By Dominic Chopping

Nokia Corp. on Thursday posted a third-quarter rise in net profit but cut guidance and announced a strategic shake-up as the company expects a challenging year in 2021.

"We have lost share at one large North American customer, see some margin pressure in that market, and believe we need to further increase R&D investments to ensure leadership in 5G," new Chief Executive Pekka Lundmark said.

"We have decided that we will invest whatever it takes to win in 5G."

Nokia said it will shuffle its operating model to better position the company for changing markets and align with customer needs. Four new business groups will be created along with new leadership teams. Further details will be provided at the capital markets day in March 2021, it said.

The company's adjusted net profit for the quarter rose to 300 million euros ($352.7 million) from EUR264 million a year earlier, as sales fell 6.8% to EUR5.29 billion. Analysts polled by FactSet had expected net profit of EUR301 million on sales of EUR5.41 billion.

On a nonadjusted basis, Nokia's net profit rose to EUR193 million against an expected EUR73 million.

Nokia's key networks unit saw a 7% fall in sales but profitability rose amid stronger margins.

The company now expects 2020 adjusted earnings per share of EUR0.23 plus or minus 3 European cents, from EUR0.25 plus or minus 5 European cents previously. It also expected an adjusted operating margin of 9.0% plus or minus 1 percentage point from 9.5% plus or minus 1.5 percentage points previously.

It said the adjusted operating margin in 2021 is expected at between 7% and 10%.

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

(END) Dow Jones Newswires

October 29, 2020 03:16 ET (07:16 GMT)

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