipment maker Nokia is forecasting profit margins to rise to 10-13% in 2023 as new CEO Pekka Lundmark sets a course to catch up with competitors in the race to deliver 5G networks.
Failures in strategy in the early stages of the 5G cycle have left the Finnish company lagging behind Swedish company Ericsson and Chinese company Huawei in the battle to work on next-generation networks.
Lundmark, who took over the helm in August, introduced a new operating model with four groups of companies, reduced its executive team from 17 to 11 and plans to reduce the number of employees by up to 10,000 over the next two years.
Nokia currently employs around 90,000 people after thousands of job losses in recent years.
“We have a clear and detailed plan on how we can reset the business, accelerate competitiveness and extend our lead in the markets in which we play,” said Lundmark on Thursday.
“With this plan we can achieve double-digit comparable operating margins in 2023,” he said.
Nokia said in a statement to presentations to investors later that day that it also expects to grow faster than the market in 2023.
“It’s a big company and the time frame for reversing the ship is short, but the new leadership starts with more credibility than the old one, which has been consistently behind on the goals it has set,” said Kimmo Stenvall, an analyst for the OP Bank.
In October, Nokia lowered its 2020 operating margin forecast from 9.5% to 9% and forecast a margin of 7-10% for 2021.
The company, which stopped its dividend in October 2019, said its board of directors will be looking at the chances of proposing a dividend for 2021 after the fourth quarter.
Reporting by Essi Lehto in Helsinki and Supantha Mukherjee. Adaptation by Niklas Pollard and Mark Potter
Original Source © Reuters