Nokia to cut up to 14,000 jobs after sales drop 20%

Finnish telecom gear group Nokia on Thursday said it will cut up to 14,000 jobs as part of a new cost savings plan after third-quarter sales drop 20 per cent due to slowing sales of 5G equipment in markets such as North America. The company is targeting between 800 million euros ($842 million) and 1.2 billion euros in cost savings by 2026 as it seeks to be on track to deliver its long-term comparable operating margin plan of at least 14 per cent by 2026.

The program is expected to lead to a 72,000-77,000 employee organization compared to the 86,000 employees Nokia has today, the company said in a statement.

"Nokia expects to act quickly on the program with at least 400 million euros of in-year savings in 2024 and a further 300 million euros in 2025," the company said.

Comparable net sales fell to 4.98 billion euros from 6.24 billion euros last year, missing the estimated 5.67 billion euros, according to a LSEG poll.

"While our third quarter net sales were impacted by the ongoing uncertainty, we expect to see a more normal seasonal improvement in our network businesses in the fourth quarter," Chief Executive Pekka Lundmark said.

Nokia will move to a leaner corporate center that will provide strategic oversight and guidelines while protecting spending on research and development, and giving its business units more autonomy to operate, it said.

While the program will deliver savings, the magnitude of those will ultimately depend on the level of cost inflation, it added.

"Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness," Lundmark said.