Nokia Siemens Networks returns to operating profit in second quarter of 2012

Net sales are down 8% year-on- year following the decision to focus on fewer core areas, but are up 13% on Q1 2012

Nokia Siemens Networks returns to operating profit in second quarter of 2012

Nokia Siemens Networks was back in the black in the second quarter of 2012 after returning a non-IFRS operating profit of Euro 27m (£21.1m). It posted an operating loss of Euro 147m (£120m) in Q1. However, the year-on-year change showed a decrease in net operating profit of 33% down from Euro 40m (£31.3m).

Net sales were down 8% year-on-year from Euro 3.6bn (£2.8bn) to Euro 3.3bn (£2.6bn). The company attributed the decrease to its decision announced on 23 November 2011 to concentrate its activities on mobile broadband, customer experience management and services. However, net sales were up 13% on the previous quarter, primarily due to industry seasonality.

NSN’s gross margin remained flat at 26.6% both quarter-on-quarter and for same period a year ago thanks to improved pricing processes and a focus on priority markets such as Japan, Korea and North America. 

However, the operating margin slipped from 1.1% a year ago to 0.8% in Q2 2012 primarily due to lower net sales, partially offset by lower operating expenses. The sequential quarterly increase from -5% to 0.8% was due to higher net sales combined with lower operating expenses.

NSN saw net sales decrease in all geographic regions except Asia Pacific (the largest region by revenue overtaking Europe in Q2) which was up 6% year-on-year to Euro 1bn. Europe became the company’s second largest revenue generator, but sales decreased by 12% to Euro 990m. Sales fell by 16% in Greater China (Euro 340m), 22% in Middle East and Africa (Euro 304m), 4% in North America (Euro 300m) and 14% in Latin America (Euro 381m).

The company is sticking to its restructuring plan to reduce its non-IFRS annualised operating expenses and production overheads by Euro 1bn (£783m) by the end of 2013, compared with the end of 2011. NSN’s strategy is to divest itself of non-core businesses (the microwave transport business has been sold to DragonWave and the fixed line Broadband Access business to ASTRAN) and cut its headcount by a potential 17,000 jobs worldwide.

Written by Wireless magazine
Wireless magazine

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