NOK Nokia Corp

By Dominic Chopping

Nokia Corp. (NOK) on Thursday posted better-than-expected fourth-quarter net profit amid continued spending by operators on new fifth-generation networks but cautioned that competition in the market remains intense.

In its key networks business, Nokia saw growth driven by South Korea and Japan, partially offset by declines in Greater China and North America.

"In 4Q 2019, we experienced continued temporary capital expenditure constraints in North America related to customer merger activity, as well as continued competitive intensity," the company said.

The company's adjusted net profit for the three-month period ended Dec. 31 was 821 million euros ($905 million), compared with EUR728 million a year earlier. Analysts polled by FactSet had expected a net profit of EUR694 million.

On a nonadjusted basis, Nokia reported a net profit of EUR563 million against EUR367 million expected.

Sales for the quarter rose 0.5% to EUR6.9 billion, in line with analysts' expectations.

Nokia suspended dividend payments in the third quarter after saying it needed to save cash to cover the high costs of rolling out 5G networks. It said at the time that payments will resume when its net cash position improves to approximately EUR2 billion. Its net cash position at the end of the fourth quarter stood at EUR1.7 billion, and Nokia said it doesn't expect to resume dividend payments during the first three quarters of the year.

"We recognize..,that we have faced challenges in Mobile Access and in cash generation," said Chief Executive Rajeev Suri.

"We will have a sharp focus on these two areas over the course of 2020, which we believe to be a year of progressive improvement as the actions we have underway start to deliver results."

Nokia expects improvements to be driven by increasing shipments of its "5G Powered by ReefShark" portfolio, product cost reductions, better commercial management, and strengthened operational performance in services.

The company still expects 2020 adjusted earnings per share of EUR0.25 plus or minus 5 cents, with an adjusted operating margin of 9.5% plus or minus 1.5 percentage points.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

February 06, 2020 02:12 ET (07:12 GMT)

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