GlobeNewswire

Nokia Corporation Financial Report for Q2 and Half Year 2021

Share

Nokia Corporation 
Half year report
29 July 2021 at 08:00 EET

Nokia Corporation Financial Report for Q2 and Half Year 2021

Strong first half, 2021 Outlook revised upwards

  • Top-line strength continued in Q2, with constant currency net sales up 9% year-on-year, driven by growth across all business groups, with particular strength in Network Infrastructure. Reported net sales increased 4%.
  • Important progress on our three-phased strategy. Mobile Networks strengthening its competitiveness with major product launch, including some industry leading features. Network Infrastructure continued to gain share in the first half.
  • Our new operating model is delivering clear accountability and financial discipline through the organization.
  • Comparable gross margin of 42.3% (reported 41.0%) in Q2, reflecting broad improvements, particularly in Mobile Networks, which benefitted from a one-time software deal and 5G growth.
  • Comparable operating margin of 12.8% (reported 9.1%) in Q2, with improvements across all business groups, also helped by the one-time software deal in Mobile Networks.
  • Q2 comparable diluted EPS of EUR 0.09; reported diluted EPS of EUR 0.06.
  • Generated positive free cash flow for the fifth quarter in a row; liquidity position remains solid with EUR 3.7bn net cash.
  • Strong performance in first half 2021 with 9% constant currency sales growth (reported net sales +4%) and comparable operating margin of 11.9% (reported 8.8%), driving increase in our full year Outlook although headwinds remain for the second half.
  • Considering our strong start to 2021, we revise our full year 2021 Outlook, including net sales expected to be EUR 21.7bn to 22.7bn (previously EUR 20.6bn to EUR 21.8bn) with comparable operating margin in the range of 10-12% (previously 7-10%).

This is a summary of the Nokia Corporation Financial Report for Q2 and Half Year 2021 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. Investors should not solely rely on summaries of Nokia's financial reports, but should also review the complete reports with tables.

PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q2 2021 RESULTS

I am delighted that our strong start to 2021 continued in the second quarter. Our constant currency sales growth of 9%, combined with good cost control, enabled us to deliver a comparable operating margin of 12.8%. Even excluding a one-time software deal in Mobile Networks, we saw good underlying progress in operating margin. We are already seeing the benefits of our new operating model which helped us to deliver such a strong financial performance.

The highlight of the second quarter was the Mobile Networks launch of our new AirScale baseband and radio products with up to 75% better power efficiency helping to reduce our environmental footprint and the lightest 32TRX massive MIMO active antenna in the market. In Network Infrastructure we sustained double-digit growth and have a series of product launches ahead in the second half to further strengthen our differentiation. Cloud and Network Services is making good progress on its portfolio rebalancing and Nokia Technologies continues to scale with two licensing agreements with automotive manufacturers including Daimler.

Considering our robust start to 2021, we are revising upwards our full year Outlook. We now expect a comparable operating margin between 10-12% for full year 2021, compared to our previous range of 7-10%. We have executed faster than planned on our strategy in the first half which provides us with a good foundation for the full year. We still however expect to face the earlier communicated headwinds in the second half, particularly with market share loss and price erosion in North America. Therefore, we still expect our typical quarterly earnings seasonality to be less pronounced in 2021. In addition, we continue to accelerate R&D investments and monitor risks around component availability, considering the strong demand for our products.

Overall, I am very happy with the progress made in the first half. I want to thank our entire team for their hard work and commitment.

FINANCIAL RESULTS

EUR million (except for EPS in EUR) Q2'21 Q2'20 YoY change Constant currency YoY changeQ1–Q2'21 Q1–Q2'20 YoY change Constant currency YoY change
Reported results
Net sales 5 313 5 092 4% 9%10 389 10 005 4% 9%
Gross margin %141.0% 38.1% 290bps 39.5% 36.8% 270bps
Research and development expenses1(1 063) (1 013) 5% (2 060) (2 019) 2%
Selling, general and administrative expenses1(712) (709) 0% (1 360) (1 489) (9)%
Operating profit 484 170 185% 916 94 874%
Operating margin % 9.1% 3.3% 580bps 8.8% 0.9% 790bps
Profit/(loss) for the period 351 99 255% 614 (17)
EPS, diluted 0.06 0.02 200% 0.11 0.00
Net cash and current financial investments 3 688 1 550 138% 3 688 1 550 138%
Comparable results
Net sales 5 313 5 093 4% 9%10 389 10 007 4% 9%
Gross margin % 42.3% 39.6% 270bps 40.3% 38.0% 230bps
Research and development expenses (1 011) (953) 6% (1 985) (1 928) 3%
Selling, general and administrative expenses (585) (590) (1)% (1 137) (1 262) (10)%
Operating profit 682 423 61% 1 234 539 129%
Operating margin % 12.8% 8.3% 450bps 11.9% 5.4% 650bps
Profit for the period 539 316 71% 914 348 163%
EPS, diluted 0.09 0.06 50% 0.16 0.06 167%
ROIC218.4% 11.4% 700bps
1In Q4 2020, Nokia reclassified certain items of income and expenses from other operating income and expenses to the functions. The comparative reported results for Q2’20 and Q1-Q2'20 have been recast accordingly. Refer to Note 1, Basis of preparation, in the Financial statement information section included in Nokia Corporation Financial Report for Q2 and Half Year 2021 for details.
2Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q2 and Half Year 2021 for details.

Reconciliation of reported operating profit to comparable operating profit
EUR million Q2'21 Q2'20 YoY change Q1–Q2'21 Q1–Q2'20 YoY change
Reported operating profit484 170 185% 916 94 874%
Restructuring and associated charges 141 130 177 217
Amortization of acquired intangible assets 97 106 194 207
Settlement of legal disputes (80) 0 (80) 0
Impairment of assets, net of impairment reversals 32 19 33 20
Other, net 8 (2) (6) 1
Comparable operating profit682 423 61% 1 234 539 129%

OUTLOOK

Full year 2021Full year 2023
Net sales1 EUR 21.7 billion to EUR 22.7 billion

(adjusted from EUR 20.6 to 21.8bn)
Grow faster than the market
Comparable operating margin2 10 to 12% (adjusted from 7 to 10%) 10–13%
Free cash flow3 Clearly positive (adjusted from positive) Clearly positive
Comparable ROIC2,4 17 to 21% (adjusted from 10 to 15%) 15–20%
1 Assuming actual currency rates for first half 2021 and end of June EUR/USD rate of 1.19 continues in the second half 2021 (this is adjusted from our previous guidance based on the year-end 2020 EUR/USD rate of 1.23).
2 Comparable measures exclude intangible asset amortization and other purchase price fair value adjustments, goodwill impairments, restructuring related charges and certain other items affecting comparability. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q2 and Half Year 2021 for details.
3 Free cash flow = net cash from/(used in) operating activities - capital expenditures + proceeds from sale of property, plant and equipment and intangible assets – purchase of non-current financial investments + proceeds from sale of non-current financial investments..
4 Comparable ROIC = comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q2 and Half Year 2021 for details.

OUTLOOK ASSUMPTIONS

  • Nokia’s outlook assumptions for the comparable operating margin of each business group in 2021 and 2023 are provided below (updated):
Full year 2021Full year 2023
Mobile Networks 4 to 7% 5 to 8%
Network Infrastructure 8 to 11% 9 to 12%
Cloud and Network Services 3 to 6% 8 to 11%
Nokia Technologies >75% >75%
  • We continue to maintain our expectation for Nokia Technologies to deliver a slight improvement in comparable operating profit in full year 2021, relative to full year 2020, and stable performance over the longer-term;
  • Group Common and Other primarily consists of support function costs. We expect the net negative impact of Group Common and Other to be approximately EUR 200 million in 2021 and over the longer-term;
  • In full year 2021, Nokia expects the free cash flow performance of Nokia Technologies to be approximately EUR 600 million lower than its operating profit, primarily due to prepayments we received from certain licensees;
  • Comparable financial income and expenses are expected to be an expense of approximately EUR 200 million in full year 2021 and EUR 250 million over the longer-term (updated);
  • Comparable income tax expenses are expected to be approximately EUR 450 million in full year 2021 and over the longer-term, subject to regional profit mix, net sales subject to withholding tax and the timing of patent licensing cash flow;
  • Cash outflows related to income taxes are expected to be approximately EUR 350 million in full year 2021 and over the longer-term until our US or Finnish deferred tax assets are fully utilized;
  • Capital expenditures are expected to be approximately EUR 650 million in full year 2021 and EUR 600 million over the longer-term (updated); and
  • Rule of thumb related to currency fluctuations: Assuming our current mix of net sales and total costs (refer to Note 1, Basis of Preparation, in the Financial statement information section included in Nokia Corporation Financial Report for Q2 and Half Year 2021 for details), we expect that a 10% increase in the EUR/USD exchange rate would have an impact of approximately negative 4 to 5% on net sales and an approximately neutral impact on operating profit.

RISK FACTORS

Nokia and its business are exposed to a number of risks and uncertainties which include but are not limited to:

  • Competitive intensity, which is particularly impacting Mobile Networks and is expected to continue at a high level in full year 2021, as some competitors seek to take share in the early stages of 5G;
  • Our ability to accelerate our product roadmaps and cost competitiveness through additional 5G investments in full year 2021, thereby enabling us to drive product cost reductions and maintain the necessary scale to be competitive;
  • Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits;
  • Developments in North America following the conclusion of the C-band auction, including the potential for temporary capital expenditure constraints or the acceleration of 5G deployments;
  • The scope and duration of the COVID-19 impact, particularly in certain countries, including India, where the pandemic has worsened, and the pace and shape of the economic recovery following the pandemic;
  • Our ability to procure certain standard components and the costs thereof, such as semiconductors;
  • The timing of completions and acceptances of certain projects;
  • Our product and regional mix;
  • Macroeconomic, industry and competitive dynamics;
  • The timing and value of new and existing patent licensing agreements with smartphone vendors, automotive companies and consumer electronics companies;
  • Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; and the regulatory landscape for patent licensing;

as well as the risk factors specified under Forward-looking Statements of this release, and our 2020 annual report on Form 20-F published on March 4, 2021 under Operating and financial review and prospects-Risk factors.

FORWARD-LOOKING STATEMENTS

Certain statements herein that are not historical facts are forward-looking statements. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements regarding: A) expectations, plans, benefits or outlook related to our strategies, product launches, growth management and operational key performance indicators; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of that impact of COVID-19 on our businesses, our supply chain and our customers’ businesses) and any future dividends; C) expectations and targets regarding financial performance, cash generation, results, the timing of receivables, operating expenses, taxes, currency exchange rates, hedging, cost savings, product cost reductions and competitiveness, as well as results of operations including targeted synergies, better commercial management and those results related to market share, prices, net sales, income and margins; D) ability to execute, expectations, plans or benefits related to changes in organizational and operational structure and cash or cost savings arrangements; and (E) any statements preceded by or including "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 29 July 2021 at 11:30 a.m. Finnish time. A link to the webcast will be available at www.nokia.com/financials. Media representatives can follow the presentation via the link, or alternatively call +1-412-717-9224.

About Nokia

At Nokia, we create technology that helps the world act together.

As a trusted partner for critical networks, we are committed to innovation and technology leadership across mobile, fixed and cloud networks. We create value with intellectual property and long-term research, led by the award-winning Nokia Bell Labs.

Adhering to the highest standards of integrity and security, we help build the capabilities needed for a more productive, sustainable and inclusive world.

Inquiries:

Nokia
Communications
Phone: +358 10 448 4900
Email: press.services@nokia.com
Katja Antila, Head of Media Relations

Nokia
Investor Relations
Phone: +358 40 803 4080
Email: investor.relations@nokia.com

Attachment

To view this piece of content from www.globenewswire.com, please give your consent at the top of this page.
To view this piece of content from ml-eu.globenewswire.com, please give your consent at the top of this page.

About GlobeNewswire

GlobeNewswire
GlobeNewswire
One Liberty Plaza - 165 Broadway
NY 10006 New York

https://globenewswire.com

GlobeNewswire is one of the world's largest newswire distribution networks, specializing in the delivery of corporate press releases financial disclosures and multimedia content to the media, investment community, individual investors and the general public.

Subscribe to releases from GlobeNewswire

Subscribe to all the latest releases from GlobeNewswire by registering your e-mail address below. You can unsubscribe at any time.

Latest releases from GlobeNewswire

Repurchase of shares in Millicom24.9.2021 23:00:00 CEST | Press release

Repurchase of shares in Millicom Luxembourg, September24, 2021 - During the period September 16, 2021 – September 22, 2021, Millicom repurchased a total of 122,612 of its Swedish Depository Receipts (SDRs), hereinafter referred to as shares within the framework of the repurchase program announced on July 29, 2021 (the Repurchase Program), details of which are shown in the table below. DateNumber of shares repurchasedWeighted average repurchaseprice (SEK) excluding commissionsTotal daily transaction value (SEK), excluding commissions 16/09/2021 17,000 315.2166 5,358,682.20 17/09/2021 13,000 316.9849 4,120,803.70 20/09/2021 47,000 310.3055 14,584,358.50 21/09/2021 22,000 312.2228 6,868,901.60 22/09/2021 23,612 311.9609 7,366,020.77 All purchases were carried out on Nasdaq Stockholm by Citigroup Global Markets Limited on behalf of Millicom. Following the purchases, as of September 22, 2021, Millicom holds 915,037 treasury shares and has repurchased 739,438 shares under the Repurchase Prog

Jotul Holdings SA's direct subsidiary Jøtul AS issues senior secured floating rate bonds of NOK 475,000,00024.9.2021 18:00:00 CEST | Press release

Jotul Holdings SA's direct subsidiary Jøtul AS has successfully issued senior secured floating rate bonds in an amount of NOK 475,000,000 under a framework of up to NOK 750,000,000 with ISIN NO0011104069. The bonds were issued at par, are due in October 2024 and carry a floating interest rate of NIBOR 3m + 6.95 per cent. The proceeds from the bond issue will be used to finance, redemption of existing debt including Jotul Holdings SA's existing bond loan with ISIN NO0010815749, as well as general corporate purposes. Pareto Securities AB acted as sole arranger and bookrunner in connection with the bond issue. For more information, please visit Jotul Holdings SA’s website at www.intl.jotul.com/investor-relations or contact: Pareto Securities in capacity of Sole Bookrunner and Financial Advisor: Markus Wirenhammar, Head of Investment Banking Tel: +46 708 72 51 86 Jotul Holdings SA: Nils Agnar Brunborg, Chief Executive Officer Tel: +47 90 60 55 7869 35 90 00 Mail: Nils.Brunborg@jotul.no Thi

Nordic American Tankers Ltd (NAT) – Board Members of NAT buy stock in NAT24.9.2021 16:28:10 CEST | Press release

Friday, September 24, 2021 Dear Shareholders and Investors, All Board Members of NAT have recently increased their shareholdings in the company. The Founder, Chairman & CEO, Herbjorn Hansson, Norway, bought 75,000 shares in NAT September 17. Board Member Alexander Hansson, Monaco, bought 100,000 shares in NAT August 31, and 50,000 shares September 20. Board Member Jim Kelly, New York, has also adjusted his holding upwards to 175,000 shares in NAT. Doug Penick of Dallas, Texas, joined the Board at the NAT AGM July 19, 2021. He has already accumulated 125,000 shares in NAT. It is a strong sign of confidence that board members buy stock in our company. The Hansson family is the third largest shareholder group in NAT. Sincerely, Herbjorn Hansson Founder, Chairman & CEO Nordic American Tankers Ltd. www.nat.bm CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS Matters discussed in this press release may constitute forward-looking statements. The Private Securities Litigation Reform Ac

CONDITIONS FOR RIKSBANK BID PROCEDURE KOMMUNINVEST BONDS24.9.2021 16:20:00 CEST | Press release

Bid procedure, 2021-09-28BondsKOMMUNINVEST I SVERIGE: 2410. SE0010469205. 2024-10-02 KOMMUNINVEST I SVERIGE: 2602, SE0013745452, 2026-02-04 BidsBids on interest and volume are entered via Bloomberg Bond Auction SystemBid date2021-09-28Bid times10.00-11.00 (CET/CEST) on the Bid dateRequested volume (corresponding nominal amount)2410: 1500 mln SEK +/-750 mln SEK 2602: 1000 mln SEK +/-500 mln SEK Highest permitted bid volume (corresponding nominal amount)2410: 1500 mln SEK per bid 2602: 1000 mln SEK per bid Lowest permitted bid volume (corresponding nominal amount)SEK 50 million per bidExpected allocation timeNot later than 11.15 (CET/CEST) on the Bid dateDelivery and payment date2021-09-30Delivery of bondsTo the Riksbank's account in Euroclear Sweden AB's securities settlement system 1 4948 6383General Terms and ConditionsGeneral Terms and Conditions General Terms and Conditions för the Riksbank’s Purchases of Bonds via Bid Procedure 2020:3. dated 20 November 2020 (see the Riksbank´s web

CONDITIONS FOR THE RIKSBANK´S PURCHASES OF COMMERCIAL PAPER24.9.2021 16:20:00 CEST | Press release

Bid procedure, 2021-09-29CertificateCommercial paper issued in SEK by non-financial companies with their registered office in Sweden and with a remaining maturity of up to six months on the Bid date. i.e. with the latest maturity date as of 2022-03-29 Delivery may not be made in commercial paper purchased by the Counterparty from the issuer less than one week prior to the date for announcing the Special terms, i.e. the purchase may not have been made after 2021-09-17 BidsCounterparties may make one bid per Credit rating class and maturity class. Bids are made to tel 08-696 69 70 and confirmed by e-mail to EOL@riksbank.se.Bid date2021-09-29Bid times09.00-09.30 (CET/CEST) on the Bid dateRequested volume (corresponding nominal amount)SEK 4 billionHighest permitted bid volume (corresponding nominal amount)The total bid volume from one Counterparty for the two Credit rating classes may not exceed SEK 4 billion. No bid may contain Commercial paper in excess of SEK 250 million issued by the s

CONDITIONS FOR RIKSBANK REVERSED AUCTIONS SEK GOVERNMENT BONDS24.9.2021 16:20:00 CEST | Press release

Bid procedure, 2021-10-01BondsSWEDISH GOVERNMENT: 1062. SE0013935319. 2031-05-12 SWEDISH GOVERNMENT: 1063, SE0015193313, 2045-11-24 Bid date2021-10-01Bid times09.00-10.00 (CET/CEST) on the Bid dateRequested volume (corresponding nominal amount)1062: 500 mln SEK +/-250 mln SEK 1063: 500 mln SEK +/-250 mln SEK Highest permitted bid volume (corresponding nominal amount)1062: 500 mln SEK per bid 1063: 500 mln SEK per bid Lowest permitted bid volume (corresponding nominal amount)SEK 50 million per bidExpected allocation timeNot later than 10.15 (CET/CEST) on the Bid dateDelivery and payment date2021-10-05Delivery of bondsTo the Riksbank's account in Euroclear Sweden AB's securities settlement system 1 4948 6383 Stockholm, 2021-09-24 This is a translation of the special terms and conditions published on www.riksbank.se. In the case of any inconsistency between the English translation and the Swedish language version, the Swedish language version shall prevail. Complete terms and conditions c

CONDITIONS FOR RIKSBANK REVERSED AUCTIONS SEK COVERED BONDS24.9.2021 16:20:00 CEST | Press release

Bid procedure, 2021-09-30BondsSWEDBANK HYPOTEK AB: 196. SE0015244991. 2026-03-18 STADSHYPOTEK AB: 1587, SE0010441303, 2023-06-01 SWEDISH COVERED BOND: 147, SE0009383664, 2026-06-17 SKANDINAVISKA ENSKILDA: 575, SE0010546572, 2022-12-21 LANSFORSAKRINGAR HYPOTEK: 516, SE0009190390, 2023-09-20 DANSKE HYPOTEK AB: 2512, SE0013877214, 2025-12-17 NORDEA HYPOTEK AB: 5534, SE0012230415, 2024-09-18 Bid date2021-09-30Bid times09.00-10.00 (CET/CEST) on the Bid dateRequested volume (corresponding nominal amount)196: 400 mln SEK +/-200 mln SEK 1587: 1900 mln SEK +/-950 mln SEK 147: 700 mln SEK +/-350 mln SEK 575: 500 mln SEK +/-250 mln SEK 516: 600 mln SEK +/-300 mln SEK 2512: 500 mln SEK +/-250 mln SEK 5534: 400 mln SEK +/-200 mln SEK Highest permitted bid volume (corresponding nominal amount)196: 400 mln SEK per bid 1587: 1900 mln SEK per bid 147: 700 mln SEK per bid 575: 500 mln SEK per bid 516: 600 mln SEK per bid 2512: 500 mln SEK per bid 5534: 400 mln SEK per bid Lowest permitted bid volume (co