April 18 (Reuters) -

Finnish telecom gear maker Nokia reported on

Thursday a smaller-than-expected rise in quarterly profit as

sales tumbled because operators bought less 5G technology, but

said it expected a sales pick-up this year.

A fall in demand for 5G equipment in North America, the

largest market for Nokia and rival Ericsson, and

market share losses in China have forced both to temper

expectations and lay off thousands of employees to shed costs.

The Finnish group posted a first-quarter operating profit,

excluding certain items of income and expenses, and helped by

cost cuts, of 597 million euros, up from a year-earlier 479

million, as constant-currency sales fell 19%.

Four analysts polled by LSEG had on average forecast a 663

million euro profit.

CEO Pekka Lundmark said an improvement in order intake seen

late last year continued in the first quarter despite a

persistent challenging business environment.

"While we are conscious of the broader economic

environment, considering the ongoing order intake strength, we

expect Network Infrastructure will return to net sales growth

for full year 2024 with a stronger second half performance," he

said.

Sales at the Network Infrastructure division fell 26%,

measured in local currencies as well as net.

For the Mobile Networks division, which saw

local-currency sales tumble 37%, he said Nokia expects demand to

pick up the rest of the year.

Nokia in January forecast a demand recovery in the second

half of 2024. Ericsson on Tuesday said its sales would normalise

in the second half.

Nokia on Thursday repeated an outlook given in January for a

comparable operating profit in 2024 of 2.3-2.9 billion euros.

"We remain confident in a stronger second half and

achieving our full year outlook," Lundmark said.

Nokia's comparable gross margin widened to 48.6% from 37.7%.