Nokia increases profit target and predicts 2015 business growth

Finnish telecoms firm Nokia confirmed an increase in its long-term profitability target this week following strong demand for its high-speed 4G networks this year.

The company also expects business to grow in 2015 as it targets a long–term network operating margin in the region of eight to 11 per cent, compared to an earlier target of five to 10 per cent.

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Nokia, which currently holds the title of the world’s third largest network equipment manufacturer after Ericsson and Huawei, has largely met analysts’ expectation with the increase after a strong year so far. In October, the firm announced a margin of 11.4 per cent for the first nine months of 2014.

The telecoms giant is also holding its first capital market day in five years this week, where it is expected to reveal its plans to sustain profitability after 4G networks near saturation point in some parts of the world.

Rival company and market leader Ericsson recently publicised plans to cut costs as a result of diminishing growth prospects.

In an interview with Reuters, Inderes analyst Mikael Rautanen commented on the Nokia news.

"Expectations for 2015 (margin) have been on the upper end of that range, so perhaps that guidance was a slight disappointment for the market," he said. "But it is good to remember that Nokia has been very conservative with its outlook lately."

Nokia also expects its navigation unit HERE to grow next year, along with sales at its patent unit Technologies.

Read more: Nokia sheds Windows Phone to Microsoft, soars back into profit

The firm sold its handset business to Microsoft in a £4.46 billion deal earlier this year, meaning the company now focuses almost entirely on manufacturing network equipment.