Nokia Outlines Workforce and Cost-Reduction Initiative Amid Mixed 2023 Results
Nokia, the Finnish telecommunications and networking equipment maker, has announced a plan to bring its headcount down to a range of 72,000 to 77,000 employees. The company reported a net profit decline for the first nine months of 2023, dipping by 35.4 percent to 708 million euros, and outlined a strategy to trim its cost base from the 86,000-strong level it currently maintains by the end of 2026. The aim is to reduce costs in gross terms, before inflation, by 800 to 1,200 million euros over the same period, equating to a 10% to 15% reduction in personnel expenses given variable salaries within the target range for both years.
Nokia emphasized a brisk execution of this program, projecting at least 400 million euros in annual savings for 2024 and 300 million euros for 2025. The anticipated savings are expected to come primarily from the mobile networks, cloud services, and corporate functions sectors. The company stated that the proposed restructuring would target an organization with 72,000 to 77,000 employees, compared with the current 86,000 workforce. The exact scale will depend on how end-market demand develops, and net savings will also be influenced by inflationary effects.
Company leadership reaffirmed its belief in the medium to long term attractiveness of its markets, recognizing that cloud computing and AI progress will require substantial investments in networks with enhanced capabilities. The executive team stressed that the timing of market recovery will shape the results, and actions will proceed at three strategic, operational, and cost-focused levels. The plan includes accelerating strategy execution by granting greater operational autonomy to business groups, rationalizing the operating model through the integration of sales teams into these groups, and realigning the cost base to preserve profitability.
In the results discussion, Nokia reported a net profit of 708 million euros for the first nine months of the 2023 fiscal year, reflecting a year-over-year drop of 35.4 percent. Total net sales from January to September reached 16.551 billion euros, with infrastructure revenue down 5 percent to 6,034 million euros and cloud and services down 2 percent to 2,243 million euros. Revenue from mobile networks declined 5 percent to 7,347 million euros. The company’s technology division posted revenues of 834 million euros, a 9 percent decrease versus the prior year.
For the third quarter, Nokia reported attributable net profit of 139 million euros, a steep drop of 67.4 percent from the prior year, while net sales fell 20.2 percent to 4.982 billion euros. The CEO commented that although the quarter showed resilience against a challenging macro environment, operating profit still declined. Looking ahead, the company maintained its full-year guidance in constant currency terms, expecting net sales in the 23.2 to 24.6 billion euro band and a comparable operating margin of 11.5% to 13%. The leadership noted expectations for a more normal seasonal recovery in the network business in the fourth quarter, even as uncertainty persists in broader markets.