Thursday, February 1, 2018

Nokia reports stronger financials and outlook

Nokia reported Q4 2017 sales of EUR 6.7 billion, flat compared with the same period in 2016, however, on a constant currency basis, non-IFRS net sales increased 5% and reported net sales increased 6%, with 2% growth in Nokia's Networks business and 80% growth in Nokia Technologies.

Non-IFRS diluted EPS in Q4 2017 amounted to EUR 0.13, compared to EUR 0.12 in Q4 2016/

The improved performance of Nokia's Networks business was driven by IP Networks and Applications and by Ultra Broadband Networks. The large year-on-year variations in foreign exchange rates had a negative impact on reported net sales, with net sales down 4% compared to the year-ago period. Strong operational discipline produced a solid Q4 2017 gross margin of 37.6%, and an operating margin of 11.1%.

Nokia Technologies' sales increased 79% year-on-year primarily due to new license agreements. Approximately EUR 210 million of the net sales in Q4 2017 (zero in Q4 2016) were non-recurring in nature and related to catch-up net sales, of which approximately EUR 80 million related to 2017 and EUR 130 million related to the prior years.

Looking ahead, Nokia is targeting stronger profitibilit with non-IFRS diluted EPS rising to EUR 0.23 to 0.27 in full year 2018 and EUR 0.37 to 0.42 in full year 2020.

Rajeev Suri, Nokia's CEO, issued the following statement: "I am pleased that Nokia ended 2017 with a strong fourth quarter. We saw constant currency growth in three of our five Networks business groups as well as very strong growth in Nokia Technologies. Group profitability increased in both the quarter and the full year, and gross margin remained resilient in Networks despite the dilutive impact of robust competition in China.

"This performance reflects the progress we have made since Q3 with our mobile product portfolio, and positions us well for the upcoming transition to 5G. Our recent 4G/LTE software release was the highest quality in our history; our AirScale 5G-ready base stations are shipping in volume and delivering excellent results in the field; and we are making good progress in the execution of product migrations for key customers."