Home Economic Indicator Nokia plans to reduce workforce by 14,000 due to a 20% decline in sales.

Nokia plans to reduce workforce by 14,000 due to a 20% decline in sales.

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Nokia to Cut Thousands of Jobs as Sales Slump

Nokia’s Cost-Cutting Plan

Finnish telecom gear group Nokia has announced plans to cut up to 14,000 jobs in response to a 20% drop in sales during the third quarter. The decline in sales is primarily attributed to slowing demand for 5G equipment in markets like North America. In an effort to achieve cost savings of between 800 million euros ($842 million) and 1.2 billion euros by 2026, Nokia aims to streamline its operations and deliver a long-term operating margin of at least 14% by 2026.

The Impact on Nokia’s Workforce

Nokia’s new cost-saving program will result in a reduction of its employee count from 86,000 to around 72,000-77,000. The company expects to swiftly implement the program, generating savings of at least 400 million euros in 2024 and an additional 300 million euros in 2025. However, the final extent of these savings will depend on the level of cost inflation.

Financial Performance and Future Outlook

In the third quarter, Nokia’s net sales plunged from 6.24 billion euros to 4.98 billion euros, falling short of the estimated 5.67 billion euros. Despite the challenging market conditions, Chief Executive Pekka Lundmark remains optimistic, predicting a more typical seasonal improvement in the company’s network businesses during the fourth quarter.

Nokia’s Strategy for the Future

As part of its cost-cutting efforts, Nokia plans to establish a leaner corporate center that will provide strategic oversight while safeguarding investments in research and development. The company aims to grant its business units greater autonomy to operate effectively. Nokia’s CEO, Pekka Lundmark, emphasized the significance of resetting the cost-base to adapt to market uncertainties and secure long-term profitability and competitiveness.

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