Thursday, October 29, 2020

Nokia posts 7% year-on-year decrease in net sales

Nokia reported a 7% year-on-year decrease in net sales to EUR 5.294 billion (approximately US$6.927 billion), largely driven by lower services within Mobile Access. Operating margin improved to 6.6% from 4.6% a year earlier. Operating profit (non-IFRS) rose to EUR 486 million, up 2% YOY. 

Nokia said the impact of COVID-19 was primarily related to factory closures, resulting in a net sales impact of approximately EUR 200 million in the first nine months of 2020, with the majority of these net sales expected to be shifted to future periods, rather than being lost. At the end of Q3 2020, Nokia is no longer experiencing factory closures related to COVID-19. In addition, COVID-19 has affected our operational costs, and we now expect a temporary benefit of approximately EUR 250 million due to lower travel and personnel expenses related to COVID-19 in full year 2020.

Pekka Lundmark, Nokia's President and CEO, states:

"In my first quarter as CEO of Nokia, I have seen both opportunities and challenges. As our solid Q3 results demonstrate, we are making good progress in many parts of our business. Profitability was up on a year-on-year basis, we had the fifth consecutive quarter of solid free cash flow, Nokia Enterprise maintained its double-digit growth, and we continued to strengthen the competitiveness and cost position of our mobile radio products."

"When I look ahead, however, the good progress we have made is not enough. Our financial performance in 2021 is expected to be challenging, and more change is needed. We have lost share at one large North American customer, see some margin pressure in that market, and believe we need to further increase R&D investments to ensure leadership in 5G. In fact, we have decided that we will invest whatever it takes to win in 5G. Our customers are counting on us and we will be there for them."