TIDMNOKIA 
 
   Nokia Corporation 
 
   Half year report 
 
   July 31, 2020 at 08:00 (CET +1) 
 
   Nokia Corporation Financial Report for Q2 and Half Year 2020 
 
   Continued improved execution drives strong margin and cash performance 
 
 
   -- Strong margin expansion, primarily driven by Mobile Access 
 
   -- Clear roadmap progress, particularly related to our 5G mid-band portfolio 
 
   -- Confidence in resilient customer base and strong liquidity position 
 
   -- 11% decrease in net sales, largely driven by COVID-19 and China 
 
   -- Strong growth in Nokia Enterprise 
 
   -- Positive operating profit, on a reported basis, in both Q2 and half year 
      2020 
 
   -- Within previously provided Outlook ranges for full year 2020, adjusted 
      the non-IFRS mid-points for EPS to EUR 0.25 and operating margin to 9.5% 
 
   -- Delivered strong free cash flow year-to-date and raised 2020 recurring 
      free cash flow guidance to be clearly positive 
 
 
 
   This is a summary of the Nokia Corporation financial report for Q2 and 
half year 2020 published today. The complete financial report for Q2 and 
half year 2020 with tables is available at 
https://www.globenewswire.com/Tracker?data=jg7A6XD12Wh0kKBCMkH0P-f1INZIRzS_EVnRqob_gcMSbfxx4TWakbiNirKbQZ3nsCUP9RSTwwmqp_kA_XGB8bYnvk3TX2uqXTFhj3LCmuw= 
www.nokia.com/financials. Investors should not rely on summaries of our 
financial reports only, but should review the complete financial reports 
with tables. 
 
   RAJEEV SURI, PRESIDENT AND CEO, ON Q2 2020 RESULTS 
 
 
 
 
 
   Nokia delivered a strong improvement in Q2, with better-than-expected 
profitability, significant improvement in cash generation, clear 
indications of a return to strength in mobile radio, and a year-on-year 
increase in earnings-per-share, despite the challenges of COVID-19. 
These results show that our execution has improved as planned and that 
we are well positioned to end the year with a significantly stronger 
financial position. As a result, we are adjusting upward both the 
midpoint of our full-year 2020 non-IFRS EPS and operating margin 
guidance within our previously disclosed outlook ranges. 
 
   Profitability gains in the quarter were supported by a 4.5 percentage 
point year-on-year improvement in Networks gross margin, building on a 
3.5 percentage point gain in the first quarter, and driving Nokia 
non-IFRS gross margin to 39.6%. Nokia Enterprise also grew year-on-year 
constant currency sales by 18% compared to one year ago and expanded 
margins. 
 
   Nokia-level revenue was down in the quarter, with the majority of that 
the result of COVID-19 as well as a sharp decline in China based on the 
prudent approach we have taken in that market. We also saw a reduction 
driven by our proactive steps to reduce the volume of low margin 
services business. We expect that the majority of sales missed in the 
quarter due to COVID-19 will shift to future periods. 
 
   At the start of the year, we said we would have a sharp focus on our 
Mobile Access business and improving cash generation. In both areas we 
continue to make good progress. Free cash flow in the quarter was 
positive EUR265 million, versus negative EUR1.0 billion one year ago, 
and Nokia ended Q2 with EUR1.6 billion of net cash, and EUR7.5 billion 
in total cash. Given our strong first-half improvement, we now expect 
free cash flow for full-year 2020 to be "clearly positive" compared to 
our earlier guidance of "positive". 
 
   In Mobile Access, we saw healthy improvements in our radio portfolio, 
where roadmaps are strengthening, costs are coming down, and product 
performance is rising. We have a particularly powerful portfolio in 
mid-band mobile radio, with proven products deployed with 55 customers, 
and the first live C-Band network demonstrated in the U.S. during the 
quarter. Pleasingly, our "5G Powered by ReefShark" shipments continue to 
increase and we believe we remain on track to reach 35% or better by 
year end. And, we now have 83 5G deals. 
 
   Our continued momentum was demonstrated by the progress we announced 
after the quarter ended. These included the availability of a software 
upgrade that allows millions of Nokia 4G/LTE radios deployed to more 
than 350 customers to be migrated seamlessly to 5G; and plans to 
accelerate leadership in Open RAN. Nokia is the only global supplier 
fully committed to O-RAN with commercial 5G Cloud-RAN networks. We also 
announced an expansion of our IP routing business into the data center 
market and highlighted that Apple was deploying our technology at its 
data centers. 
 
   This is my last quarterly announcement as CEO of Nokia and I want to 
close with a note of thanks: thanks to our shareholders, thanks to our 
customers, thanks to our many other stakeholders, and a particular 
thanks to the great employees of Nokia. You have constantly made me 
proud and I expect that you will continue to do so in the many years to 
come. Thank you all. It has been a pleasure and an honor. 
 
   NOKIA FINANCIAL RESULTS 
 
 
 
 
                                                  Constant                                 Constant 
EUR million (except                       YoY      currency                        YoY      currency 
 for EPS in EUR)          Q2'20  Q2'19   change   YoY change  Q1-Q2'20  Q1-Q2'19  change   YoY change 
------------------------  -----  ------  ------  -----------  --------  --------  ------  ----------- 
Net sales                 5 092   5 694   (11)%        (11)%    10 005    10 726    (7)%         (7)% 
    Networks              3 955   4 393   (10)%        (10)%     7 713     8 336    (7)%         (8)% 
    Nokia Software          597     678   (12)%        (12)%     1 210     1 221    (1)%         (1)% 
    Nokia Technologies      341     383   (11)%        (11)%       689       753    (8)%         (9)% 
    Group Common and 
     Other                  210     263   (20)%        (21)%       415       484   (14)%        (15)% 
    Non-IFRS exclusions     (1)     (2)                            (1)      (27) 
    Eliminations           (11)    (21)                           (20)      (41) 
Gross profit              2 006   2 065    (3)%                  3 784     3 646      4% 
Operating profit/(loss)     170    (57)                             94     (581) 
    Networks                249     119    109%                    169     (135) 
    Nokia Software           88     137   (36)%                    159       130     22% 
    Nokia Technologies      282     324   (13)%                    572       626    (9)% 
    Group Common and 
     Other                (197)   (129)                          (361)     (230) 
    Non-IFRS exclusions   (253)   (508)                          (445)     (972) 
Operating margin %         3.3%  (1.0)%  430bps                   0.9%    (5.4)%  630bps 
Net sales (non-IFRS)      5 093   5 696   (11)%        (11)%    10 007    10 753    (7)%         (7)% 
Gross profit (non-IFRS)   2 017   2 117    (5)%                  3 804     3 758      1% 
Operating profit/(loss) 
 (non-IFRS)                 423     451    (6)%                    539       391     38% 
Operating margin % 
 (non-IFRS)                8.3%    7.9%   40bps                   5.4%      3.6%  180bps 
                          -----  ------  ------               --------  --------  ------ 
Financial income and 
 expenses                  (11)   (173)   (94)%                   (61)     (228)   (73)% 
Income taxes               (80)      46                           (51)       188 
Profit/(loss) for the 
 period                      85   (191)                           (16)     (632) 
EPS, diluted               0.01  (0.03)                           0.00    (0.11) 
Financial income and 
 expenses (non-IFRS)       (27)    (86)   (69)%                   (93)     (178)   (48)% 
Income taxes (non-IFRS)    (87)   (101)   (14)%                  (100)      (60)     67% 
Profit/(loss) for the 
 period (non-IFRS)          316     258     22%                    348       142    145% 
EPS, diluted (non-IFRS)    0.06    0.05     20%                   0.06      0.02    200% 
                          -----  ------  ------               --------  --------  ------ 
The financial information in this report is unaudited. Non-IFRS results 
 exclude costs related to the acquisition of Alcatel-Lucent and related 
 integration, goodwill impairment charges, intangible asset amortization 
 and other purchase price fair value adjustments, restructuring and associated 
 charges and certain other items that may not be indicative of Nokia's 
 underlying business performance. For details, please refer to note 2, 
 "Non-IFRS to reported reconciliation", in the notes to the Financial 
 statement information included in Nokia Corporation interim report for 
 Q2 and Half Year 2020. Change in net sales at constant currency excludes 
 the effect of changes in exchange rates in comparison to euro, our reporting 
 currency. For more information on currency exposures, please refer to 
 note 1, "Basis of Preparation", in the "Financial statement information" 
 section included in Nokia Corporation interim report for Q2 and Half 
 Year 2020. 
 
 
   -- Both non-IFRS and reported net sales in Q2 2020 were EUR 5.1bn, compared 
      to EUR 5.7bn in Q2 2019. On a constant currency basis, both non-IFRS and 
      reported net sales decreased 11%. Excluding one-time licensing net sales 
      in Q2 2020 and Q2 2019, net sales decreased 10% on both a non-IFRS and 
      reported basis. 
 
   -- Q2 2020 net sales were impacted by COVID-19 and unique dynamics in China. 
      In Q2 2020, we estimate that COVID-19 had an approximately EUR 300 
      million negative net impact on our net sales; with the majority of these 
      net sales expected to be shifted to future periods, rather than being 
      lost. 
 
   -- In Q2 2020, Nokia's gross and operating margin both expanded year-on-year, 
      primarily driven by broad based strength in Networks, particularly in 
      Mobile Access, with IP Routing and Fixed Access also contributing

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