Telecom gear group Nokia, on Thursday, announced that it will cut over 14,000 jobs as a part of a new cost savings plan. The company took this decision after reporting a 20% drop in sales after the third quarter due to slowing sales of 5G equipment in markets such as North America.
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The company aims to achieve cost savings ranging from €800 million ($842 million) to €1.2 billion by 2026, aligning with its objective of realizing a long-term comparable operating margin of at least 14% 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. It further added, “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.”
Net sales, when compared, decreased from 6.24 billion euros in the previous year to 4.98 billion euros, falling short of the estimated 5.67 billion euros, as reported by 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 has outlined its plans to transition towards a streamlined corporate center, which will offer strategic supervision and directives. This approach will prioritize investment in research and development while granting greater operational autonomy to its business units.
The extent of the savings that the program will yield is contingent on the degree of cost inflation, according to the statement.
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"Resetting the cost-base is a necessary step to adjust to market uncertainty and to secure our long-term profitability and competitiveness," Lundmark said.