February 6 (UPI) — Nokia, a Finnish network equipment supplier, reported fourth-quarter and full-year results for fiscal 2019 on Thursday, local time, according tomedia reports. Nokia’s net sales for the fourth quarter were 6,903 million euros ($7.593 billion), essentially unchanged from 6.869 billion euros a year earlier, while operating profit for the quarter was 1.13 billion euros ($1.2 billion), the company said. It beat analysts’ average estimate of 1.09 billion euros, while adjusted earnings per share were 0.15 euros, above the average analyst estimate of 0.13 euros.
The improvement in the company’s profitability reflects the effectiveness of Nokia’s cost-saving program. But Nokia stressed in its earnings report that the decline in gross profit sprees on mobile access, particularly in the company’s networking division, had partly affected its quarterly results.
“We expect quarterly 2020 to be similar to 2019, with most operating profit and free cash flow generated in the fourth quarter,” Nokia said in a statement. “
Nokia cut its forecast in October and stopped paying dividends because it needed to invest more in 5G, sending its shares down by more than a fifth. Nokia faces challenges in reducing equipment costs and upgrading its network from 4G to 5G, even though operating profit for the quarter beat analysts’ expectations.
Nokia warned that potential markets other than China could stagnate this year compared with 2019. But competing for market share in China will challenge the company’s profitability. Rival Ericsson has been aggressively trying to expand in China.
“We face challenges in mobile access and generating cash flow,” Rajeev Suri, the company’s chief executive, said in a statement. “While I believe there will be many challenges in 2020, I believe we are taking the right steps to gradually improve our operations this year and to have a stronger 2021. “
Daniel Djurberg, an analyst at Commerzbank, said Nokia’s 2019 target and its outlook for 2020 should be positive. He also stressed Nokia’s “very stable cash flow” and said nokia shares could rise 10 per cent, given the company’s share price fell by about a third in the previous 12 months.
Nokia’s shares have risen about 6 per cent since the start of the year to Wednesday, boosted by an upgrade from analysts.
Nokia employees said the company had been struggling to integrate with the company since it acquired Alcatel-Lucent in 2016, and management was plagued by an internal management environment. In October, Nokia issued an alert for quarterly results, announcing that its chairman, Risto Silasmaa, and
Joerg Erlemeier, chief operating officer, left. The news sparked speculation that Nokia would undergo deeper reforms.