Nokia said mobile networks net sales declined 19% (Representational)
Nokia has announced to reduce its workforce by up to 14,000 jobs due to a 19% decline in third-quarter sales. The programme is projected to result in an organisation with 72,000 to 77,000 employees, as opposed to the current workforce of 86,000 at Nokia, the news agency Reuters reported.
This drop in numbers is primarily attributed to sluggish sales of 5G equipment in markets like North America.
“Mobile Networks net sales declined 19% as we saw some moderation in the pace of 5G deployment in India which meant the growth there was no longer enough to offset the slowdown in North America,” CEO Pekka Lundmark said in a statement.
Nokia's new cost-saving plan aims to achieve cost reductions of between 800 million euros and 1.2 billion euros by 2026. The objective is to align with its long-term plan of achieving a comparable operating margin of at least 14% by 2026.
"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," Mr Lundmark said.
He emphasised the significance of resetting the cost base as a crucial measure to adapt to market uncertainties and ensure long-term profitability and competitiveness.
Nokia has expressed its commitment to swiftly execute the programme, anticipating at least 400 million euros in savings for the year 2024, followed by an additional 300 million euros in 2025.
Nokia is set to transition into a more streamlined corporate centre that will offer strategic oversight and guidance while safeguarding investments in research and development.
This will also grant greater autonomy to its business units. The company emphasized that while the program is expected to yield savings, the extent of those savings will be contingent on the level of cost inflation.