Finnish telecom giant Nokia said Thursday it could cut its workforce by as many as 14,000 people after it reported lower-than-expected third-quarter profits.
Similarly, Rolls-Royce, the British manufacturer of aircraft engines, said Tuesday it plans to axe up to 2,500 jobs worldwide, or about six percent of its staff.
“In the third quarter we saw an increased impact on our business from the macroeconomic challenges,” Nokia CEO, Pekka Lundmark said in a statement.
Nokia’s savings programme is expected to reduce the firm’s employees to as low as 72,000, reducing costs by up to 1.2 billion euros ($1.14 billion) by 2026, the company said.
The programme targets business areas Mobile Networks, Cloud and Network Services and corporate functions.
Nokia reported that its profits reached 133 million euros in the third quarter, a 69 percent drop from the same period a year ago.
“The earnings were much weaker than expected and the outlook is more uncertain. So it’s not looking that good in the short term for Nokia,” Atte Riikola, an analyst at equity analysis firm Inderes, told AFP.
The telecommunications equipment maker, which is locked in a battle for 5G networks with Swedish rival Ericsson and China’s Huawei, said its sales dropped by 20 percent to 4.98 billion euros in the third quarter compared to 2022.
“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,” Lundmark said.
Despite the uncertainty in the third quarter, Nokia expects to see “improvement in our network businesses in the fourth quarter.”
But Riikola believed that Nokia’s “estimates will come down pretty dramatically.”
“There’s a possibility for a negative profit warning,” he added.
Also, Rolls-Royce said in a statement “It is estimated that 2,000-2,500 roles will be removed globally” under “plans for a simpler, more streamlined.”
Chief executive Tufan Erginbilgic, who began restructuring the group on taking the helm at the start of the year, said the company was “building a Rolls-Royce that is fit for the future.
“That means a more… efficient organisation that will deliver for our customers, partners and shareholders.”
The statement said the latest restructuring would “help Rolls-Royce build enhanced capabilities in key areas such as procurement and supply chain management, ensuring they are as strong as the company’s engineering and technical excellence”.
Previous CEO Warren East had axed more than 9,000 jobs and launched a major divestment programme in 2020 to navigate damaging pandemic fallout across the aviation industry.
In a quick turnaround under its new boss, Rolls in August posted first-half net profit totalling £1.2 billion ($1.5 billion), compared with a loss after tax of £1.6 billion a year earlier.
Erginbilgic, a dual UK and Turkish national, worked for more than 20 years at energy major BP.
AFP
