HELSINKI: Finnish telecoms equipment and 5G player Nokia announced Thursday a fall in net income for 2020 despite a strong fourth quarter, and warned of “meaningful headwinds” this year.
“We saw healthy gross margin and operating margin performance for both (the fourth quarter) and full year 2020,” thanks to a renewed focus on North America and ongoing research and development (R&D) efforts, chief executive Pekka Lundmark said in a statement.
Full-year operating income rose by 5.5 percent to 2.1 billion euros ($2.5 billion), and Nokia’s gross margin increased by 2.5 percentage points to 39 percent as the firm fought for its share of the tough 5G market.
Shorthand for fifth-generation mobile technology, 5G is expected to pave the way for rapid-fire video downloads and innovations such aas fast-thinking self-driving cars.
But despite fourth-quarter growth of 11 percent in North America, Lundmark said that predicted market share loss there in 5G and 4G along with price erosion meant the firm’s 2021 outlook remained unchanged, with a 7-10 percent operating margin target.
Increased R&D spending will also weigh on the firm’s profitability as Lundmark, who took over in August, reiterated his pledge to “invest whatever it takes to win in 5G”.
Competitor Ericsson posted a total of 127 signed contracts in late January.
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