Shares of Nokia (NOK) jumped 8.5% in premarket trading Thursday after the Finnish telecom infrastructure company reported better-than-expected quarterly profit and forecast improved demand in the second half of the year.
Notably, the telecom giant said its comparable earnings before interest and tax (EBIT) dropped to 846 million euros ($920.2 million) in the quarter, down from 1.15 billion euros in the same quarter a year earlier. However, the result was still better than the 767.5 million euros expected by analysts.
Nokia’s profits received a boost from robust gross margins as software sales rose higher.
Net sales in Q4 stood at 5.7 billion euros, down 23% year-over-year (YOY). Similarly, comparable operating profit plunged 27% to 846 million euros.
Looking ahead, Nokia said it expects comparable operating profit in 2024 to be between 2.3 billion euros and 2.9 billion, compared with the consensus estimates of 2.38 billion euros.
"In network infrastructure, there are signs of a recovery," Nokia’s CEO Pekka Lundmark told Reuters.
Lundmark foresees a demand recovery in the second half of the year, driven by enhanced order intake from prominent technology companies and increased government spending on infrastructure.
In October, Nokia outlined its intentions to reduce its workforce by up to 14,000 jobs. The company recently finalized a patent agreement with Chinese smartphone manufacturer Oppo and is nearing a resolution in a dispute with another company.
“With Oppo having signed in January, we expect Nokia has better visibility into the catch-up payments and so can guide more firmly; the upside is, however, driven largely by catch-up payments and so will normalise in 2025,” Citi Research analysts said in a Thursday note.
In addition to its financial results, Nokia also announced plans to begin a 2-year 600 million euro ($653 million) stock buyback plan this quarter.