Nokia's quarterly profit beats on 5G demand, flags supply concerns By Reuters

© Reuters. FILE PHOTO: The logo and ticker for Nokia are displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 21, 2018. REUTERS/Brendan McDermid

By Essi Lehto and Supantha Mukherjee

HELSINKI/STOCKHOLM (Reuters) -Nokia reported a stronger-than-expected third-quarter operating profit on Thursday, with more telecom operators switching to 5G services and as the telecom equipment maker's efforts to trim costs took hold.

The company, which has been getting back on track following product missteps last year, also followed Nordic rival Ericsson (BS:ERICAs) in flagging about global semiconductor shortage starting to hit supply.

"The uncertainty around the global semiconductor market limits our visibility into Q4 and 2022," Chief Executive Officer Pekka Lundmark said in a statement.

Global producers of goods from televisions to cars have faced a host of supply chain issues ranging from a shortage of vital components, manpower, logistics snarls, and delays at plants due to power cuts in China.

"We are working closely not only with our suppliers to ensure component availability but also with our customers to ensure we can meet their needs and mitigate the unprecedented component cost inflation our industry faces," Lundmark said.

Nokia (NYSE:NOK)'s quarterly net sales rose 2% to 5.4 billion euros ($6.27 billion) from 5.3 billion a year ago, in line with analysts' expectations.

The company expects comparable operating profit margin to be towards the upper end of the target range of 10% to 12%.

Comparable operating profit during July-September surged to 633 million euros from 486 million last year, beating the 488 million euros forecast by 11 analysts polled by Refinitiv.

While its mainstay mobile network business took a hit from losing business in the United States, network infrastructure grew 6% in constant currency and cloud and network services rose 12%.

In July, Nokia won its first 5G radio contract in China, while rival Ericsson lost market share after Sweden last year decided to ban Chinese vendors from their 5G networks.

($1 = 0.8618 euros)

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