Nokia, the Finnish telecommunications company, has unveiled a plan to slash thousands of jobs in an attempt to save up to 1.2 billion euros ($1.26 billion) after experiencing a sharp drop in net profit during the third quarter.
In their latest financial report, Nokia reported a 45% decline in comparable net profit for the third quarter. A challenging macroeconomic environment has significantly impacted customer spending, leading to a 14% decline in sales for their network infrastructure business and a 19% decline in mobile network sales. The slowdown in North America, coupled with the moderation of 5G deployment in India, has contributed to this decrease in revenue.
To counter these challenges, Nokia aims to achieve cost savings of between EUR800 million and EUR1.2 billion by 2026. This cost-cutting initiative is crucial for the company to meet its long-term target of a comparable operating margin of at least 14% by 2026.
The job cuts are expected to affect between 9,000 and 14,000 employees out of Nokia's total workforce of 86,000. Despite these changes, the company remains committed to its sales and operating margin targets, although it now anticipates landing at the lower end of the sales range and the middle range for operating margin.
In the third quarter, comparable net profit decreased from EUR550 million to EUR304 million compared to the previous year. Sales also suffered with a 20% decline to EUR4.98 billion. These figures fell short of analysts' expectations of EUR399 million in net profit on sales of EUR5.67 billion.