In the first quarter of 2024, Nokia Corporation released its interim report, highlighting a challenging period with a 19% year-on-year decline in net sales, measured in constant currency. This downturn largely stems from reduced investments in 5G technology by clients amidst economic uncertainties and heightened financial costs. Despite the market slowdown, Nokia reported a notable increase in profit—501 million euros, a 46% rise from the previous year, albeit falling short of analyst expectations. This boost was partly due to one-off gains in Nokia's licensing business. The net income attributable to shareholders also saw an uplift, rising from 332 million euros to 497 million euros.

Despite these financial strains, Nokia demonstrated financial resilience with nearly 1 billion euros in free cash flow for the quarter and a net cash balance of 5.1 billion euros. The firm's gross margin improved substantially to 48.6%, thanks primarily to Nokia Technologies' patent licensing deals and advancements in Mobile Networks driven by beneficial regional and product mix changes.

Nokia's CEO, Pekka Lundmark, underscored the challenging market environment but remained optimistic about the future, noting improved order intake and an expanding order backlog, particularly in Network Infrastructure. This optimism is buoyed by the belief that the market conditions represent the trough for demand, especially within Nokia's Mobile Networks and Cloud and Network Services segments, with expectations for a recovery in the latter half of 2024.

The Mobile Networks sector faced a steep 37% decline in net sales due to reduced spending in North America and India, while Cloud and Network Services experienced a soft start to the year due to the overall spending environment. However, improvements in order intake and momentum in the pipeline, especially with Nokia's Network as Code platform, hint at potential recovery. This platform has already attracted interest from 11 operators, with more discussions underway.

Nokia Technologies showcased a robust start to the year by finalizing several key licensing agreements, which significantly boosted their annual licensing net sales run-rate to approximately 1.3 billion euros for the quarter, with expectations to reach 1.4 to 1.5 billion euros in the mid-term.

The company remains committed to achieving its full-year 2024 outlook, with an expected comparable operating profit of between 2.3 billion to 2.9 billion euros and a free cash flow conversion rate of 30% to 60%. Nokia's strategic actions, including operating model changes and a cost savings roadmap initiated in October, are seen as crucial steps toward realizing improved net sales growth in the second half of 2024.

Nokia's financial calendar will continue with the publication of its second quarter and half-year 2024 results scheduled for July 18, followed by the third quarter and January-September results on October 17, 2024. As Nokia navigates through these challenging market conditions, its strategic focus on innovation, financial discipline, and operational efficiency remains pivotal in driving towards a more favorable second half of the year and beyond.