Nokia announces $600m buyback: share price soars

A fairly grey 2023 for Nokia. The Finnish telecommunications equipment group ended the year with a net profit down 84 per cent year-on-year to EUR 679 million. This was announced in a note by the company itself, once the undisputed leader in the mobile phone market. In the same note, Nokia predicts a 'still difficult' environment in the first half of 2024, where, however, it expects 'positive signs' for network infrastructure orders. . The Finnish giant recorded an 11 per cent drop in sales to EUR 22.26 billion last year and estimates a still 'complicated' first quarter.

The company itself announced that it will launch a two-year EUR 600 million (USD 653 million) share buyback plan this quarter. The announcement triggered a rally in the stock, with the shares rising 7% in the first hours of trading.

"In 2023 we witnessed a significant change in customer behaviour impacting our industry, driven by the macroeconomic environment and high interest rates together with customer inventory digestion," said Nokia CEO Pekka Lundmark.

Inventory digestion refers to customers, such as telecommunications networks, using equipment they have already purchased, rather than buying new equipment. Lundmark said that the difficult environment of 2023 will continue this year. And the company expects comparable operating profit to reach between EUR 2.3 billion and EUR 2.9 billion in 2024. Analysts expect operating profit to be around EUR 2.4 billion in 2024.

Nokia has been hurt by the telecom operators' cut in network spending. India, which has invested heavily in next-generation mobile networks over the past two years, is starting to slow down. And mobile networks, Nokia's largest division in terms of revenue, saw sales fall 17% year-on-year to EUR 2.5 billion in the fourth quarter.