Nokia's Q3 2022 operating profit was lower than market expectations on Thursday, even as the Finnish telecom equipment maker continued to benefit from strong demand for 5G network construction.
Nokia's third-quarter operating profit rose to 658 million euros (about 4.652 billion yuan) from 633 million euros (about 4.475 billion yuan) last year but trailed the average forecast of 690.6 million euros from 10 analysts polled by Refinitiv.
Nokia CEO Pekka Lundmark said that while growing macro and geopolitical uncertainty could have an impact on capital spending for some customers, Nokia expects its markets to grow on a constant currency basis in 2023.
In addition to growing demand from telecom customers in the US and Europe, Nokia and rival Ericsson have also secured major contracts from Indian telecom operators to roll out 5G in the country.
"Given our recent success with new 5G contracts in regions such as India, with strong growth expected in 2023, we believe we are firmly on the road to outperforming the market and making progress towards our long-term margin targets."
Compared with the same period last year, net sales in the quarter at constant exchange rates increased by 6% to 6.24 billion euros (approximately 44.117 billion yuan), higher than the expected 6.06 billion euros (approximately 42.844 billion yuan).
Nokia said its comparable operating margin fell to 10.5% from 11.7% as improved profitability of mobile networks and network infrastructure was offset by the timing effect of Nokia Technologies' contract renewals.
Rival Ericsson also reported weaker-than-expected core earnings on Thursday.
Nokia shares are down about 15% this year, outperforming Ericsson's 28% drop and in line with European telecom stocks (.SXKP), which are down an average of 15% in 2022.
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