Nokia has reported what it calls a ‘particularly weak’ first quarter result. During the first quarter of 2019 the company posted a free cash flow of -€913 million.
The Helsinki company, most well-known for its mobile handsets, said the dip was expected.
“The slow start to 2019 and expected weak overall first half puts significant pressure on execution in the second half,” the company said in a statement.
Rajeev Suri, Nokia president and CEO said that the company’s investment in 5G, the successor to 4G connectivity, would help to balance the books in the second half of the year.
“Q1 was a weak quarter for Nokia. We expected that it would be, and the outcome has not changed our perspective on the full year,” he said.
“5G revenues are expected to grow sharply, particularly in the second half of the year, driven by our 36 commercial wins to date.”
The listed company said it was unable to recognize approximately €200m of net sales related to 5G deliveries mainly in North America, which it expects to recognize in full before the end of 2019.
“Competitive intensity has slightly increased in certain accounts as some competitors seek to be more commercially aggressive in the early stages of 5G,” said Suri.
“The 5G ecosystem is still maturing and as that happens our opportunity increases.”
He added that customers were also reassessing their vendors in light of security concerns, which increased pressure on the business but also presented a longer-term opportunity.
The company said it is also “progressing well” with its €700m cost savings program, which will involve improving its research and development productivity and reducing the cost of support functions.
Last year the listed firm was loaned €500 million by the European Investment Bank to fund 5G research.