Nokia Corporation Financial Report for Q3 2022

Nokia Corporation 
Interim report
20 October 2022 at 08:00 EEST

Nokia Corporation Financial Report for Q3 2022

Accelerating gross sales progress

• Q3 internet gross sales progress accelerated to six% y-o-y in fixed forex (+16% reported). By business group:
  • Mobile Networks grew 12%, as a result of continued sturdy demand and provide constraints easing.
  • Network Infrastructure continued its sturdy efficiency with 5% progress and sturdy demand.
  • Cloud and Network Services declined 3% as we continued to rebalance our portfolio.
  • Nokia Technologies declined 19%, nonetheless impacted by expired licenses which might be in litigation/pending renewal.
• Enterprise internet gross sales grew 22% y-o-y in fixed forex (+32% reported) with notable power in personal wi-fi.
• Reported gross margin declined 60bps y-o-y to 40.1% and working margin declined 100bps y-o-y to eight.3% primarily as a result of decline in Nokia Technologies.
• Comparable working margin of 10.5% compressed 120bps y-o-y primarily as a result of decline in Nokia Technologies. Operating margins in each Mobile Networks (+250bps) and Network Infrastructure (+50bps) improved.
• Comparable diluted EPS of EUR 0.10; reported diluted EPS of EUR 0.08.
• Free money circulation optimistic EUR 0.3bn, internet money steadiness of EUR 4.7bn.
• Full 12 months 2022 internet gross sales outlook is unchanged in fixed forex. Full 12 months internet gross sales outlook making use of 30 Sept 2022 trade charges is EUR 23.9bn to EUR 25.1bn. Comparable working margin steering stays 11% to 13.5%.

This is a abstract of the Nokia Corporation Financial Report for Q3 2022 revealed as we speak. Nokia solely publishes a abstract of its monetary reviews in inventory trade releases. The abstract focuses on Nokia Group’s monetary data in addition to on Nokia’s outlook. The detailed, segment-level dialogue will likely be out there within the full monetary report hosted at www.nokia.com/financials. A video interview summarizing the important thing factors of our Q3 outcomes can even be revealed on the web site. Investors mustn’t solely depend on summaries of Nokia’s monetary reviews and must also assessment the entire report with tables.

PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q3 2022 RESULTS

Our third quarter efficiency demonstrates we’re delivering on our ambition to speed up progress. Net gross sales grew 6% in fixed forex as provide constraints began to ease and we maintained good profitability with comparable working margin of 10.5%. This was barely down year-on-year, as bettering profitability in Mobile Networks and Network Infrastructure was offset by timing results of contract renewals in Nokia Technologies.

I used to be happy to see a robust quarter in Mobile Networks, which grew 12% in fixed forex as we benefited from our improved competitiveness and bettering provide scenario. Net gross sales progress remained sturdy additionally in Network Infrastructure at 5% pushed by continued sturdy underlying demand traits. Cloud and Networks Services declined 3% as we work to rebalance the portfolio however with bettering gross margin. Nokia Technologies continued to ship good progress in its patent licensing progress areas corresponding to automotive and client electronics. These areas, which have been negligible in 2018, now contribute over EUR 100 million in internet gross sales previously 12 months.

Our Enterprise internet gross sales progress accelerated to 22% in fixed forex. We have sturdy momentum in Enterprise together with including 30 new personal wi-fi prospects within the quarter and an additional new IP Routing buyer in webscale. With this momentum, we anticipate Enterprise to stay our quickest rising buyer section.

While dangers round timing of excellent offers in Nokia Technologies stay, assuming these shut we proceed monitoring in direction of the high-end of our internet gross sales steering for 2022 and in direction of the mid-point of our working margin steering.

As we begin to look past 2022, we acknowledge the growing macro and geopolitical uncertainty inside which we function. While it might have an effect on a few of our prospects’ capex spending, we presently anticipate progress on a relentless forex foundation in our addressable markets in 2023. Considering our current success in new 5G offers in areas like India that are anticipated to ramp up strongly in 2023, we imagine we’re firmly on a path to outperform the market and to make progress in direction of reaching our long-term margin targets.

FINANCIAL RESULTS

OUTLOOK

¹ Assuming the speed 1 EUR = 0.97 USD as of 30 September 2022 continues for the rest of 2022 together with year-to-date precise international trade charges (adjusted from prior 1 EUR = 1.04 USD charge as of 30 June 2022). Assuming the 30 June 2022 trade charge, the web gross sales outlook would proceed to be EUR 23.5bn to EUR 24.7bn.
² Please consult with Performance measures part in Nokia Corporation Financial Report for Q3 2022 for a full clarification of how these phrases are outlined.

The outlook, the long-term targets (3-5 years) and the entire underlying outlook assumptions described beneath are forward-looking statements topic to quite a few dangers and uncertainties as described within the Risk Factors part later on this launch.

• Nokia’s outlook assumptions anticipate the next measurement and progress in our estimated complete addressable markets (Mobile Networks excluding China and Network Infrastructure excluding Submarine Networks) and assuming year-to-date precise charges and 1 EUR = 0.97 USD for the rest of the 12 months (up to date):

• Nokia’s outlook assumptions for the working margin of every business group in 2022 are offered beneath:        

• Nokia expects Nokia Technologies to ship a largely steady working revenue efficiency in 2022 (assuming the conclusion of some excellent offers) and over the longer-term;
• Nokia expects the web unfavorable influence of Group Common and Other to be EUR 250 million in 2022 and over the longer-term;
• In full 12 months 2022, Nokia expects the free money circulation efficiency of Nokia Technologies to be roughly EUR 450 million decrease than its working revenue, primarily as a result of prepayments obtained from sure licensees in earlier years;
• Comparable monetary earnings and bills are actually anticipated to be an expense of roughly EUR 50-150 million in full 12 months 2022 and over the longer-term. There is presently higher uncertainty as a result of international trade volatility and related impacts (replace);
• Comparable earnings tax bills are anticipated to be roughly EUR 450 million in full 12 months 2022 and over the longer-term;
• Cash outflows associated to earnings taxes are anticipated to be roughly EUR 400 million in full 12 months 2022 and over the longer-term; and
• Capital expenditures are anticipated to be roughly EUR 600 million in full 12 months 2022 and round EUR 600 million over the longer-term with some variation year-to-year (replace).

Rule of thumb associated to forex fluctuations: Assuming our present mixture of internet gross sales and complete prices (consult with Note 1, Basis of Preparation within the Financial assertion data part included in Nokia Corporation Financial Report for Q3 2022 for particulars), we anticipate {that a} 10% strengthening within the USD vs. the EUR would have an effect of roughly optimistic 5% on internet gross sales, a optimistic influence on working revenue and a slight optimistic influence to our working margin, earlier than hedging. In the present monetary 12 months, as a result of influence of hedging, we anticipate an roughly impartial influence on working revenue and a barely unfavorable influence to working margin.

Nokia’s long-term targets as revealed with our fourth quarter 2021 outcomes stay unchanged.

SHAREHOLDER DISTRIBUTION

Dividend

Under the authorization by the Annual General Meeting held on 5 April 2022, the Board of Directors could resolve an mixture most distribution of EUR 0.08 per share. The authorization will likely be used to distribute dividend and/or property from the reserve for invested unrestricted fairness in 4 installments throughout the authorization interval, in reference to the quarterly outcomes, until the Board decides in any other case for a justified cause.

Under the authorization, a EUR 0.02 dividend was paid in Q2 2022 totaling EUR 113 million and a EUR 0.02 dividend was paid in Q3 2022 totaling EUR 112 million.

On 20 October 2022, the Board resolved to distribute a dividend of EUR 0.02 per share. The dividend file date is on 25 October 2022 and the dividend will likely be paid on 3 November 2022. The precise dividend cost date outdoors Finland will likely be decided by the practices of the middleman banks transferring the dividend funds.

Following this introduced distribution of the third installment and executed funds of the earlier installments, the Board’s remaining distribution authorization is a most of EUR 0.02 per share.

The cost of the third installment of the distribution is anticipated to complete roughly EUR 112 million in This fall 2022.

Share buyback program

In 2020 and 2021, Nokia generated sturdy money circulation which considerably improved the money place of the corporate. To handle the corporate’s capital construction, the Board of Directors initiated a share buyback program beneath the authorization from the AGM to repurchase shares. Purchases started in February 2022. By the tip of September 2022, Nokia has repurchased 50,270,648 shares for a complete buy value of roughly EUR 238 million, with weighted common buy value of EUR 4.74 per share. The program targets to return as much as EUR 600 million of money to shareholders in tranches over a interval of two years.

RISK FACTORS

Nokia and its companies are uncovered to quite a few dangers and uncertainties which embrace however will not be restricted to:

• Competitive depth, which is anticipated to proceed at a excessive degree;
• Our capability to make sure competitiveness of our product roadmaps and prices by means of extra R&D investments;
• Our capability to acquire sure commonplace elements and the prices thereof, corresponding to semiconductors;
• Disturbance within the world provide chain;
• Accelerating inflation, elevated world macro-uncertainty, main forex fluctuations and better rates of interest;
• Scope and period of the COVID-19 pandemic, and its financial influence;
• War or different geopolitical conflicts, disruptions and potential prices thereof;
• Other macroeconomic, business and aggressive developments;
• Timing and worth of latest and present patent licensing agreements with smartphone distributors, automotive corporations, client electronics corporations and different licensees;
• Results in model and expertise licensing; prices to guard and implement our mental property rights; and the regulatory panorama for patent licensing;
• Timing of completions and acceptances of sure tasks;
• Our product and regional combine;
• Uncertainty in forecasting earnings tax bills and money outflows, over the long-term, as they’re additionally topic to potential modifications as a result of business combine, the timing of patent licensing money circulation and modifications in tax laws, together with potential tax reforms in numerous international locations and OECD initiatives;
• Our capability to make the most of our US and Finnish deferred tax property and their recognition on our steadiness sheet;
• Our capability to fulfill our sustainability and different ESG targets, together with our targets regarding greenhouse fuel emissions; as nicely the danger elements specified beneath Forward-looking statements of this launch, and our 2021 annual report on Form 20-F revealed on 3 March 2022 beneath Operating and monetary assessment and prospects-Risk elements.

FORWARD-LOOKING STATEMENTS

Certain statements herein that aren’t historic details are forward-looking statements. These forward-looking statements mirror Nokia’s present expectations and views of future developments and embrace statements relating to: A) expectations, plans, advantages or outlook associated to our methods, product launches, progress administration, sustainability and different ESG targets, operational key efficiency indicators and choices on market exits; B) expectations, plans or advantages associated to future efficiency of our companies (together with the anticipated influence, timing and period of COVID-19 and the final macroeconomic circumstances on our companies, our provide chain and our prospects’ companies) and any future dividends and different distributions of revenue; C) expectations and targets relating to monetary efficiency and outcomes of operations, together with market share, costs, internet gross sales, earnings, margins, money era, the timing of receivables, working bills, provisions, impairments, taxes, forex trade charges, hedging, funding funds, inflation, product value reductions, competitiveness, income era in any particular area, and licensing earnings and funds; D) capability to execute, expectations, plans or advantages associated to modifications in organizational construction and working mannequin; and E) any statements preceded by or together with “continue”, “believe”, “commit”, “estimate”, “expect”, “aim”, “influence”, “will” or similar expressions. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which could cause our actual results to differ materially from such statements. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. Factors, including risks and uncertainties that could cause these differences, include those risks and uncertainties identified in the Risk Factors above.

ANALYST WEBCAST

Nokia’s video webcast will begin on 20 October 2022 at 11.30 a.m. Finnish time (EEST). A link to the webcast will be available at www.nokia.com/financials. Media representatives can listen in via the link, or alternatively call +1-412-317-5619.

FINANCIAL CALENDAR

• Nokia plans to publish its fourth quarter and full 12 months 2022 outcomes on 26 January 2023.

About Nokia

At Nokia, we create expertise that helps the world act collectively.

As a trusted associate for essential networks, we’re dedicated to innovation and expertise management throughout cell, mounted and cloud networks. We create worth with mental property and long-term analysis, led by the award-winning Nokia Bell Labs.

Adhering to the very best requirements of integrity and safety, we assist construct the capabilities wanted for a extra productive, sustainable and inclusive world.

Inquiries:

Nokia
Communications
Phone: +358 10 448 4900
Email: [email protected]
Maria Vaismaa, Global Head of Public Relations

Nokia
Investor Relations
Phone: +358 40 803 4080
Email: [email protected]

• Nokia Q3 2022 report English