Both companies said customers, especially in North America, were curbing spending and reducing inventory levels amid high inflation and rising interest rates, in a sign of a potential prolonged slowdown across the sector.
In an update on Friday, Finland’s Nokia said sales would now be between €23.2bn and €24.6bn this year, down from an earlier forecast of €24.6bn to €26.2bn, as a tougher economic backdrop weighed on customers.
The company also trimmed the top end of its profit margin range to 13 per cent from 14 per cent, keeping 11.5 per cent as the bottom.
Telecoms groups have been hurt by a worsening economic outlook that has forced businesses to slash their budgets and pull investment in technology and upgrades, particularly in markets such as the US.
“Customer spending plans are increasingly impacted by high inflation and rising interest rates, along with some projects now slipping to 2024 — notably in North America,” Nokia said. The company added the lower forecasts related to its network infrastructure and mobile networks units.
Nokia said it had been “proactively managing costs to protect profitability” and would “continue to take measures to ensure it remains on track towards its long-term targets of growing faster than the market”.
Sweden-based Ericsson reported a 62 per cent drop in its operating profit for the three months ended in June on Friday, slightly beating market expectations. The decline was driven by a 42 per cent fall in comparable North American sales year-on-year.
Sales growth in India partly offset the “softening” in other markets, “notably in North America, where buildout pace moderated and customer inventory levels were reduced”, said chief executive Börje Ekholm.
_0.jpg?itok=QU87XW8D){kind=tracking}
.jpeg?itok=vCj6bCRe)
