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MarketScreener Homepage  >  Equities  >  NASDAQ OMX HELSINKI LTD.  >  Nokia Oyj    NOKIA   FI0009000681


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Nokia Oyj : Corporation Corporation Interim Report For Q3 And January-September 2020

10/29/2020 | 01:16am EST
   Nokia Corporation 
   Interim report 
   29 October 2020 at 08:00 (CET +1) 
   Nokia Corporation Interim Report for Q3 and January-September 2020 
   Solid margin and free cash flow; net sales decline primarily due to 
   -- Continued improvements in our Mobile Access portfolio; reducing product 
      costs and improving product performance; commitment to invest in R&D to 
      drive product leadership 
   -- 7% year-on-year decrease in net sales, largely driven by lower services 
      within Mobile Access, consistent with our expectation for lower network 
      deployment services 
   -- Strong year-on-year growth in Nokia Enterprise 
   -- Continued margin expansion year-on-year, primarily driven by Mobile 
      Access and Optical Networks 
   -- Positive operating profit, on a reported basis, in Q3 and first nine 
      months of 2020 
   -- Solid free cash flow in Q3 and the first nine months of 2020 
   -- Adjusted 2020 outlook midpoints for non-IFRS EPS to EUR 0.23 (from EUR 
      0.25) and operating margin to 9.0% (from 9.5%), with the new midpoints 
      and ranges within the previously provided outlook ranges 
   -- Provided new outlook for 2021 non-IFRS operating margin of 7-10% 
   -- Long term outlook to be provided latest at the Capital Markets Day on 
      March 18, 2021 
   This is a summary of the Nokia Corporation Interim Report for Q3 and 
January-September 2020 published today. The complete Interim Report for 
Q3 and January-September 2020 with tables is available at 
www.nokia.com/financials. Investors should not rely on summaries of our 
financial reports only, but should review the complete financial reports 
with tables. 
   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. 
   We announced separately today some important changes to our operating 
model. The goal of this new model is to better align with the needs of 
our customers, and through that improve our performance and create 
shareholder value. The changes announced today mark a shift from 
end-to-end as a strategic principle to a more focused approach with each 
business group having a distinct role in our overall strategy. 
   Each of the four new business groups will have P&L responsibility and 
ownership of creating a path to becoming one of the market leaders in 
their respective sector. The changes optimize our operating model for 
better accountability and transparency, increased simplicity and 
   We plan to share more details about our strategy in December and at a 
Capital Markets Day in March. A more rigorous approach to capital 
allocation will be key to our strategic direction. As a technology 
company we will invest to win in those segments where we choose to 
   Equally important is our view of the future, where we see an opportunity 
to lead in "network-as-a-service" business models for telecom operators 
and enterprise customers. This change offers a broad opportunity for 
Nokia to provide a trusted, software-led and cloud-based network 
capability that can be rapidly integrated, deployed, and self-managed as 
a complete service, allowing us to move up the value chain and provide 
additional "network plus" value-adding services. This vision will take 
time to become a reality, but Nokia is well positioned to win given our 
deep experience in delivering carrier-grade network performance and 
extensive work with webscale companies and enterprises. 
   I have no doubt that the potential of Nokia is substantial, even if 
delivering on that promise will take time. We expect to stabilize our 
financial performance in 2021 and deliver progressive improvement 
towards our long-term goal after that. We intend to provide an update on 
long-term outlook at the latest on Capital Markets Day. I am confident 
that with the right strategy, focus, and operating model we will be 
successful. Today, we embark on that journey. 
                                               Constant                                 Constant 
EUR million (except                    YoY      currency                        YoY      currency 
 for EPS in EUR)        Q3'20  Q3'19  change   YoY change  Q1-Q3'20  Q1-Q3'19  change   YoY change 
----------------------  -----  -----  ------  -----------  --------  --------  ------  ----------- 
Net sales               5 294  5 686    (7)%         (3)%    15 299    16 412    (7)%         (6)% 
    Networks            4 112  4 434    (7)%         (3)%    11 825    12 770    (7)%         (6)% 
    Nokia Software        585    677   (14)%        (10)%     1 795     1 898    (5)%         (4)% 
    Nokia Technologies    331    358    (8)%         (8)%     1 020     1 112    (8)%         (8)% 
    Group Common and 
     Other                275    236     17%          16%       691       720    (4)%         (5)% 
     exclusions           (1)    (2)                            (2)      (29) 
    Eliminations          (9)   (17)                           (29)      (58) 
Gross profit            1 976  1 969      0%                  5 760     5 614      3% 
 profit/(loss)            350    264     33%                    444     (318) 
    Networks              263    128    105%                    431       (7) 
    Nokia Software         87    156   (44)%                    246       286   (14)% 
    Nokia Technologies    274    294    (7)%                    846       919    (8)% 
    Group Common and 
     Other              (138)  (100)                          (499)     (329) 
     exclusions         (136)  (214)                          (581)   (1 187) 
Operating margin %       6.6%   4.6%  200bps                   2.9%    (1.9)%  480bps 
Net sales (non-IFRS)    5 294  5 688    (7)%         (3)%    15 301    16 441    (7)%         (6)% 
Gross profit 
 (non-IFRS)             1 981  2 006    (1)%                  5 785     5 765      0% 
Operating profit 
 (non-IFRS)               486    478      2%                  1 025       869     18% 
Operating margin % 
 (non-IFRS)              9.2%   8.4%   80bps                   6.7%      5.3%  140bps 
                        -----  -----  ------               --------  --------  ------ 
Financial income and 
 expenses                (73)   (98)   (26)%                  (134)     (326)   (59)% 
Income taxes             (74)   (80)                          (124)       108 
Profit/(loss) for the 
 period                   203     87    133%                    187     (545) 
EPS, diluted             0.04   0.01    300%                   0.03    (0.10) 
Financial income and 
 expenses (non-IFRS)     (78)  (113)   (31)%                  (172)     (291)   (41)% 
Income taxes 
 (non-IFRS)             (103)  (101)      2%                  (202)     (161)     25% 
Profit for the period 
 (non-IFRS)               305    267     14%                    653       409     60% 
EPS, diluted 
 (non-IFRS)              0.05   0.05      0%                   0.11      0.07     57% 
                        -----  -----  ------               --------  --------  ------ 
   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 Q3 and January-September 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 Q3 and January-September 2020. 
   -- Both non-IFRS and reported net sales in Q3 2020 were EUR 5.3bn, compared 
      to EUR 5.7bn in Q3 2019. On a constant currency basis, both non-IFRS and 
      reported net sales decreased 3%, primarily due to services within Mobile 
      Access. The services-related declines in Q3 2020 were primarily driven by 
      lower levels of network deployment services, consistent with our 
      expectation, as disclosed in our Outlook section of the Report for Q2 and 
      Half Year 2020. In Nokia Enterprise, we continued to make great progress 
      and delivered 15% year-on-year growth in net sales. 
   -- The impact of COVID-19 on Nokia's financial performance and financial 
      position was primarily related to factory closures, resulting in a net 
      sales impact of approximately EUR 200 million in the first nine months of 

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Sales 2020 21 652 M 26 244 M 26 244 M
Net income 2020 662 M 802 M 802 M
Net cash 2020 1 982 M 2 402 M 2 402 M
P/E ratio 2020 29,3x
Yield 2020 0,16%
Capitalization 18 640 M 22 521 M 22 594 M
EV / Sales 2020 0,77x
EV / Sales 2021 0,76x
Nbr of Employees 94 250
Free-Float 93,3%
Duration : Period :
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Technical analysis trends NOKIA OYJ
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 26
Average target price 3,64 €
Last Close Price 3,31 €
Spread / Highest target 57,0%
Spread / Average Target 9,89%
Spread / Lowest Target -37,1%
EPS Revisions
Pekka Ilmari Lundmark President & Chief Executive Officer
Sari Maritta Baldauf Chairman
Marco Wirén Chief Financial Officer
Marcus Weldon Chief Technology Officer
Kari Henrik Stadigh Vice Chairman
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