SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a -16 or 15d -16 of
the Securities Exchange Act of 1934
Report on Form 6-K dated October 20, 2022
(Commission File No. 1-13202)
Nokia Corporation
Karakaari 7A
FI-02610 Espoo
Finland
(Name and address of registrant’s principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F: |
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Form 20-F: x |
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Form 40-F: ¨ |
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): |
Yes: ¨ |
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No: x |
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Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): |
Yes: ¨ |
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No: x |
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Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. |
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Yes: ¨ |
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No: x |
Enclosures:
| • | Stock
Exchange Release: Nokia Corporation Financial Report for Q3 2022 |
| • | Report attached to the Stock Exchange Release: Interim Report for Q3 2022 |
|
Stock exchange release
20 October 2022 |
1 (7) |
Nokia Corporation
Interim report
20 October 2022 at 08:00 EEST
Nokia Corporation Financial Report for Q3 2022
Accelerating sales growth
| · | Q3 net sales growth accelerated to 6% y-o-y in constant currency (+16% reported). By business group: |
| | |
| o | Mobile Networks grew 12%, due to continued strong demand and supply constraints easing. |
| | |
| o | Network Infrastructure continued its strong performance with 5% growth and robust demand. |
| | |
| o | Cloud and Network Services declined 3% as we continued to rebalance our portfolio. |
| | |
| o | Nokia Technologies declined 19%, still impacted by expired licenses that are in litigation/pending renewal. |
| | |
| · | Enterprise net sales grew 22% y-o-y in constant currency (+32% reported) with notable strength in private wireless. |
| | |
| · | Reported gross margin declined 60bps y-o-y to 40.1% and operating margin declined 100bps y-o-y to 8.3% mainly due to the decline in
Nokia Technologies. |
| | |
| · | Comparable operating margin of 10.5% compressed 120bps y-o-y mainly due to the decline in Nokia Technologies. Operating margins in
both Mobile Networks (+250bps) and Network Infrastructure (+50bps) improved. |
| | |
| · | Comparable diluted EPS of EUR 0.10; reported diluted EPS of EUR 0.08. |
| | |
| · | Free cash flow positive EUR 0.3bn, net cash balance of EUR 4.7bn. |
| | |
| · | Full year 2022 net sales outlook is unchanged in constant currency. Full year net sales outlook applying 30 Sept 2022 exchange rates
is EUR 23.9bn to EUR 25.1bn. Comparable operating margin guidance remains 11% to 13.5%. |
This is a summary of the Nokia Corporation Financial
Report for Q3 2022 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. A video interview summarizing the key points of our Q3 results will
also be published on the website. Investors should not solely rely on summaries of Nokia's financial reports and should also review the
complete report with tables.
PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q3 2022 RESULTS
Our third quarter performance demonstrates we are delivering on our
ambition to accelerate growth. Net sales grew 6% in constant currency as supply constraints started to ease and we maintained good profitability
with comparable operating margin of 10.5%. This was slightly down year-on-year, as improving profitability in Mobile Networks and Network
Infrastructure was offset by timing effects of contract renewals in Nokia Technologies.
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Stock exchange release
20 October 2022 |
2 (7) |
I was pleased to see a strong quarter in Mobile Networks, which grew
12% in constant currency as we benefited from our improved competitiveness and improving supply situation. Net sales growth remained robust
also in Network Infrastructure at 5% driven by continued strong underlying demand trends. Cloud and Networks Services declined 3% as we
work to rebalance the portfolio but with improving gross margin. Nokia Technologies continued to deliver good progress in its patent licensing
growth areas such as automotive and consumer electronics. These areas, which were negligible in 2018, now contribute over EUR 100 million
in net sales in the past 12 months.
Our Enterprise net sales growth accelerated to 22% in constant currency.
We have strong momentum in Enterprise including adding 30 new private wireless customers in the quarter and a further new IP Routing customer
in webscale. With this momentum, we expect Enterprise to remain our fastest growing customer segment.
While risks around timing of outstanding deals in Nokia Technologies
remain, assuming these close we continue tracking towards the high-end of our net sales guidance for 2022 and towards the mid-point of
our operating margin guidance.
As we start to look beyond 2022, we recognize the increasing macro
and geopolitical uncertainty within which we operate. While it could have an impact on some of our customers’ capex spending, we
currently expect growth on a constant currency basis in our addressable markets in 2023. Considering our recent success in new 5G deals
in regions like India which are expected to ramp up strongly in 2023, we believe we are firmly on a path to outperform the market and
to make progress towards achieving our long-term margin targets.
FINANCIAL RESULTS
EUR million (except for EPS in EUR) | |
Q3'22 | | |
Q3'21 | | |
YoY change | | |
Constant currency YoY
change | | |
Q1– Q3'22 | | |
Q1– Q3'21 | | |
YoY change | | |
Constant currency YoY change | |
Reported results | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Net sales | |
| 6 241 | | |
| 5 399 | | |
| 16 | % | |
| 6 | % | |
| 17 462 | | |
| 15 788 | | |
| 11 | % | |
| 3 | % |
Gross margin % | |
| 40.1 | % | |
| 40.7 | % | |
| (60 | )bps | |
| | | |
| 40.3 | % | |
| 39.9 | % | |
| 40 | bps | |
| | |
Research and development expenses | |
| (1 165 | ) | |
| (1 036 | ) | |
| 12 | % | |
| | | |
| (3 328 | ) | |
| (3 096 | ) | |
| 7 | % | |
| | |
Selling, general and administrative expenses | |
| (771 | ) | |
| (674 | ) | |
| 14 | % | |
| | | |
| (2 174 | ) | |
| (2 034 | ) | |
| 7 | % | |
| | |
Operating profit | |
| 518 | | |
| 502 | | |
| 3 | % | |
| | | |
| 1 436 | | |
| 1 418 | | |
| 1 | % | |
| | |
Operating margin % | |
| 8.3 | % | |
| 9.3 | % | |
| (100 | )bps | |
| | | |
| 8.2 | % | |
| 9.0 | % | |
| (80 | )bps | |
| | |
Profit for the period | |
| 428 | | |
| 351 | | |
| 22 | % | |
| | | |
| 1 107 | | |
| 965 | | |
| 15 | % | |
| | |
EPS, diluted | |
| 0.08 | | |
| 0.06 | | |
| 33 | % | |
| | | |
| 0.19 | | |
| 0.17 | | |
| 12 | % | |
| | |
Net cash and interest-bearing financial investments | |
| 4 655 | | |
| 4 300 | | |
| 8 | % | |
| | | |
| 4 655 | | |
| 4 300 | | |
| 8 | % | |
| | |
Comparable results | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net sales | |
| 6 241 | | |
| 5 399 | | |
| 16 | % | |
| 6 | % | |
| 17 462 | | |
| 15 788 | | |
| 11 | % | |
| 3 | % |
Gross margin % | |
| 40.4 | % | |
| 40.8 | % | |
| (40 | )bps | |
| | | |
| 40.6 | % | |
| 40.5 | % | |
| 10 | bps | |
| | |
Research and development expenses | |
| (1 139 | ) | |
| (1 007 | ) | |
| 13 | % | |
| | | |
| (3 261 | ) | |
| (2 992 | ) | |
| 9 | % | |
| | |
Selling, general and administrative expenses | |
| (674 | ) | |
| (583 | ) | |
| 16 | % | |
| | | |
| (1 878 | ) | |
| (1 719 | ) | |
| 9 | % | |
| | |
Operating profit | |
| 658 | | |
| 633 | | |
| 4 | % | |
| | | |
| 1 955 | | |
| 1 867 | | |
| 5 | % | |
| | |
Operating margin % | |
| 10.5 | % | |
| 11.7 | % | |
| (120 | )bps | |
| | | |
| 11.2 | % | |
| 11.8 | % | |
| (60 | )bps | |
| | |
Profit for the period | |
| 551 | | |
| 463 | | |
| 19 | % | |
| | | |
| 1 552 | | |
| 1 377 | | |
| 13 | % | |
| | |
EPS, diluted | |
| 0.10 | | |
| 0.08 | | |
| 25 | % | |
| | | |
| 0.27 | | |
| 0.24 | | |
| 13 | % | |
| | |
ROIC1 | |
| 17.5 | % | |
| 20.2 | % | |
| (270 | )bps | |
| | | |
| 17.5 | % | |
| 20.2 | % | |
| (270 | )bps | |
| | |
1 Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to the Performance measures section in Nokia Corporation Financial Report for Q3 2022 for details.
|
Stock exchange release
20 October 2022 |
3 (7) |
Business group results | |
Mobile Networks | | |
Network Infrastructure | | |
Cloud and Network Services | | |
Nokia Technologies | | |
Group Common and Other | |
EUR million | |
Q3'22 | | |
Q3'21 | | |
Q3'22 | | |
Q3'21 | | |
Q3'22 | | |
Q3'21 | | |
Q3'22 | | |
Q3'21 | | |
Q3'22 | | |
Q3'21 | |
Net Sales | |
| 2 851 | | |
| 2 315 | | |
| 2 211 | | |
| 1 915 | | |
| 801 | | |
| 748 | | |
| 305 | | |
| 367 | | |
| 84 | | |
| 64 | |
YoY change | |
| 23 | % | |
| | | |
| 15 | % | |
| | | |
| 7 | % | |
| | | |
| (17 | )% | |
| | | |
| 31 | % | |
| | |
Constant currency YoY change | |
| 12 | % | |
| | | |
| 5 | % | |
| | | |
| (3 | )% | |
| | | |
| (19 | )% | |
| | | |
| 21 | % | |
| | |
Gross margin % | |
| 39.4 | % | |
| 37.8 | % | |
| 35.6 | % | |
| 35.9 | % | |
| 39.0 | % | |
| 37.6 | % | |
| 99.7 | % | |
| 99.7 | % | |
| (4.8 | )% | |
| (7.8 | )% |
Operating profit/(loss) | |
| 278 | | |
| 169 | | |
| 228 | | |
| 187 | | |
| 16 | | |
| 31 | | |
| 207 | | |
| 285 | | |
| (70 | ) | |
| (38 | ) |
Operating margin % | |
| 9.8 | % | |
| 7.3 | % | |
| 10.3 | % | |
| 9.8 | % | |
| 2.0 | % | |
| 4.1 | % | |
| 67.9 | % | |
| 77.7 | % | |
| (83.3 | )% | |
| (59.4 | )% |
OUTLOOK
|
Full year 2022 |
Net sales1 |
EUR 23.9 billion to EUR 25.1 billion (constant currency unchanged, adjusted for currency)1 |
Comparable operating margin2 |
11 to 13.5% |
Free cash flow2 |
25-55% conversion from comparable operating profit |
1
Assuming the rate 1 EUR = 0.97 USD as of 30 September 2022 continues for the remainder of 2022 along with
year-to-date actual foreign exchange rates (adjusted from prior 1 EUR = 1.04 USD rate as of 30 June 2022). Assuming the 30 June 2022 exchange
rate, the net sales outlook would continue to be EUR 23.5bn to EUR 24.7bn.
2 Please refer to Performance measures
section in Nokia Corporation Financial Report for Q3 2022 for a full explanation of how these terms are defined.
The outlook, the long-term targets (3-5 years) and
all of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties
as described in the Risk Factors section later in this release.
| · | Nokia’s outlook assumptions expect the following size and growth in our estimated total addressable markets (Mobile Networks
excluding China and Network Infrastructure excluding Submarine Networks) and assuming year-to-date actual rates and 1 EUR = 0.97 USD for
the remainder of the year (updated): |
|
Stock exchange release
20 October 2022 |
4 (7) |
| |
2022 total
addressable
market (€bn) | | |
Constant
currency
growth |
|
Mobile Networks | |
| 52 | | |
+5 |
% |
Network Infrastructure | |
| 48 | | |
+5 |
% |
Cloud and Network Services | |
| 28 | | |
+3 |
% |
Nokia total addressable market | |
| 127 | | |
+5 |
% |
| · | Nokia’s outlook assumptions for the operating margin of each business group in 2022 are provided below: |
| |
| Full year 2022 | |
Mobile Networks | |
| 6.5
to 9.5% | |
Network Infrastructure | |
| 9.5
to 12.5% | |
Cloud and Network Services | |
| 4.0
to 7.0% | |
Nokia Technologies | |
| >75% | |
| · | Nokia expects Nokia Technologies to deliver a largely stable operating profit performance in 2022 (assuming the conclusion of some
outstanding deals) and over the longer-term; |
| | |
| · | Nokia expects the net negative impact of Group Common and Other to be EUR 250 million in 2022 and over the longer-term; |
| | |
| · | In full year 2022, Nokia expects the free cash flow performance of Nokia Technologies to be approximately EUR 450 million lower than
its operating profit, primarily due to prepayments received from certain licensees in previous years; |
| | |
| · | Comparable financial income and expenses are now expected to be an expense of approximately EUR 50-150 million in full year 2022 and
over the longer-term. There is currently greater uncertainty due to the foreign exchange volatility and associated impacts (update); |
| | |
| · | Comparable income tax expenses are expected to be approximately EUR 450 million in full year 2022 and over the longer-term; |
| | |
| · | Cash outflows related to income taxes are expected to be approximately EUR 400 million in full year 2022 and over the longer-term;
and |
| | |
| · | Capital expenditures are expected to be approximately EUR 600 million in full year 2022 and around EUR 600 million over the longer-term
with some variation year-to-year (update). |
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 Q3 2022 for details), we expect that a 10% strengthening in the USD vs. the EUR would have an impact
of approximately positive 5% on net sales, a positive impact on operating profit and a slight positive impact to our operating margin,
before hedging. In the current financial year, due to the impact of hedging, we expect an approximately neutral impact on operating profit
and a slightly negative impact to operating margin.
Nokia’s long-term targets as published with our fourth quarter
2021 results remain unchanged.
SHAREHOLDER DISTRIBUTION
Dividend
Under the authorization by the Annual General Meeting held on 5
April 2022, the Board of Directors may resolve an aggregate maximum distribution of EUR 0.08 per share. The authorization will be
used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the
authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.
|
Stock exchange release
20 October 2022 |
5 (7) |
Under the authorization, a EUR 0.02 dividend was paid in Q2 2022 totaling
EUR 113 million and a EUR 0.02 dividend was paid in Q3 2022 totaling EUR 112 million.
On 20 October 2022, the Board resolved to distribute a dividend of
EUR 0.02 per share. The dividend record date is on 25 October 2022 and the dividend will be paid on 3 November 2022. The actual dividend
payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.
Following this announced distribution of the third installment and
executed payments of the previous installments, the Board’s remaining distribution authorization is a maximum of EUR 0.02 per share.
The payment of the third installment of the distribution is expected
to total approximately EUR 112 million in Q4 2022.
Share buyback program
In 2020 and 2021, Nokia generated strong cash flow which significantly
improved the cash position of the company. To manage the company’s capital structure, the Board of Directors initiated a share buyback
program under the authorization from the AGM to repurchase shares. Purchases began in February 2022. By the end of September 2022, Nokia
has repurchased 50,270,648 shares for a total purchase price of approximately EUR 238 million, with weighted average purchase price of
EUR 4.74 per share. The program targets to return up to EUR 600 million of cash to shareholders in tranches over a period of two years.
RISK FACTORS
Nokia and its businesses are exposed to a number
of risks and uncertainties which include but are not limited to:
| · | Competitive intensity, which is expected to continue at a high level; |
| · | Our ability to ensure competitiveness of our product roadmaps and costs through additional R&D investments; |
| · | Our ability to procure certain standard components and the costs thereof, such as semiconductors; |
| · | Disturbance in the global supply chain; |
| · | Accelerating inflation, increased global macro-uncertainty, major currency fluctuations and higher interest rates; |
| · | Scope and duration of the COVID-19 pandemic, and its economic impact; |
| · | War or other geopolitical conflicts, disruptions and potential costs thereof; |
| · | Other macroeconomic, industry and competitive developments; |
| · | Timing and value of new and existing patent licensing agreements with smartphone vendors, automotive companies, consumer electronics
companies and other licensees; |
| · | Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; and the regulatory landscape
for patent licensing; |
| · | Timing of completions and acceptances of certain projects; |
| · | Our product and regional mix; |
|
Stock exchange release
20 October 2022 |
6 (7) |
| · | Uncertainty in forecasting income tax expenses and cash outflows, over the long-term, as they are also subject to possible changes
due to business mix, the timing of patent licensing cash flow and changes in tax legislation, including potential tax reforms in various
countries and OECD initiatives; |
| · | Our ability to utilize our US and Finnish deferred tax assets and their recognition on our balance sheet; |
| · | Our ability to meet our sustainability and other ESG targets, including our targets relating to greenhouse gas emissions; as well
the risk factors specified under Forward-looking statements of this release, and our 2021 annual report on Form 20-F published on 3 March
2022 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, sustainability
and other ESG targets, operational key performance indicators and decisions on market exits; B) expectations, plans or benefits related
to future performance of our businesses (including the expected impact, timing and duration of COVID-19 and the general macroeconomic
conditions on our businesses, our supply chain and our customers’ businesses) and any future dividends and other distributions of
profit; C) expectations and targets regarding financial performance and results of operations, including market share, prices, net sales,
income, margins, cash generation, the timing of receivables, operating expenses, provisions, impairments, taxes, currency exchange rates,
hedging, investment funds, inflation, product cost reductions, competitiveness, revenue generation in any specific region, and licensing
income and payments; D) ability to execute, expectations, plans or benefits related to changes in organizational structure and operating
model; 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 20 October 2022 at 11.30 a.m.
Finnish time (EEST). A link to the webcast will be available at www.nokia.com/financials. Media representatives can listen in
via the link, or alternatively call +1-412-317-5619.
FINANCIAL CALENDAR
| · | Nokia plans to publish its fourth quarter and full year 2022 results on 26 January 2023. |
|
Stock exchange release
20 October 2022 |
7 (7) |
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
Maria Vaismaa, Global Head of Public Relations
Nokia
Investor Relations
Phone: +358 40 803 4080
Email: investor.relations@nokia.com
|
2
0
Octo
ber
2022
1
Interim Report for Q3 202
2
Accelerating sales growth
▪
Q
3
net sales
growth accelerated to
6
% y
-
o
-
y in constant currency (+
16
% reported).
By business group:
▪
Mobile Networks grew
12
%
,
due to
continued
strong demand
and
supply
constraints
easing
.
▪
Network Infrastructure
continued its strong performance with
5
% growth
and robust demand
.
▪
Cloud and Network Services
declined 3%
as we continued
to
rebalance
our portfolio.
▪
Nokia Technologies declined
19
%
,
still
impacted by expired l
icenses that are
in litigation/
pending renewal
.
▪
Enterprise
net sales
grew 22%
y
-
o
-
y in constant currency
(+32% reported)
with
notable
strength
in private wireless.
▪
Reported gross margin declined 60bps y
-
o
-
y to 40.1% and operating margin declined
100bps y
-
o
-
y to 8.3%
mainly
due to the decline in Nokia Technologies.
▪
Comparable operating margin
of
1
0.5
%
compressed
120bps
y
-
o
-
y
mainly
due to the decline in
Nokia
Technologies.
Operating margins in both Mobile Networks (+250bps) and Network Infrastruct
ure (+50bps) improved.
▪
Comparable diluted EPS of EUR 0.
1
0
; reported diluted EPS of EUR 0.
0
8
.
▪
Free cash flow
positive
EUR
0.
3
bn
, net cash balance of EUR 4.
7
bn.
▪
Full year 2022
net sales
outlook is unchanged in constant currency. Full year net sales outlook applying 30
Sept
2022
exchange rates is EUR
23.9
bn to EUR
25.1
bn.
Comparable operating margin
guid
anc
e
remains 11% to 13.5%.
EUR million (except for EPS in EUR)
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY change
Reported results
Net sales
6 241
5 399
16%
6%
17 462
15 788
11%
3%
Gross margin %
40.1%
40.7%
(60)bps
40.3%
39.9%
40bps
Research and
development expenses
(1 165)
(1 036)
12%
(3 328)
(3 096)
7%
Selling, general and administrative expenses
(771)
(674)
14%
(2 174)
(2 034)
7%
Operating profit
518
502
3%
1 436
1 418
1%
Operating margin %
8.3%
9.3%
(100)bps
8.2%
9.0%
(80)
bps
Profit for the period
428
351
22%
1 107
965
15%
EPS, diluted
0.08
0.06
33%
0.19
0.17
12%
Net cash and interest
-
bearing financial investments
4 655
4 300
8%
4 655
4 300
8%
Comparable results
Net sales
6 241
5 399
16%
6%
17 462
15 788
11%
3%
Gross margin %
40.4%
40.8%
(40)bps
40.6%
40.5%
10bps
Research and development expenses
(1 139)
(1 007)
13%
(3 261)
(2 992)
9%
Selling, general and administrative expenses
(674)
(583)
16%
(1 878)
(1 719)
9%
Operating profit
658
633
4%
1 955
1 867
5%
Operating margin %
10.5%
11.7%
(120)bps
11.2%
11.8%
(60)bps
Profit for the period
551
463
19%
1 552
1 377
13%
EPS, diluted
0.10
0.08
25%
0.27
0.24
13%
ROIC
1
17.5%
20.2%
(270)bps
17.5%
20.2%
(270)bps
1
Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters
’ ending balances. Refer to the Performance measures section in
this report for details.
Business group
results
Mobile
Networks
Network
Infrastructure
Cloud and
Network Services
Nokia
Technologies
Group Common
and Other
EUR million
Q3'22
Q3'21
Q3'22
Q3'21
Q3'22
Q3'21
Q3'22
Q3'21
Q3'22
Q3'21
Net Sales
2 851
2 315
2 211
1 915
801
748
305
367
84
64
YoY
change
23%
15%
7%
(17)%
31%
Constant currency YoY change
12%
5%
(3)%
(19)%
21%
Gross margin %
39.4%
37.8%
35.6%
35.9%
39.0%
37.6%
99.7%
99.7%
(4.8)%
(7.8)%
Operating profit/(loss)
278
169
228
187
16
31
207
285
(70)
(38)
Operating margin %
9.8%
7.3%
10.3%
9.8%
2.0%
4.1%
67.9%
77.7%
(83.3)%
(59.4)%
|
|
2
0
Octo
ber
2022
2
Our third quarter performance demonstrates we are delivering on our
ambition to accelerate growth. Net sales grew 6% in constant currency
as supply constraints started to ease and we maintained good
profitability with comparable operating margin of 10.5%.
This was
slightly down year
-
on
-
year, as improving profitability in Mobile Networks
and Network Infrastructure was offset by timing effects of contract
renewals in Nokia Technologies.
I was pleased to see a strong quarter in Mobile Networks, which grew
12% in constant currency as we benefit
ed from our improved
competitiveness and improving supply situation. Net sales growth
remained robust also in Network Infrastructure at 5% driven by
continued strong underlying demand trends. Cloud and Networks
Services declined 3% as we work to rebalance the portfolio but with
improving gross margin. Nokia Technologies continued to deliver good
progress in its patent licensing growth areas such as au
tomotive and
consumer electronics. These areas, which were negligible in 2018, now
contribute over EUR 100 million in net sales in the past 12 months.
Our Enterprise net sales growth accelerated to 22% in constant
currency. We have strong momentum in Ente
rprise including adding 30
new private wireless customers in the quarter and a further new IP
Routing customer in
webscale
. With this momentum, we expect
Enterprise to remain our fastest growing customer segment.
While risks around timing of outstanding d
eals in Nokia Technologies
remain
,
assuming these close
we continue tracking towards the high
-
end of our net sales guidance for 2022 and towards the mid
-
point of
our operating margin guidance.
As we start to look beyond 2022, we
recogni
z
e the increasing macro and
geopolitical uncertainty within which we operate. While it could have an
impact on some of our customers’ capex spending, we currently expect
growth on a constant currency basis in our addressable markets in 2023.
Consid
ering our recent success in new 5G deals in regions like India
which are expected to ramp up strongly in 2023, we believe we are
firmly on a path to outperform the market and to make progress
towards achieving our long
-
term margin targets
.
Outlook
Full year 2022
Net sales
1
EUR 2
3.
9
billion to EUR 2
5.1
billion
(
constant currency unchanged,
adjusted
for currency)
1
Comparable operating margin
2
11 to 13.5%
Free cash flow
2
25
-
55% conversion from comparable operating profit
1
Assuming the rate 1 EUR = 0.97 USD as of 30 September 2022 continues for the remainder of 2022 along with year
-
to
-
date actual foreign exchange rates (adjusted from prior 1 EUR = 1.04 USD rate as of 30
June 2022). Assuming the 30 June 2022 exchange rate, t
he net sales outlook would continue to be EUR 23.5bn to EUR 24.7bn.
2
Please refer to Performance measures section in this report for a full explanation of how these terms are defined.
The outlook, the long
-
term targets (3
-
5 years) and all of the underlying
outlook assumptions described below are
forward
-
looking statements
subject to
a number of risks and uncertainties
as described in the Risk
Factors section later in this report.
▪
Nokia
’s outlook assumptions expect the following size and growth in
our
estimated
total
addressable markets
(
Mobile Networks excluding
China and Network Infrastructure excluding Submarine Networks
) and
assuming
year
-
to
-
date
actual
rate
s
and
1 EUR =
0.97
USD
for the
remainder of the year
(updated)
:
2022
total
addressable
market
(
€bn)
Constant
currency
growth
Mobile Networks
5
2
+
5
%
Network Infrastructure
4
8
+
5
%
Cloud and Network Services
2
8
+
3
%
Nokia
total addressable market
12
7
+
5
%
▪
Nokia’s
outlook assumptions for the operating margin of each
business group in 2022 are provided below:
Full year 2022
Mobile Networks
6.5 to 9.5%
Network Infrastructure
9.5 to 12.5%
Cloud and Network Services
4.0 to 7.0%
Nokia Technologies
>75%
▪
Nokia
expect
s
Nokia Technologies to deliver a largely stable operating
profit performance in 2022
(assuming the conclusion of
some
outstanding deals)
and over the longer
-
term
;
▪
Nokia
expect
s
the net negative impact of Group Common and Other
to be EUR 250
million in 2022 and over the longer
-
term;
▪
In full year 2022, Nokia expects the free cash flow performance of
Nokia Technologies to be approximately EUR 450 million lower than
its operating profit, primarily due to prepayments received from
certain licensee
s in previous years;
▪
Comparable financial income and expenses are
now
expected to be
an expense of approximately EUR 50
-
150
million in full year 2022 and
over the longer
-
term
.
There is
currently
greater uncertainty due to
the foreign exchange
volatility and associated
impacts
(update);
▪
Comparable income tax expenses are expected to be approximately
EUR 450 million in full year 2022 and over the longer
-
term;
▪
Cash outflows related to income taxes are expected to be
approximately EUR 400 million i
n full year 2022 and over the longer
-
term;
and
▪
Capital expenditures are expected to be approximately EUR 6
0
0
million in full year 2022 and around EUR 600 million over the longer
-
term
with some variation year
-
to
-
year (update)
.
Rule of thumb
related to
curre
ncy fluctuations: Assuming our current
mix of net sales and total costs (refer to Note 1, Basis of Preparation
in
the Financial statement information section
for details), we expect that
a 10%
strengthening
in the
USD
vs. the
EUR
would have an impact of
approximately
positive
5% on net sales
, a positive impact on operating
profit and a
slight positive
impact
to our operating margin
,
before
hedging
. In the current financial year
,
due to the impact of hedging
,
we
expect an approximat
ely neutral impact on operating profit and
a
slightly negative
impact
to operating margin.
Nokia’s long
-
term targets as published with our fourth quarter 2021
results remain unchanged.
|
|
2
0
Octo
ber
2022
3
Financial Results
Q
3
202
2
compared to Q
3
202
1
Net sales
In Q
3
202
2
, reported net sales
in
creased
1
6
%,
benefiting from
foreign exchange rate fluctuations
along with the following drivers
.
On a constant currency basis, Nokia net sales
growth
accelerated to
6
%
helped by some improvement in supply chain constraints
.
Mobile Networks
grew
12%
while Network Infrastructure
grew 5%
even against tough year
-
on
-
year comparisons.
Cloud and Network
Serv
ices net sales
declined by 3%
while
Nokia Technologies net sales
were once again negatively impacted
by
the timing of licensing
agreement renewals
, declining 19%
.
Gross margin
Reported gross margin
de
creased
6
0
basis points to
40.
1
%
in Q
3
2022
and comparable gross margin
de
creased
40
basis points to
40.
4
%
.
The
decline in
gross margin
was mainly due to
lower net
sales in Nokia Technologies
, as well as
an unfavorable impact from
foreign exchange
rate
fluctuations
.
This was partially offset by
imp
rovements in Mobile Networks gross margin.
Operating profit and margin
Reported operating profit
in Q
3
2022
was EUR
518
million, or
8.3
%
of net sales,
down
from
9.
3
% in the year
-
ago quarter
.
C
omparable
operating profit
increased
to EUR
658
million,
while
comparable
operating margin
was
10.5%,
down
from 11.7%
in the year
-
ago
quarter
.
Higher
overall
gross profit
in Q3 2022
was largely offset by
higher operating expenses
and the impact of hedging
,
which
is
recorded in other operating income and
expense
s
.
In addition to
the negative impact from foreign exchange fluctuations
and
salary
inflation
,
higher
R&D expenses
reflected continued
investments
to
build or maintain technology leadership across our portfoli
o, while
h
igher
SG&A expenses reflected
investment
s
in
areas such as
private wireless
.
The impact of hedging
in Q3 2022
was negative
EUR 45 million, compared to
a benefit of
EUR
12
million in Q3 2021.
In Q
3
202
2
, the difference between reported and comparable
operating pr
ofit was related to
the amortization of acquired
intangible assets
, the impairment and write
-
off of assets
and
restructuring and associated charges
.
In Q
3
202
1
, the difference
between reported and comparable operating profit was primarily
related to
the am
ortization of acquired intangible assets and
restructuring and associated charges
.
Profit for the period
Reported net profit
in Q3 2022
was EUR
4
28
million, compared to
EUR
351
million in Q
3
202
1
. Comparable net profit was EUR
5
51
million, compared to EUR
463
million in Q
3
202
1
. The
improvement
in
comparable net profit
reflects the increase in comparable
operating profit
,
as well as
a net positive fluctuation in
financial
income and
expenses
which
was
primarily
driven by the
positive
revaluation of embedded derivatives
related to foreign currency
orders
.
I
n
addition to the items impacting comparability included in
operating profit (and their associated tax effects), in Q3 2022 the
difference betwee
n reported and comparable net profit was related
to
the
release of cumulative exchange differences related to
the
abandonment of
a small
foreign operation and the
change in
financial liability to acquire Nokia Shanghai
-
Bell non
-
controlling
interest
.
In Q3 2021, the difference between reported and
comparable net profit was related
to
the change in financial liability
to acquire Nokia Shanghai
-
Bell non
-
controlling interest.
Earnings per share
Reported diluted EPS was EUR 0.
08
in Q3 2022
, compared to EUR
0.
0
6
in Q
3
202
1
.
Comparable diluted EPS was EUR 0.
10
in Q
3
2022
compared to EUR 0.0
8
in
Q
3
2021.
Comparable return on Invested Capital (ROIC)
Q
3
202
2
comparable ROIC was
1
7.5
%, compared to
20.2
% in Q
3
202
1
. The
de
crease
reflected
higher average invested capital for the
rolling four quarters, partly offset by
higher
operating profit
after
tax
for
the
rolling four quarters
.
The higher average invested capital
reflected
growth in average total equity, partially offset by increase
in
average total cash and interest
-
bearing financial investments and
a decrease in average total interest
-
bearing liabilities
.
Cash performance
During Q
3
202
2
, net cash
in
creased EUR
109
million, resulting in an
end
-
of
-
quarter net cash balance of approximately EUR 4.
7
billion.
T
otal cash
in
creased EUR
68
million, resulting in an end
-
of
-
quarter
total cash balance of approximately EUR 9.
3
billion.
Free cash flow
was
positive
EUR
266
million
in
Q
3
2022
, largely
generated from
operating profits
.
Shareholder distribution
Dividend
Under the authorization by the Annual General Meeting held on 5
April 2022, the Board of
Directors may resolve an aggregate
maximum distribution of EUR 0.08 per share. The authorization will
be used to distribute dividend and/or assets from the reserve for
invested unrestricted equity in four installments during the
authorization period, in co
nnection with the quarterly results, unless
the Board decides otherwise for a justified reason.
Under the authorization, a EUR 0.02 dividend was paid in Q2 2022
totaling
EUR
113 million
and a EUR 0.02 dividend was paid in Q3 2022
totaling EUR 112 million.
On 20 October 2022, the Board resolved to distribute a dividend of
EUR 0.02 per share. The dividend record date is on 25 October 2022
and the dividend will be paid on 3 November 2022. The actual
dividend payment date outside Finland will be determined by
the
practices of the intermediary banks transferring the dividend
payments.
Following this announced distribution of the third installment and
executed payments of the
previous installments
, the Board’s
remaining distribution authorization is a maximum of
EUR 0.02 per
share.
The payment of the third installment of the distribution is expected
to total approximately EUR 112 million in Q4 2022.
Share buyback program
In 2020 and 2021, Nokia generated strong cash flow which
significantly improved the cash posit
ion of the company. To
manage the company’s capital structure,
the
Board of Directors
initiated a share buyback program under the authorization from the
AGM to repurchase shares. Purchases began in February 2022. By
the end of
September
2022, Nokia has rep
urchased
50,270,648
shares for a total
purchase price
of approximately EUR
238
million,
with weighted average purchase price of EUR 4
.74
per share. The
program targets to return up to EUR 600 million of cash to
shareholders in tranches over a period of two years.
|
|
2
0
Octo
ber
2022
4
Segment Details
Mobile Networks
EUR
million
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY change
Net sales
2 851
2 315
23%
12%
7 711
6 957
11%
3%
Gross profit
1 122
876
28%
3 068
2 601
18%
Gross margin %
39.4%
37.8%
160bps
39.8%
37.4%
240bps
Operating profit
278
169
64%
739
495
49%
Operating margin %
9.8%
7.3%
250bps
9.6%
7.1%
250bps
In Q3 2022,
Mobile Networks
net sales
growth
accelerated to 23
%
on a reported basis and
12
% on a constant currency basis.
The third
quarter started to see some improvements in the supply chain
with
net sales benefiting from some catch
-
up,
while
customer demand
remain
ed
strong.
With our improved portfolio competitiven
ess,
strong order backlog, and continued investments in supply chain
resilience, we
continue to
expect to deliver net sales growth on a
constant currency basis in 2022.
Within
Mobile Networks
,
product net sales increased at a
double
-
digit rate on a constant currency
basis
while services declined
slightly.
From a regional perspective, on a constant currency basis
Mobile Networks
saw strong net sales growth in North America
,
while
Europe, Latin Am
erica and Greater China
also grew
.
Net sales
in India declined
in the quarter,
due to the timing of
5G licenses
,
with net sales expected to ramp
up
over the coming quarters
.
Favorable
regional
mix
continued to support
g
ross margin
s
in the
quarter.
Both
operating profit
and operating margin expanded in Q
3
2022
due to
higher gross profit
. This
was partly offset by higher R&D
and
SG&A
expenses, which reflected
continued investment
s
and
the
impact of
foreign exchange rate
fluctuations
.
Operating profit also
saw a negative
impact
in the quarter from
hedging and loss
allowances on certain trade receivables
.
In Q
3
2022, our System
-
on
-
Chip based
5G Powered by ReefShark
product portfolio accounted for
93
% of shipments
and remains on
track to
reach the target
of ~100% of product shipments
by the
end of 2022
.
Network Infrastructure
EUR million
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY
change
Net sales
2 211
1 915
15%
5%
6 338
5 420
17%
9%
-
IP Networks
773
668
16%
3%
2 167
1 923
13%
3%
-
Optical Networks
451
412
9%
0%
1 251
1 203
4%
(3)%
-
Fixed Networks
705
588
20%
7%
2 088
1 611
30%
19%
-
Submarine Networks
283
247
15%
17%
831
683
22%
23%
Gross profit
788
687
15%
2 234
1 917
17%
Gross margin %
35.6%
35.9%
(30)bps
35.2%
35.4%
(20)bps
Operating profit
228
187
22%
670
536
25%
Operating margin %
10.3%
9.8%
50bps
10.6%
9.9%
70bps
While
Network Infrastructure net sales faced a tough year
-
on
-
year
comparison,
s
trong end market trends
drove
15
% growth on a
reported basis and
5
% on a constant currency basis.
IP Networks
net sales grew
3
% on a constant currency basis
,
primarily
reflecting slight growth in Europe, Latin America and
Middle East and Africa, while North America was flat. Orders for FP5
-
based solutions continue to ramp
up
,
with
availability expected in
Q4 2022.
Optical Networks
net sales
were flat
on a constant curren
cy basis
a
s
a decline in Europe, which largely reflects our decision to exit Russia,
was offset by growth across most other regions.
Specific global
supply chain challenges continue to affect the optical networking
industry, although we are seeing signs of
improvement
during
the
second half of 2022, which should continue into early 2023.
Fixed Networks
grew
7
% on a constant currency basis
against a
tough year
-
ago comparison
with growth driven by on
-
going strong
fiber deployments. Regionally
,
growth was p
articularly strong in
Europe
.
Net sales in North America declined,
as continued growth in
fiber deployments were offset by a slowdown in fixed wireless
access which remains sensitive to a small number of customers
.
Submarine Networks
net sales grew
17
% on a constant currency
basis
, as webscale
-
driven project deployments continued to drive
growth
.
Gross margin
declined slightly y
ear
-
on
-
y
ear
primarily due to
foreign
exchange rate fluctuations
.
Operating prof
it
and operating margin improved year
-
o
n
-
year as
the leverage from growth was
partly
offset by higher operating
expenses largely
due
to
inflation and
foreign exchange rate
fluctuations.
|
|
2
0
Octo
ber
2022
5
Cloud and Network Services
EUR million
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY change
Net sales
801
748
7%
(3)%
2 291
2 125
8%
1%
Gross profit
312
281
11%
876
757
16%
Gross margin %
39.0%
37.6%
140bps
38.2%
35.6%
260bps
Operating profit
16
31
(48)%
30
20
50%
Operating margin %
2.0%
4.1%
(210)bps
1.3%
0.9%
40bps
Cloud and Network Services
net sales
grew 7% on a reported basis
and
declined
3%
on a constant currency basis
, as the
portfolio
rebalancing of the business continued
.
From a product perspective,
strong growth in Enterprise Solutions, which was driven by ongoing
momentum in campus wireless, was more than offset by a decline
in Core Networks.
From a regional perspective,
on a constant currency basis
Cloud
and Network Services
saw
a decline in Asia Pacific, while North
America, Middle East and Africa
,
as well as
Europe grew
.
Gross margin
expanded
140
bps
and benefited
from
favorable
regional mix and
lower
fixed production overheads
.
O
perating profit
and operating margin
declined
as the higher gross
profit was offset by increased
R&D and
SG&A expenses
, reflecting
continued investments to build on
leadership position in campus
wireless
.
Nokia Technologies
EUR million
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY change
Net sales
305
367
(17)%
(19)%
916
1 133
(19)%
(21)%
Gross profit
304
366
(17)%
913
1 129
(19)%
Gross margin %
99.7%
99.7%
0bps
99.7%
99.6%
10bps
Operating profit
207
285
(27)%
644
903
(29)%
Operating margin %
67.9%
77.7%
(980)bps
70.3%
79.7%
(940)bps
Nokia Technologies
net sales
declined year
-
on
-
year due to two
licensing agreements that ended during 2021 which are in the
process of litigation/renewal along with the
impact of market share
changes in the smartphone industry, including
a company that has
exited the smartphone market.
Q3 2022 benefited from catch
-
up
net sales in automotive and consumer electronics while net sales in
Q3 2021 benefited from a one
-
time transaction.
We continued to
see
positive traction in expanding our licensing coverage into non
-
smartphone categories with deals in automotive and consumer
electronics.
The
current annualized net sales run
-
rate continues to be below
the
prior range of approximately EUR 1.4 to 1.5 billion
in Q4 2021
,
however
,
we are in a strong position to return to this range and
remain confident in the strength of the patent portfolio. Conclusion
of negotiations
with respect to
new
licensing agreements
would
also be expected to include catch
-
up payments
to cover periods of
non
-
payment. The outlook assumption for Nokia Technologies
operating profit to be stable
in 2022 and over the longer
-
term
assumes the conclusion of these negotiations but
Nokia
will
prioritize protecting the value of our intellectual pr
operty
rather
than
achieving certain timelines
.
The decline in
operating profit
was driven by the decline in net sales
in
addition to higher
litigation and
licensing expenses
.
Group Common and Other
EUR
million
Q3'22
Q3'21
YoY
change
Constant
currency
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY
change
Constant
currency
YoY change
Net sales
84
64
31%
21%
236
183
29%
21%
Gross profit/(loss)
(4)
(5)
(6)
(10)
Gross margin %
(4.8)%
(7.8)%
300bps
(2.5)%
(5.5)%
300bps
Operating profit/(loss)
(70)
(38)
(129)
(87)
Operating margin %
(83.3)%
(59.4)%
(2 390)bps
(54.7)%
(47.5)%
(720)bps
Group Common and Other
net sales
increased
31
% on a reported
basis and
2
1
% on a constant currency basis as Radio Frequency
Systems
saw
strong growth in North America.
The
de
crease in
operating result
was
driven by
lower
profit from
Nokia’s venture fund investments, which amounted to
approximately
EUR
20
million in Q
3
2022
and related to the
net
impact
of
foreign exchange fluctuations and revaluations
, compared
to
approximately
EUR
4
0 million in Q
3
2021
, as well as higher
operating expenses
.
|
|
2
0
Octo
ber
2022
6
Net
sales by region
1
EUR million
Q3'22
Q3'21
YoY
change
Constant
currency YoY
change
Q1
–
Q3'22
Q1
–
Q3'21
YoY change
Constant
currency YoY
change
Asia Pacific
638
639
0%
(5)%
1 847
1 788
3%
0%
Europe
1 533
1 476
4%
2%
4 311
4 476
(4)%
(5)%
Greater China
415
352
18%
9%
1 225
1 119
9%
1%
India
281
250
12%
(1)%
722
787
(8)%
(17)%
Latin America
334
238
40%
20%
835
658
27%
12%
Middle East & Africa
482
420
15%
6%
1 374
1 218
13%
6%
North America
2 275
1 776
28%
10%
6 317
5 058
25%
11%
Submarine Networks
283
247
15%
17%
831
683
22%
23%
Total
6 241
5 399
16%
6%
17 462
15 788
11%
3%
1
In Q2 2022, Nokia changed how it presents net sales information on a regional basis. Nokia determined that providing net sale
s of its Submarine Networks business separately from the net sales by
region information for the rest of the Group improves the use
fulness of regional net sales information by removing volatility caused by the specific nature of the Submarine Networks busi
ness. The
comparative information for net sales by region has been recast accordingly.
Reported changes are disclosed in the table above.
The regional
commentary
below focuses on constant currency results, to exclude
the impact of foreign exchange rate fluctuation
s
.
The commentary
is based on regions excluding Submarine Networks,
given
the nature
of that business leads to significant regional volatility between
periods
.
Net sales
declined
in
Asia Pacific
as growth in Network
Infrastructure
, particularly in Fixed Networks,
was more than offset
by
decline
s
in Cloud and Network Services
and
, to a lesser extent,
Mobile Networks
.
Europe
net sales
grew
primarily due to
both Network Infrastructure
and Mobile Networks, while
Nokia Technologies (which is entirely
reported in Europe)
declined
,
as it
continued to be impacted by
expired licenses t
hat are in the process of being renewed
.
Growth in
Network Infrastructure was driven by Fixed Networks and IP
Networks.
Within
Greater China
, net sales in
creased due to
Mobile Networks
.
The
slight
decline in n
et sales in
India
was related
to
Mobile
Networks,
due to the timing of 5G licenses, with net sales expected
to ramp
up
over the coming quarters.
Net sales in
Latin America
increased primarily
due
to
Mobile
Networks
and Network Infrastructure
, particularly in Fixed Networks
.
Middle East &
Africa
witnessed growth in both
Mobile Networks
and
Cloud and Network Services
.
The strong performance in
North America
reflected double
-
digit
growth in
Mobile Networks
, as well as
growth in Cloud and Network
Services, partly offset by a decline in
Network Infrastructure,
particularly in Fixed Networks
.
Net sales by customer type
EUR million
Q3'22
Q3'21
YoY change
Constant
currency YoY
change
Q1
–
Q3'22
Q1
–
Q3'21
YoY change
Constant
currency YoY
change
Communications service providers (CSP)
5 096
4 364
17%
6%
14 272
12 739
12%
4%
Enterprise
485
368
32%
22%
1 238
1 079
15%
8%
Licensees
305
367
(17)%
(19)%
916
1 133
(19)%
(21)%
Other
1
355
300
18%
18%
1 036
836
24%
23%
Total
6 241
5 399
16%
6%
17 462
15 788
11%
3%
1
Includes net sales of Submarine Networks which operates in a different market, and Radio Frequency Systems (RFS), which is be
ing managed as a separate entity, and certain other items, such as
eliminations of inter
-
segment
revenues. Submarine Networks and RFS net sales also include revenue from communications service providers and enterprise cust
omers.
In the third quarter we saw strong growth of 6%
in constant
currency
with CSPs. We continue to s
ee strong customer demand
and whilst the supply chain situation remains challenging we did see
some improvement in the quarter helping to drive growth.
Enterprise net sales saw a strong acceleration to 2
2
% net sales
growth in constant currency in Q3 2022
as we were able to better
convert our order backlog due to the improving supply situation.
Private wireless continued to grow strongly double
-
digit and now
has more than
515
customers. Webscale also delivered strong
double
-
digit net sales and order intake
growth in the quarter.
Customer engagement also remains positive with a new webscale IP
Routing customer added in the period.
In Q3 2022, we added
73
new Enterprise customers.
Refer to the Nokia Technologies section of this report for a
discussion on net s
ales to Licensees.
The
strong growth in ‘Other’
was
due to the strength of Submarine
Networks.
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7
Q3 2022 to Q3 2021 bridge for net sales and operating profit
EUR million
Q3'22
Volume,
price, mix
and other
Foreign
exchange
impact
Items
affecting
comparability
Q3'21
Net sales
6 241
307
535
0
5 399
Operating profit
518
37
(11)
(10)
502
Operating margin %
8.3%
9.3%
The table above shows the change in net sales and operating
profit
compared to the year
-
ago quarter.
N
et sales benefit
ed
strongly
from the impact of
foreign exchange rate fluctuations
as well as
improvements from an operational standpoint
. Operating profit saw
a
positive
impact
from an operational standpoint, a
neg
ative
impact
from
foreign exchange rate fluctuations
,
as well as a
negative
impact
from
larger
items affecting comparability largely due to
the
impairment and write
-
off of assets
.
The
negative impact
to
operating profit
seen from foreign exchange rate fluc
tuations is a
combination of
an underlying benefit to operating profit related to
our mix of
currency exposures
,
which was
more than
offset by our
hedging program.
Reconciliation of reported operating profit to
comparable operating profit
EUR million
Q3'22
Q3'21
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY change
Reported operating profit
518
502
3%
1 436
1 418
1%
Amortization of acquired intangible assets
105
99
305
293
Impairment and write
-
off of assets, net of
reversals
18
(1)
13
32
Restructuring and associated charges
17
34
97
211
Costs associated with country exit
0
0
104
0
Settlement of legal disputes
0
0
0
(80)
Gain on sale of fixed assets
0
0
0
(23)
Other, net
0
(1)
0
16
Comparable operating profit
658
633
4%
1 955
1 867
5%
The comparable operating profit that Nokia discloses is intended to
provide meaningful supplemental information to both management
and investors regarding Nokia’s
underlying business performance by
excluding certain items of income and expenses that may not be
indicative of Nokia’s business operating results. Comparable
operating profit is used also in determining management
remuneration.
In Q
3
2022 the adjustments related to
the
amortization of acquired
intangible assets which is primarily related to purchase price
allocation
of the Alcatel
-
Lucent acquisition
, the impairment and
write
-
off of assets
related to
real estate properties
, as well as
restructuring charges related to the ongoing restructuring program
(discussed
later in this interim report
).
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|
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8
Cash and cash flow in Q
3
202
2
EUR million, at end of period
Q3'22
Q2'22
QoQ change
Q4'21
YTD change
Total
cash and interest
-
bearing financial investments
9 251
9 183
1%
9 268
0%
Net cash and interest
-
bearing financial investments
1
4 655
4 546
2%
4 615
1%
1
Net cash and interest
-
bearing financial investments does not include lease liabilities. For
details, please refer to the Performance measures section in this report.
Free cash flow
During Q3 2022, Nokia’s free cash flow was positive EUR 266 million,
generated from operating profit
,
partly offset by cash outflows
related to net working capital, as well as capital expenditures,
restructuring and income taxes.
Net cash
used in
operating activities
Net cash
used in
operating activities was driven by:
▪
Nokia’s adjusted profit of EUR
863
m
illion.
▪
Approximately EUR
60
million of restructuring and associated
cash outflows, related to our current and previous cost savings
programs.
▪
Excluding the restructuring and associated cash outflows, the
de
crease in net cash related to net working capital
was
approximately EUR
300
million, as follows:
o
The
in
crease in receivables was approximately EUR
610
million,
primarily
related to
account
s
receivable
and the
decrease in the balance sheet impact of the sale of
receivables in the quarter
.
o
The
in
crease in
inventories was approximately EUR
480
million,
reflecting
continued
efforts
to increase inventories
amidst
the challenging
supply chain
environment
, as well as
building inventory for upcoming deployments in India
.
o
The
increase
in liabilities was approximately EUR
790
million
,
primarily related to
an increase in accounts payable, as well as
accruals for 2022 performance
-
related employee variable pay
.
▪
An outflow related to cash taxes of approximately EUR
100
million.
▪
An outflow r
elated to net interest of approximately EUR
20
million.
Net cash used in investing activities
▪
Net cash used in investing activities was related primarily to
capital expenditures of
approximately EUR
120
million
and
approximately EUR 20 million related to
a contingent
consideration
from a prior
acquisition
.
Net cash used in financing activities
▪
Net cash used in financing activities was related primarily to
dividend payments of approximately EUR
110
million,
the
acqui
sition
of treasury shares of approximately EUR
90
million
and lease payments of approximately EUR
50
million
.
Change in total cash and net cash
In Q
3
202
2
, the approximately EUR
40
million difference between
the change in total cash and net cash was primar
ily due to
changes
in the carrying amounts of certain issued bonds, as a result
of
interest rate fluctuations
, partially offset by foreign exchange rate
fluctuations
.
|
|
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Octo
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2022
9
January
-
September
2022 compared to
January
–
September
2021
Net sales
In the first
nine
months of 2022, reported net sales increased
11
%,
benefiting from foreign exchange rate fluctuations.
On a constant currency basis, Nokia net sales increased
3
%
in the
first
nine
months of 2022
,
despite the impact of
wider
supply chain
constraints. Performance was
driven by strong growth in Network
Infrastructure
,
robust growth in
Mobile Networks and sligh
t growth
in Cloud and Network Services
. Nokia Technologies net sales were
negatively impacted by the timing of licensing agreement renewals.
Gross margin
Both reported and comparable gross margin improved year
-
on
-
year in the first
nine
months of 2022. Rep
orted gross margin
increased
40
basis points to 40.
3
%
and comparable gross margin
increased
1
0 basis points to 40.
6
%. The
slight
gross margin
expansion was delivered despite lower net sales in Nokia
Technologies and was primarily driven by
continued progress in
both
Mobile Networks
and
Cloud and Network Services.
Operating profit and margin
Reported operating profit in the first
ni
ne
months of 2022 was
EUR
1 436
million, or 8.2% of net sales, down from
9.0
% in the year
-
ago period. Comparable operating profit increased to EUR 1 9
55
million, while
comparable
operating margin was down year
-
on
-
year
at 11.
2
%. While gross profit increase
d in the first
nine months
of
2022 due to higher net sales, this was largely offset by higher
operating expenses, which were negatively impacted by foreign
exchange fluctuations, as well as lower other operating income. R&D
expenses increased year
-
on
-
year,
reflecting our commitment to
build or maintain technology leadership across our portfolio.
Other
operating income decreased year
-
on
-
year due to the absence of
certain
other operating income items that benefited the year
-
ago
period, as well as lower profits from Nokia’s venture funds.
S
G&A
expenses increased related to
higher salary expenses and
investments we are making in areas such as private wireless
.
Additionally,
operating expenses benefited year
-
on
-
year from lower
variable pay accruals
.
The impact of h
edging
was a negative
EUR
74
million
in
the first nine months of 2022
, compared to a benefit of
EUR
44
million in
year
-
ago period
.
In the first
nine
months of 2022,
the difference between reported
and comparable operating profit was related to
the amortization of
acquired intangible assets, a provision related to Russia,
restructuring and associated charges
, as well as an impairment and
write
-
off of assets
. In the first
nine
months of 2021, the difference
between reported and comparable operating profit was primarily
related to the amortization of acquired intangible assets
,
restructuring and associated charges
,
the impairment
and write
-
off
of assets
and th
e fair value changes of a legacy IPR fund
, partly
offset by a gain related to the settlement of legal disputes and a
gain related the sale of fixed assets.
Profit for the period
Reported net profit in the first
nine
months of 2022 was EUR
1 1
07
million, co
mpared to EUR
965
million in the year
-
ago period.
Comparable net profit was EUR 1
5
52
million, compared to
EUR
1 377
million in the year
-
ago period. The improvement in
comparable net profit reflects
lower financial expenses
, an increase
in comparable oper
ating profit, as well as lower
income tax
expenses, partly offset by lower share of results of associated
companies and joint ventures.
In the first
nine months
of 2022, in addition to the items impacting
comparability included in operating profit (and th
eir associated tax
effects), the difference between reported and comparable net
profit was related to loss allowances on customer financing loans
,
the release of cumulative exchange differences related to
abandonment of foreign operations
and
by the change in financial
liability to acquire Nokia Shanghai Bell non
-
controlling interest. In
the first
nine months
of 2021, in addition to the items impacting
comparability included in operating profit (and their associated tax
effects), the difference
between reported and comparable net
profit was related to the change in financial liability to acquire Nokia
Shanghai Bell non
-
controlling interest
and a deferred tax expense
due to tax rate changes
.
Earnings per share
Reported diluted EPS in the first
n
ine
months of 2022 was EUR 0.
19
,
compared to EUR 0.1
7
in the year
-
ago period. Comparable diluted
EPS in the first
nine
months of 2022 was EUR 0.
2
7
compared to
EUR 0.
24
in the year
-
ago period.
Cash performance
During the first
nine
months of 2022, net cash
in
creased
EUR
40
million, resulting in an end
-
of
-
period net cash balance of
approximately EUR 4.
7
billion. Total cash decreased EUR
17
million,
resulting in total cash balance of approximately EUR 9.
3
billion. Free
cash flow was
EUR
476
million in the first
nine
months of 2022
.
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|
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10
S
ustainability
Our strategy and focus areas
At Nokia, we create technology that helps the world act together. Connectivity and digitalization play a critical role in hel
ping t
o solve many
of the world’s greatest challenges. Our sustainability strategy is focused on the areas we believe will have the greatest imp
act on
sustainable development and our profitability: climate, integrity and culture.
Climate
In Q3
2022
, we were honoured to receive the RE100 best newcomer
award as part of the 2022 RE100 Awards roster. This award
recognises the newest RE100 members making significant
reductions to their carbon emissions. While the energy used in
Nokia’s
facilities and fleet (scope 1 and 2 emissions) accounts for
only 1 percent of total emissions, Nokia continues to take action to
minimize its footprint. Nokia joined RE100 earlier this year as part of
its target to move to 100% renewable electricity by 202
5.
Integrity
With the potential risk of misuse of technology and broader use of
artificial intelligence
(AI)
, it’s critical to ensure ethical design and
delivery. Therefore, we published our Six Pillars of Responsible AI,
that should guide all AI research
and development in the future. We
believe these principles should be applied the moment any new AI
solution is conceived and then enforced throughout its
development, implementation and operation stages. Our six pillars
of responsible AI are: Fairness, Re
liability, Privacy, Transparency,
Sustainability and Accountability.
To complement our Ethical Business mandatory training and bring
our Code of Conduct to life, we have developed “just
-
in
-
time”
training modules. These modules focus on individual topics an
d are
delivered in response to an automated trigger indicating when the
training is most valuable. The first module provides information
regarding our investigation process and is provided to any individual
who raises a concern through our hotline. The sec
ond module
addresses competition law risks and is provided to employees
attending trade conferences or industry meetings. Other modules
under development focus on risks including gifts and hospitality,
and projects that include site acquisition activities.
Culture
Our recent annual “Checking Nokia’s Heartbeat” survey yielded a
very high participation rate of 66%, double the market average, and
provid
ed
strong feedback on employee satisfaction scores across
many categories. From this survey we assessed that
83% of
participants experience an inclusive culture and 85% are proud to
represent Nokia’s brand, both these values increased from previous
surveys and are well above market average according to industry
norms.
The survey also shows continued improvement
in living our Nokia
Essentials culture principles
-
Open, Fearless and Empowered. We
specifically see a strong progress on empowerment compared to
2021.
Personal development and growth are core to our people strategy
and in Q3
2022
we launched a new Techni
cal Career Path that
enables our experts in technical fields to build career paths aligned
with their personal aspirations and supports the development of
critical skills for the future.
In Q3
2022
Nokia also completed two key UN Women projects. In
Kenya
we finalized the “Action for Education” pilot, engaging
schoolgirls and delivering an inspiring, role model driven STEM
concept. After the pilot the number of girls choosing a STEM
subject has increased by 22% and the school reports an increase of
motivati
on and confidence among the participants. Nokia also
finalized the “Action for Leadership” program in partnership with
Deutsche Telekom Group and UN Women. Besides a visible
empowerment of female leadership behavior shown by the
participants, the program a
lso delivered four business related
proposals addressing social sustainability.
Improving lives
The technology Nokia provides can help connect the unconnected,
close the digital divide and provide equal access to opportunity. In
Q3
2022
, we announced a partnership with Broadband.money to
help local broadband providers connect unserved and underserved
communities in the US. Local broadband service providers and
communities throughout America use the Broadband.money
platform to research, d
evelop, and submit broadband grant
proposals.
Nokia will add its expertise and market
-
leading innovation to the
platform, accessible to users in the form of tutorials, blueprint
network designs and tools to help work out the equipment they will
need, furt
her simplifying the grant application process.
|
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11
Additional information
Cost savings program
In Q1 2021, we announced plans to reset our cost base, targeting a
reduction of approximately EUR 600 million by the end of 2023.
Given the strength in our end markets, the pace of restructuring
continues to be slower than we initially planned. The overal
l size of
the plan
,
however
,
remains unchanged and continues to depend on
the evolution of our end markets
,
consistent with our commentary
when we announced the plan.
We
continue to
expect these cost savings to result in approximately
EUR 500
-
600 million of restructuring and associated charges by
2023.
We
continue to expect
total restructuring and associated cash
outflows to be approximately EUR 1 050
-
1 150 million. This total
includ
es approximately EUR 500 million of cash outflows related to
our previous restructuring program.
In EUR million, rounded to the nearest EUR 50 million
Actual
Expected amounts for
Total
amount
1
2021
2022
2023
Beyond
2023
Recurring gross cost savings
150
250
100
100
600
-
cost of sales
50
100
50
50
250
-
operating expenses
100
150
50
50
350
Restructuring and associated charges related to our most recent cost savings program
250
~100
~200
500
-
600
Restructuring and associated cash outflows
2
350
~300
~250
~200
1 050
–
1 150
1
Savings expected by end of 2023.
2
Includes cash outflows related to the most recent cost savings program, as well as the remaining cash outflows
related to our previous programs.
Restructuring and associated charges by Business Group
In EUR million, rounded to the nearest EUR 50 million
Mobile Networks
300
–
350
Network
Infrastructure
~100
Cloud and Network Services
100
–
150
Total restructuring and associated charges
500
–
600
Significant events
January
–
September
202
2
On 3 February 2022, Nokia
announced that its Board of Directors is
initiating a share buyback program to return up to EUR 600 million
of cash to shareholders in tranches over a period of two years.
Nokia launched the first phase of the program on 11 February 2022
with repurchases s
tarting on 14 February 2022.
On 5 April 2022, Nokia held its Annual General Meeting (AGM) at its
headquarters in Espoo under special arrangements due to the
COVID
-
19 pandemic. Approximately 59 300 shareholders
representing approximately 3 063 million share
s and votes were
represented at the meeting. The following resolutions were made:
▪
The financial statements were adopted
and the Board and
President and CEO were discharged from liability for financial year
2021.
▪
The AGM decided that no dividend is distributed by a resolution
of the Annual General Meeting and authorized the Board of
Directors to resolve in its discretion on
the distribution of an
aggregate maximum of EUR 0.08 per share as dividend from the
retained earnings and/or as assets from the reserve for invested
unrestricted equity (equity repayment).
▪
Sari Baldauf, Bruce Brown, Thomas Dannenfeldt, Jeanette Horan,
Edw
ard Kozel, Sren Skou and Carla Smits
-
Nusteling were
reelected as members of the Board of Directors for a term
ending at the close of the next AGM. In addition, the AGM
resolved to elect Lisa Hook, Thomas Saueressig and Kai Öistämö
as new members of the Bo
ard of Directors for the same term of
office. In an assembly meeting that took place after the AGM, the
Board elected Sari Baldauf as Chair of the Board, and Sren Skou
as new Vice Chair of the Board.
▪
The annual fees of the Board members were increased by
EUR 10 000 except for the Board Chair.
▪
Remuneration Report of the company's governing bodies was
supported.
▪
Deloitte Oy was re
-
elected as the auditor for Nokia for the
financial year 2023.
▪
Board was authorized to resolve to repurchase a maximum of
550
million Nokia shares and to issue a maximum of 550 million
shares through issuance of shares or special rights entitling to
shares in one or more issues. The authorizations are effective
until 4 October 2023 and they terminated the corresponding
authorizat
ions granted by the AGM on 8 April 2021.
On 12 April 2022, Nokia announced its intention to exit the Russian
market. Nokia will aim to provide the necessary support to maintain
the networks already present as we exit the market. Nokia sees this
as the most
responsible course of action to take. Nokia recognized
a provision of EUR 104 million in Q1 2022 in relation
to Russia.
Russia
accounted for less than 2% of Nokia’s net sales in 2021. In Q
3
2022,
our net sales in Russia declined approximately EUR
70
milli
on year
-
over
-
year, however, the impact was mitigated by strong demand
from other regions, considering ongoing supply constraints.
On 6 May 2022, Nokia announced that its Chief People Officer,
Stephanie Werner
-
Dietz, had informed the company that she will
l
eave and step down from the Group Leadership Team to take up a
position in another company. Werner
-
Dietz left the company on 26
August 2022.
On 13 September 2022, Nokia announced that it has appointed Amy
Hanlon
-
Rodemich as Chief People Officer and member
of the Group
|
|
2
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Octo
ber
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12
Leadership Team, effective 24 October 2022. Hanlon
-
Rodemich
joins Nokia from GlobalLogic, a leading company in digital product
engineering, where she was Chief People Officer
.
After September 2022
On 6 October 2022, Nokia announced that its
Chief Legal Officer,
Nassib Abou
-
Khalil, has decided to leave Nokia and step down from
its Group Leadership Team. A recruitment process began
immediately for his successor.
Shares
The total number of Nokia shares on 3
0
September
202
2
, equaled
5
696
261
159. On 3
0
September
202
2
,
Nokia and its subsidiary
companies
held
95 848 838
Nokia shares, representing
approximately
1.
7
% of the total number of Nokia sha
res and voting
rights.
Risk Factors
Nokia and its businesses are exposed to a number of
risks and
uncertainties which include but are not limited to:
▪
Competitive intensity, which is expected to continue at a high
level;
▪
Our ability to ensure competitiveness of our product roadmaps
and costs through additional R&D investments;
▪
Our ability to
procure certain standard components and the costs
thereof, such as semiconductors;
▪
Disturbance in the global supply chain;
▪
Accelerating inflation, increased global macro
-
uncertainty, major
currency fluctuations and higher interest rates
;
▪
Scope and duratio
n of the COVID
-
19 pandemic, and its economic
impact;
▪
War or other geopolitical conflicts
,
disruptions
and potential costs
thereof;
▪
Other macroeconomic, industry and competitive developments;
▪
Timing and value of new and existing patent licensing agreements
with smartphone vendors, automotive companies, consumer
electronics companies and other licensees;
▪
Results in brand and technology licensing; costs to protect and
enforce our intellectual property rights; and the regulatory
landscape for patent licensing;
▪
Timing of completions and acceptances of certain projects;
▪
Our product and regional mix;
▪
Uncertainty in forecasting income tax expenses and cash
outflows, over the long
-
term, as they are also subject to possible
changes due to business mix, the timing of
patent licensing cash
flow and changes in tax legislation, including potential tax reforms
in various countries and OECD initiatives;
▪
Our ability to utilize our US and Finnish deferred tax assets and
their recognition on our balance sheet;
▪
Our ability to m
eet our sustainability and other ESG targets,
including our targets relating to greenhouse gas emissions; as
well the risk factors specified under Forward
-
looking
s
tatements
of this report, and our 202
1
annual report on Form 20
-
F
published on
3
March 202
2
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, benefit
s or
outlook related to our strategies, product launches, growth
management, sustainability and other ESG targets, operational key
performance indicators and decisions on market exits; B)
expectations, plans or benefits related to future performance of
our
businesses (including the expected impact, timing and duration
of COVID
-
19 and the general macroeconomic conditions on our
businesses, our supply chain and our customers’ businesses) and
any future dividends and other distributions of profit; C)
expectati
ons and targets regarding financial performance and
results of operations, including market share, prices, net sales,
income, margins, cash generation, the timing of receivables,
operating expenses, provisions, impairments, taxes, currency
exchange rates,
hedging, investment funds, inflation, product cost
reductions, competitiveness, revenue generation in any specific
region, and licensing income and payments; D) ability to execute,
expectations, plans or benefits related to changes in organizational
struct
ure and operating model; 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
uncertai
nties, 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.
Th
ese 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
circums
tances 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.
|
|
2
0
Octo
ber
2022
13
Financial statement information
Consolidated income statement (condensed)
EUR million
Reported
Comparable
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Net sales
(Notes 2, 3)
6 241
5 399
17 462
15 788
6 241
5 399
17 462
15 788
Cost of sales
(3 736)
(3 203)
(10 426)
(9 488)
(3 719)
(3 194)
(10 377)
(9 394)
Gross profit
(Note 2)
2 505
2 196
7 035
6 300
2 522
2 205
7 084
6 394
Research and development expenses
(1 165)
(1 036)
(3 328)
(3 096)
(1 139)
(1 007)
(3 261)
(2 992)
Selling, general and
administrative expenses
(771)
(674)
(2 174)
(2 034)
(674)
(583)
(1 878)
(1 719)
Other operating income and expenses
(52)
16
(97)
248
(51)
19
8
185
Operating profit
(Note 2)
518
502
1 436
1 418
658
633
1 955
1 867
Share of results of
associated companies and joint ventures
(20)
(7)
(52)
(11)
(20)
(7)
(52)
(11)
Financial income and expenses
12
(50)
(78)
(173)
29
(47)
(38)
(138)
Profit before tax
509
446
1 306
1 234
667
580
1 864
1 718
Income tax expense (Note 5)
(93)
(95)
(245)
(261)
(116)
(117)
(312)
(341)
Profit from continuing operations
417
350
1 061
973
551
463
1 552
1 377
Profit/(loss) from discontinued operations
11
1
46
(8)
0
0
0
0
Profit for the period
428
351
1 107
965
551
463
1 552
1 377
Attributable to
Equity holders of the parent
427
342
1 096
947
550
454
1 542
1 359
Non
-
controlling interests
1
9
11
18
1
9
11
18
Earnings per share, EUR
(for profit attributable to equity holders of the
parent)
Basic
Continuing operations
0.07
0.06
0.19
0.17
0.10
0.08
0.27
0.24
Profit for the period
0.08
0.06
0.19
0.17
0.10
0.08
0.27
0.24
Diluted
Continuing operations
0.07
0.06
0.18
0.17
0.10
0.08
0.27
0.24
Profit for the period
0.08
0.06
0.19
0.17
0.10
0.08
0.27
0.24
Average number of shares ('000 shares)
Basic
Continuing operations
5 607 165
5 631 572
5 622 247
5 628 367
5
607 165
5 631 572
5 622 247
5 628 367
Profit for the period
5 607 165
5 631 572
5 622 247
5 628 367
5 607 165
5 631 572
5 622 247
5 628 367
Diluted
Continuing operations
5 667 603
5 691 352
5 677 823
5 671 235
5 667 603
5 691
352
5 677 823
5 671 235
Profit for the period
5 667 603
5 691 352
5 677 823
5 671 235
5 667 603
5 691 352
5 677 823
5 671 235
The above condensed consolidated income statement should be read in conjunction with accompanying notes.
|
|
2
0
Octo
ber
2022
14
Consolidated statement of comprehensive income (condensed)
EUR million
Reported
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Profit for the period
428
351
1 107
965
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans
(268)
1 850
(47)
2 942
Income tax related to items that will not be reclassified to profit or
loss
58
(450)
(22)
(733)
Items that may be reclassified subsequently to profit or loss
Translation differences
951
347
2 191
779
Net investment hedges
(205)
(75)
(476)
(154)
Cash flow and other hedges
(7)
(7)
12
(10)
Financial assets at
fair value through other comprehensive income
(15)
(2)
(31)
9
Other changes, net
(2)
1
(3)
1
Income tax related to items that may be reclassified subsequently to profit or loss
1
0
1
1
Other comprehensive income, net of tax
513
1 664
1 625
2 835
Total comprehensive income for the period
941
2 015
2 732
3 800
Attributable to:
Equity holders of the parent
939
2 004
2 718
3 777
Non
-
controlling interests
2
11
14
23
The above condensed consolidated statement of comprehensive income should be read in conjunction with accompanying notes.
|
|
2
0
Octo
ber
2022
15
Consolidated statement of financial position (condensed)
EUR million
30 September 2022
30 September 2021
31 December 2021
ASSETS
Goodwill
6 048
5 348
5 431
Other intangible assets
1 434
1 708
1 620
Property, plant and equipment
1 958
1 807
1 924
Right
-
of
-
use assets
992
910
884
Investments in associated companies and joint ventures
193
219
243
Other
non
-
current financial investments (Note 6)
924
711
758
Deferred tax assets (Note 5)
1 269
1 018
1 272
Other non
-
current financial assets (Note 6)
296
336
325
Defined benefit pension assets (Note 4)
7 782
7 602
7 740
Other non
-
current
receivables
236
251
255
Non
-
current interest
-
bearing financial investments (Note 6)
715
0
0
Non
-
current assets
21 849
19 909
20 452
Inventories
3 434
2 482
2 392
Trade receivables (Note 6)
5 337
4 557
5 382
Contract assets
1 210
1 232
1 146
Other current receivables
1 149
872
859
Current income tax assets
343
301
214
Other current financial assets (Note 6)
1 007
277
336
Current interest
-
bearing financial investments (Note 6)
3 340
2 478
2 577
Cash and cash equivalents (Note 6)
5 196
6
903
6 691
Current assets
21 015
19 102
19 597
Total assets
42 864
39 010
40 049
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital
246
246
246
Share issue premium
464
425
454
Treasury shares
(586)
(352)
(352)
Translation
differences
1 316
(673)
(396)
Fair value and other reserves
4 131
4 121
4 219
Reserve for invested unrestricted equity
15 783
15 724
15 726
Accumulated deficit
(1 669)
(3 200)
(2 537)
Total capital and reserves attributable to equity holders of the
parent
19 686
16 292
17 360
Non
-
controlling interests
112
100
102
Total equity
19 797
16 392
17 462
Long
-
term interest
-
bearing liabilities (Notes 6, 8)
4 364
4 524
4 537
Long
-
term lease liabilities
882
832
824
Deferred tax liabilities
329
274
282
Defined benefit pension and post
-
employment liabilities (Note 4)
2 744
3 508
3 408
Contract liabilities
187
410
354
Deferred revenue and other non
-
current liabilities
195
482
436
Provisions (Note 7)
663
675
645
Non
-
current liabilities
9 363
10 706
10
486
Short
-
term interest
-
bearing liabilities (Notes 6, 8)
232
557
116
Short
-
term lease liabilities
215
198
185
Other financial liabilities (Note 6)
1 430
791
762
Current income tax liabilities
185
146
202
Trade payables (Note 6)
4 696
3 231
3 679
Contract liabilities
2 174
2 524
2 293
Deferred revenue and other current liabilities (Note 6)
3 967
3 686
3 940
Provisions (Note 7)
804
780
924
Current liabilities
13 704
11 913
12 101
Total shareholders' equity and liabilities
42 864
39 010
40 049
Shareholders' equity per share, EUR
3.52
2.89
3.08
Number of shares (1 000 shares, excluding treasury shares)
5 600 412
5 634 554
5 634 994
The above condensed consolidated statement of financial position should be read in conjunction with accompanying notes.
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|
2
0
Octo
ber
2022
16
Consolidated statement of cash flows (condensed)
EUR million
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Cash flow from operating
activities
Profit for the period
428
351
1 107
965
Adjustments
435
464
1 263
1 391
Depreciation and amortization
287
274
844
818
Restructuring charges
13
21
72
169
Financial income and expenses
(15)
48
62
171
Income tax expense
83
95
241
261
Gain from other non
-
current financial investments
(19)
(43)
(115)
(135)
Other
86
69
159
107
Cash from operations before changes in net working capital
863
815
2 370
2 356
Change in net working capital
(359)
(31)
(1 076)
105
(Increase)/
decrease in receivables
(606)
(57)
126
957
Increase in inventories
(482)
(66)
(934)
(180)
Increase/(decrease) in non
-
interest
-
bearing liabilities
729
92
(268)
(672)
Cash from operations
504
784
1 294
2 461
Interest received
19
10
46
35
Interest paid
(34)
(28)
(144)
(150)
Income taxes paid, net
(98)
(37)
(289)
(207)
Net cash from operating activities
391
729
907
2 139
Cash flow from investing activities
Purchase of property, plant and equipment and intangible assets
(116)
(129)
(406)
(401)
Proceeds from sale of property, plant and equipment and intangible assets
0
8
33
56
Acquisition of businesses, net of cash acquired
(20)
0
(20)
(33)
Purchase of interest
-
bearing financial investments
(1 079)
(1 009)
(2 591)
(1 594)
Proceeds from maturities and sale of interest
-
bearing financial investments
770
32
1 137
250
Purchase of other non
-
current financial investments
(26)
(13)
(102)
(55)
Proceeds from sale of other non
-
current financial investments
17
111
44
244
Foreign exchange hedging of cash and cash equivalents
(5)
(33)
(51)
(38)
Other
1
1
8
9
Net cash used in investing activities
(458)
(1 032)
(1 948)
(1 562)
Cash flow from financing activities
Acquisition of treasury shares
(94)
0
(234)
0
Proceeds from long
-
term borrowings
0
2
8
17
Repayment of long
-
term borrowings
0
0
(1)
(482)
Proceeds from/(repayment of) short
-
term borrowings
19
(13)
32
(63)
Payment of principal portion of lease liabilities
(47)
(67)
(170)
(170)
Dividends paid
(114)
(1)
(229)
(4)
Net cash used in financing activities
(236)
(79)
(594)
(702)
Translation differences
42
33
140
88
Net decrease in cash and cash equivalents
(261)
(349)
(1 495)
(37)
Cash and cash equivalents at beginning of period
5 457
7 252
6
691
6 940
Cash and cash equivalents at end of period
5 196
6 903
5 196
6 903
Consolidated statement of cash flows combines cash flows from both the continuing and the discontinued operations. In Q3'22,
net cash from operating
activities include cash inflows of EUR 8 million related to Nokia’s discontinued operations. In Q1
-
Q3'22, n
et cash from operating activities and net cash used in
investing activities include cash inflows of EUR 27 million and EUR 29 million, respectively, related to discontinued operati
ons. These discontinued operations'
cash flows mostly relate to refunds rece
ived from Indian tax authorities. Cash flows related to discontinued operations were nil in Q3'21 and Q1
-
Q3'21. The
figures in the consolidated statement of cash flows cannot be directly traced from the statement of financial position withou
t additional in
formation as a result
of acquisitions and disposals of subsidiaries and net foreign exchange differences arising on consolidation.
The above condensed consolidated statement of cash flows should be read in conjunction with accompanying notes.
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2
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Octo
ber
2022
17
Consolidated statement of changes in shareholders' equity (condensed)
EUR million
Share
capital
Share issue
premium
Treasury
shares
Translation
differences
Fair value
and other
reserves
Reserve for
invested
unrestricted
equity
Accumulated
deficit
Attributable to
equity holders
of the parent
Non
-
controlling
interests
Total
equity
1 January 2021
246
443
(352)
(1 295)
1 910
15 656
(4 143)
12 465
80
12 545
Profit for the period
0
0
0
0
0
0
947
947
18
965
Other comprehensive income
0
0
0
622
2 211
0
(2)
2 830
5
2 835
Total comprehensive income
0
0
0
622
2 211
0
945
3 777
23
3 800
Share
-
based payments
0
75
0
0
0
0
0
75
0
75
Settlement of share
-
based payments
0
(93)
0
0
0
68
0
(24)
0
(24)
Dividend
0
0
0
0
0
0
0
0
(3)
(3)
Other movements
0
0
0
0
0
0
(1)
(1)
0
(1)
Total transactions with owners
0
(18)
0
0
0
68
(1)
49
(3)
46
30 September 2021
246
425
(352)
(673)
4 121
15 724
(3 200)
16 292
100
16 392
1 January 2022
246
454
(352)
(396)
4 219
15 726
(2
537)
17 360
102
17 462
Profit for the period
0
0
0
0
0
0
1 096
1 096
11
1 107
Other comprehensive income
0
0
0
1 712
(88)
0
(2)
1 622
3
1 625
Total comprehensive income
0
0
0
1 712
(88)
0
1 094
2 718
14
2 732
Share
-
based payments
0
108
0
0
0
0
0
108
0
108
Settlement of share
-
based payments
0
(98)
0
0
0
72
0
(26)
0
(26)
Acquisition of treasury shares
1
0
0
(234)
0
0
(15)
0
(249)
0
(249)
Dividend
0
0
0
0
0
0
(225)
(225)
(4)
(230)
Total transactions with owners
0
10
(234)
0
0
57
(225)
(392)
(4)
(397)
30 September 2022
246
464
(586)
1 316
4 131
15 783
(1 669)
19 686
112
19 797
1
Treasury shares are acquired as part of the share buyback program announced on 3 February 2022. Shares are repurchased using
funds in the reserve for invested
unrestricted equity.
The above condensed consolidated statement of changes in shareholders' equity should be read in conjunction with accompanying
notes.
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2
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Octo
ber
2022
18
Notes to Financial statements
1. BASIS OF PREPARATION
This unaudited and condensed consolidated
financial statement information of Nokia has been prepared in accordance with IAS 34, Interim Financial Reporting, and it sho
uld
be read in conjunction with the consolidated financial statements for 2021 prepared in accordance with IFRS as published by t
he
IASB and adopted by the EU. The same
accounting policies, methods of computation and applications of judgment are followed in this financial statement information
as was followed in the consolidated financial
statements for 2021. Percentages and figures p
resented herein may include rounding differences and therefore may not add up precisely to the totals presented and may
vary from previously published financial information. This financial report was authorized for issue by the Board of Director
s on 20 Oct
ober 2022.
Net sales and operating profit of the Nokia Group, particularly in Mobile Networks, Network Infrastructure and Cloud and Netw
ork Services segments, are subject to seasonal
fluctuations being generally highest in the fourth quarter and lowest in
the first quarter of the year. This is mainly due to the seasonality in the spending cycles of
communications service providers.
Management has identified regions as the relevant category to present disaggregated revenue. Nokia's primary customer base co
nsists of companies that operate on a
country specific or a regional basis and are subject to macroeconomic conditions specific to those regions. Further, although
Nokia’s technology cycle is similar around the
world, each country or region is inherently i
n a different stage of that cycle, often influenced by macroeconomic conditions. Each reportable segment, as described in Not
e 2,
Segment information, operates in every region as described in Note 3, Net sales. No reportable segment has a specific revenue
concentration in any region other than Nokia
Technologies, which is included in Europe. Each type of customer, as disclosed in Note 3, Net sales, operates in all regions.
In 2017, Nokia and China Huaxin Post & Telecommunication Economy Development Center
(China Huaxin) commenced operations of the joint venture Nokia Shanghai Bell
(NSB). China Huaxin obtained the right to fully transfer its ownership interest in NSB to Nokia in exchange for a future cash
settlement. To reflect this obligation, Nokia
derecog
nized the non
-
controlling interest and records a financial liability in current liabilities in line with the option exercise period. Any ch
anges in the estimated future cash
settlement are recorded in financial income and expense.
Nokia announced on 12 Ap
ril 2022 its intention to exit the Russian market. Nokia will aim to provide the necessary support to maintain the networks a
lready present as we
exit the market. Nokia sees this as the most responsible course of action to take. Nokia recognized a provisio
n of EUR 104 million in Q1 2022 related to Russia.
Comparable and constant currency measures
Nokia presents financial information on a reported, comparable
and constant currency basis. Comparable measures presented in this document exclude intangible asset
amortization and other purchase price fair value adjustments, goodwill impairments, restructuring related charges and certain
other items affecting compar
ability. In order
to allow full visibility on determining comparable results, information on items affecting comparability is presented separat
ely for each of the components of profit or loss.
Constant currency reporting provides additional information o
n change in financial measures on a constant currency basis in order to better reflect the underlying business
performance. Therefore, change in financial measures at constant currency excludes the impact of changes in exchange rates in
comparison to euro,
our reporting currency.
As comparable or constant currency financial measures are not defined in IFRS they may not be directly comparable with simila
rly titled measures used by other companies,
including those in the same industry. The primary rationale
for presenting these measures is that the management uses these measures in assessing the financial
performance of Nokia and believes that these measures provide meaningful supplemental information on the underlying business
performance of Nokia. These fin
ancial
measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance wi
th IFRS. For further details on performance
measures used by Nokia and reconciliations to the closest IFRS
-
defined measures,
refer to the Performance measures section accompanying this consolidated financial
statement information.
Foreign exchange rates
Nokia’s net sales are derived from various countries and invoiced in various currencies. Therefore, our business and results
from operations are exposed to changes in
foreign exchange rates between the euro, our reporting currency, and other currencies, su
ch as the US dollar and the Chinese yuan. To mitigate the impact of changes in
exchange rates on our results, we hedge operative forecasted net foreign exchange exposures, typically within a 12
-
month horizon, and apply hedge accounting in the
majority of c
ases.
The below table shows the exposure to different currencies for net sales and total costs.
Q3'22
Q3'21
Q2'22
Net sales
Total costs
Net sales
Total costs
Net sales
Total costs
EUR
~20%
~25%
~25%
~25%
~20%
~25%
USD
~55%
~50%
~50%
~50%
~55%
~50%
CNY
~5%
~5%
~5%
~5%
~5%
~5%
Other
~20%
~20%
~20%
~20%
~20%
~20%
Total
100%
100%
100%
100%
100%
100%
End of Q3'22 balance sheet rate 1 EUR = 0.97 USD, end of Q3'21 balance sheet rate 1 EUR = 1.16 USD and end of Q2'22 balance
sheet rate 1 EUR = 1.04 USD
New and amended standards and interpretations
The amendments to IFRS standards that became effective on 1 January 2022, did not have a material impact on Nokia's consolida
ted financial statements. New standards
and
amendments to existing standards issued by the IASB that are not yet effective are not expected to have a material impact on
Nokia's consolidated financial statements
when adopted.
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Octo
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19
2. SEGMENT INFORMATION
Nokia has four operating and
reportable segments for the financial reporting purposes: (1) Mobile Networks, (2) Network Infrastructure, (3) Cloud and
Network Services and (4) Nokia Technologies. Nokia also presents segment
-
level information for Group Common and Other. In addition, Nok
ia provides net
sales disclosure for the following businesses within the Network Infrastructure segment: (i) IP Networks, (ii) Optical Networ
ks, (iii) Fixed Networks and (iv)
Submarine Networks. For detailed segment descriptions, please refer to Note 5, Se
gment Information, in the consolidated financial statements for 2021.
Accounting policies of the segments are the same as those described in Note 2, Significant accounting policies, in the consol
idated financial statements for
2021, except that items affe
cting comparability are not allocated to the segments. For more information on comparable measures and items affecting
comparability, refer to Note 1, Basis of preparation and to the Performance Measures section accompanying this consolidated f
inancial sta
tement
information. Inter
-
segment revenues and transfers are accounted for as if the revenues were to third parties, that is, at current market prices.
Q3'22
Mobile Networks
Network
Infrastructure
1
Cloud
and
Network Services
Nokia
Technologies
Group Common
and Other
Eliminations and
unallocated
items
Nokia Group
EUR million
Net sales
2 851
2 211
801
305
84
(11)
6 241
of which to other segments
3
1
0
3
5
(11)
0
Gross profit/(loss)
1
122
788
312
304
(4)
(17)
2 505
Gross margin %
39.4%
35.6%
39.0%
99.7%
(4.8)%
40.1%
Research and development expenses
(572)
(336)
(147)
(52)
(31)
(26)
(1 165)
Selling, general and administrative
expenses
(224)
(217)
(141)
(38)
(54)
(97)
(771)
Other operating income and expenses
(48)
(6)
(9)
(8)
19
0
(52)
Operating profit/(loss)
278
228
16
207
(70)
(141)
518
Operating margin %
9.8%
10.3%
2.0%
67.9%
(83.3)%
8.3%
Share of results of associated
companies and joint ventures
(20)
0
2
(2)
0
(20)
Financial income and expenses
12
Profit before tax
509
Depreciation and amortization
(87)
(57)
(22)
(8)
(9)
(104)
(287)
¹Includes IP Networks net sales of EUR 773 million, Optical Networks net sales of EUR 451 million, Fixed Networks net sales o
f EUR 705 million and Submarine Networks net sales of
EUR 283 million.
|
|
2
0
Octo
ber
2022
20
Q3'21
Mobile Networks
Network
Infrastructure
1
Cloud and
Network Services
Nokia
Technologies
Group Common
and Other
Eliminations and
unallocated
items
Nokia Group
EUR million
Net sales
2 315
1 915
748
367
64
(10)
5 399
of which to other segments
2
0
0
3
4
(10)
0
Gross profit/(loss)
876
687
281
366
(5)
(9)
2 196
Gross margin %
37.8%
35.9%
37.6%
99.7%
(7.8)%
40.7%
Research and development expenses
(501)
(307)
(126)
(49)
(24)
(28)
(1 036)
Selling, general and administrative
expenses
(207)
(188)
(119)
(22)
(47)
(91)
(674)
Other operating income and expenses
1
(5)
(5)
(10)
38
(3)
16
Operating profit/(loss)
169
187
31
285
(38)
(131)
502
Operating margin %
7.3%
9.8%
4.1%
77.7%
(59.4)%
9.3%
Share of results of associated
companies and joint ventures
(8)
0
1
0
0
(7)
Financial income and expenses
(50)
Profit before tax
446
Depreciation and amortization
(84)
(54)
(24)
(8)
(5)
(99)
(275)
¹Includes IP Networks net sales of EUR 668 million, Optical Networks net sales of EUR 412 million, Fixed Networks net sales o
f EUR 588 million and Submarine Networks net sales
of EUR 247 million.
Q1
–
Q3'22
Mobile Networks
Network
Infrastructure
1
Cloud and
Network Services
Nokia
Technologies
Group Common
and Other
Eliminations and
unallocated
items
Nokia Group
EUR million
Net sales
7 711
6 338
2 291
916
236
(30)
17 462
of which to other segments
6
2
1
9
14
(30)
0
Gross profit/(loss)
3 068
2 234
876
913
(6)
(49)
7 035
Gross margin %
39.8%
35.2%
38.2%
99.7%
(2.5)%
40.3%
Research and development expenses
(1 649)
(943)
(429)
(158)
(82)
(67)
(3 328)
Selling, general and administrative
expenses
(627)
(598)
(395)
(101)
(157)
(297)
(2 174)
Other operating income and expenses
(52)
(23)
(22)
(11)
116
(106)
(97)
Operating profit/(loss)
739
670
30
644
(129)
(519)
1 436
Operating margin %
9.6%
10.6%
1.3%
70.3%
(54.7)%
8.2%
Share of results of associated
companies and joint ventures
(53)
0
4
(3)
0
(52)
Financial income and expenses
(78)
Profit before tax
1 306
Depreciation and amortization
(258)
(167)
(67)
(25)
(21)
(306)
(844)
¹Includes IP Networks net sales of EUR 2 167 million, Optical Networks net sales of EUR 1 251 million, Fixed Networks net sal
es of EUR 2 088 million and Submarine Networks net
sales of EUR 831 million.
|
|
2
0
Octo
ber
2022
21
Q1
–
Q3'21
Mobile Networks
Network
Infrastructure
1
Cloud and
Network Services
Nokia
Technologies
Group Common
and Other
Eliminations and
unallocated
items
Nokia Group
EUR million
Net sales
6 957
5 420
2 125
1 133
183
(30)
15 788
of which to other segments
5
1
1
9
14
(30)
0
Gross profit/(loss)
2 601
1 917
757
1 129
(10)
(94)
6 300
Gross margin %
37.4%
35.4%
35.6%
99.6%
(5.5)%
39.9%
Research and development expenses
(1 517)
(848)
(403)
(147)
(77)
(103)
(3 096)
Selling, general and administrative
expenses
(609)
(548)
(351)
(65)
(147)
(315)
(2 034)
Other operating income and expenses
20
14
18
(14)
148
63
248
Operating profit/(loss)
495
536
20
903
(87)
(449)
1 418
Operating margin %
7.1%
9.9%
0.9%
79.7%
(47.5)%
9.0%
Share of results of associated
companies and joint ventures
(12)
(1)
3
(2)
0
(11)
Financial income and expenses
(173)
Profit before tax
1 234
Depreciation and amortization
(250)
(155)
(72)
(25)
(24)
(293)
(818)
¹Includes IP Networks net sales of EUR 1 923 million, Optical Networks net sales of EUR 1 203 million, Fixed Networks net sal
es of EUR 1 611 million and Submarine Networks net
sales of EUR 683 million.
Material reconciling items between
operating profit for the Group and total segment operating profit
EUR million
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Operating profit for the Group
518
502
1 436
1 418
Amortization of acquired intangible assets
105
99
305
293
Impairment and
write
-
off of assets, net of reversals
18
(1)
13
32
Restructuring and associated charges
17
34
97
211
Costs associated with country exit
0
0
104
0
Settlement of legal disputes
0
0
0
(80)
Gain on sale of fixed assets
0
0
0
(23)
Other, net
0
(1)
0
16
Total segment operating profit
658
633
1 955
1 867
|
|
2
0
Octo
ber
2022
22
3. NET SALES
Net sales by region
1
EUR million
Q3'22
Q3'21
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY change
Asia Pacific
638
639
0%
1 847
1 788
3%
Europe
1 533
1
476
4%
4 311
4 476
(4)%
Greater China
415
352
18%
1 225
1 119
9%
India
281
250
12%
722
787
(8)%
Latin America
334
238
40%
835
658
27%
Middle East & Africa
482
420
15%
1 374
1 218
13%
North America
2 275
1 776
28%
6 317
5 058
25%
Submarine Networks
283
247
15%
831
683
22%
Total
6 241
5 399
16%
17 462
15 788
11%
1
In Q2 2022, Nokia changed how it presents net sales information on a regional basis. Nokia determined that providing net sale
s of its Submarine Networks
business separately from the net sales by region information for the rest of the Group improves the usefulness of regional ne
t sales information by removing
volatility caused by the specific nature of the Submarine Networks business. The comparative inform
ation for net sales by region has been recast accordingly.
Net sales by customer type
EUR million
Q3'22
Q3'21
YoY change
Q1
–
Q3'22
Q1
–
Q3'21
YoY change
Communications service providers
5 096
4 364
17%
14 272
12 739
12%
Enterprise
485
368
32%
1 238
1 079
15%
Licensees
305
367
(17)%
916
1 133
(19)%
Other
1
355
300
18%
1 036
836
24%
Total
6 241
5 399
16%
17 462
15 788
11%
1
Includes net sales of Submarine Networks which operates in a different market, and
Radio Frequency Systems (RFS), which is being managed as a separate
entity, and certain other items, such as eliminations of inter
-
segment revenues. Submarine Networks and RFS net sales also include revenue from
communications service providers and enterpr
ise customers.
|
|
2
0
Octo
ber
2022
23
4. PENSIONS AND OTHER POST
-
EMPLOYMENT BENEFITS
Nokia operates a number of
post
-
employment plans in various countries including both defined contribution and defined benefit plans. Defined benefit plans in
clude
pension plans and other post
-
employment benefit plans, providing retirement healthcare benefits and life insurance cove
rage. 96% of Nokia’s defined benefit obligation
and 98% of plan assets fair values were remeasured as of 30 September 2022. Nokia's pension and post
-
employment plans in the United States have been remeasured by
updated valuations from an external actuary a
nd the main pension plans outside of the US have been remeasured based upon updated asset valuations and changes in the
discount rates during the reporting period. The impact of not remeasuring other pension and post
-
employment obligations is considered no
t material. As of 30 September
2022, the weighted average discount rates used in remeasurement of the most significant plans were as follows (comparatives a
s of 31 December 2021): U.S. Pension
5.04% (2.40%), U.S. Opeb 5.06% (2.42%), Germany 3.39% (0.87%) a
nd U.K. 4.93% (1.87%).
The funded status of Nokia’s defined benefit plans (before the effect of the asset ceiling) increased from EUR 5 098 million,
or 125.5% as of 30 June 2022, to EUR 5 159
million, or 126.4% as of 30 September 2022. During the quarter
the global defined benefit plan asset portfolio was invested approximately 72% in fixed income, 5% in
equities and 23% in other asset classes, mainly private equity and real estate.
Change in pension and
post
-
employment net asset/(liability)
30 September 2022
30 September 2021
31 December 2021
EUR million
Pensions
1
US Opeb
Total
Pensions
1
US Opeb
Total
Pensions
1
US Opeb
Total
Net asset/(liability) recognized 1 January
5 588
(1 256)
4 332
2 572
(1 580)
992
2 572
(1 580)
992
Recognized in income statement
(62)
(23)
(85)
(115)
(22)
(137)
(128)
(29)
(157)
Recognized in other comprehensive income
(324)
277
(47)
2 810
132
2 942
2 906
134
3 040
Contributions and benefits paid
129
(2)
127
124
(7)
117
177
(6)
171
Exchange differences and other
movements
2
886
(175)
711
3
177
180
61
225
286
Net asset/(liability) recognized at the end
of the period
6 217
(1
179)
5 038
5 394
(1 300)
4 094
5 588
(1 256)
4 332
1
Includes pensions, retirement indemnities and other post
-
employment plans.
2
Includes Section 420 transfers, medicare subsidies, and other transfers.
Funded status
EUR million
30 September
2022
30 June
2022
31 March
2022
31 December
2021
30 September
2021
Defined benefit obligation
(19 522)
(20 029)
(21 120)
(22 704)
(22 632)
Fair value of plan assets
24 681
25 127
25 921
27 128
26 816
Funded status
5 159
5 098
4 801
4 424
4 184
Effect of asset ceiling
1
(121)
(104)
(89)
(92)
(90)
Net asset recognized at the end of the
period
5 038
4 994
4 712
4 332
4 094
1
In the third
quarter of 2021, Nokia modified the terms of its US defined benefit pension plans. As a result of the
modification, Nokia recognized a reduction in the effect of the asset ceiling of EUR 1 396 million.
5. DEFERRED TAXES
Deferred tax assets are recognized to the extent it is probable that future taxable profit will be available against which th
e unused tax losses, unused tax credits
and deductible temporary differences can be utilized in the relevant jurisdictions. As of 3
0 September 2022, Nokia has recognized deferred tax assets of EUR 1.3
billion (EUR 1.3 billion as of 31 December 2021).
In addition, as of 30 September 2022, Nokia has unrecognized deferred tax assets of approximately EUR 8 billion (EUR 8 billio
n as of
31 December 2021), the
majority of which relate to France (approximately EUR 4 billion) and Finland (approximately EUR 3 billion). These deferred ta
x assets have not been recognized due
to uncertainty regarding their utilization. A significant portion of t
he French unrecognized deferred tax assets are indefinite in nature and available against future
French tax liabilities, subject to a limitation of 50% of annual taxable profits. The majority of Finnish unrecognized deferr
ed tax assets are not subject to e
xpiry
and are available against future Finnish tax liabilities.
Nokia continually evaluates the probability of utilizing its deferred tax assets and considers both positive and negative evi
dence in its assessment.
In Q3 2022, Nokia continued to genera
te accounting and taxable profit in Finland and there are improvements in the financial performance compared to the
previous periods. At 30 September 2022, Nokia did not consider that it had created an established pattern of sufficient tax p
rofitability to
conclude that it is
probable that it would be able to utilize the deferred tax assets in Finland. Nokia continues to closely monitor its ability
to utilize these deferred tax assets,
including assessing the future financial performance in Finland. Should
the recent improvements in the financial results of Nokia be sustained, all or part of the
unrecognized deferred tax assets may be recognized in the future.
|
|
2
0
Octo
ber
2022
24
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial assets and liabilities recorded at fair value are categorized based on the amount of unobservable inputs used to me
asure their fair value. Three
hierarchical levels are based on an increasing amount of judgment associated with the inputs used to
derive fair valuation for these assets and liabilities, Level 1
being market values for exchange traded products, Level 2 being primarily based publicly available market information and Lev
el 3 requiring most management
judgment. For more information about
the valuation methods and principles, refer to note 2, Significant accounting policies, and note 22, Fair value of financial
instruments, in the consolidated financial statements for 2021. Items carried at fair value in the following table are measur
ed at
fair value on a recurring basis.
EUR million
Carrying amounts
Fair value
Amortized cost
Fair value through profit or loss
Fair value through other
comprehensive income
30 September 2022
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Total
Total
Other non
-
current financial investments
0
6
0
918
0
0
0
924
924
Other non
-
current financial assets
186
0
92
0
0
70
0
348
348
Non
-
current
interest
-
bearing financial investments
715
0
0
0
0
0
0
715
673
Other current financial assets
307
0
0
0
0
29
0
336
336
Derivative assets
0
0
742
0
0
0
0
742
742
Trade receivables
0
0
0
0
0
5 337
0
5 337
5 337
Current
interest
-
bearing financial investments
1 563
0
1 777
0
0
0
0
3 340
3 340
Cash and cash equivalents
4 574
0
622
0
0
0
0
5 196
5 196
Total financial assets
7 345
6
3 233
918
0
5 436
0
16 938
16 896
Long
-
term interest
-
bearing liabilities
4 364
0
0
0
0
0
0
4 364
4 217
Other long
-
term financial liabilities
0
0
0
57
0
0
0
57
57
Short
-
term interest
-
bearing
liabilities
232
0
0
0
0
0
0
232
232
Other short
-
term financial liabilities
72
0
0
534
0
0
0
606
606
Derivative liabilities
0
0
882
0
0
0
0
882
882
Discounts without performance obligations
744
0
0
0
0
0
0
744
744
Trade payables
4 696
0
0
0
0
0
0
4 696
4 696
Total financial liabilities
10 108
0
882
591
0
0
0
11 581
11 434
EUR million
Carrying amounts
Fair value
Amortized cost
Fair value through profit or loss
Fair value through other
comprehensive income
31 December 2021
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
Total
Total
Other non
-
current financial investments
0
8
0
750
0
0
0
758
758
Other non
-
current financial assets
130
0
101
0
0
94
0
325
325
Other current financial assets
115
0
0
0
0
21
0
136
136
Derivative assets
0
0
200
0
0
0
0
200
200
Trade receivables
0
0
0
0
0
5 382
0
5 382
5 382
Current interest
-
bearing financial investments
526
0
2 051
0
0
0
0
2 577
2 577
Cash and cash equivalents
4 627
0
2 064
0
0
0
0
6 691
6 691
Total financial assets
5 398
8
4 416
750
0
5 497
0
16 069
16 069
Long
-
term interest
-
bearing liabilities
4 537
0
0
0
0
0
0
4 537
4 775
Other long
-
term financial
liabilities
0
0
0
68
0
0
0
68
68
Short
-
term interest
-
bearing liabilities
116
0
0
0
0
0
0
116
116
Other short
-
term financial liabilities
0
0
0
522
0
0
0
522
522
Derivative liabilities
0
0
240
0
0
0
0
240
240
Discounts without
performance obligations
479
0
0
0
0
0
0
479
479
Trade payables
3 679
0
0
0
0
0
0
3 679
3 679
Total financial liabilities
8 811
0
240
590
0
0
0
9 641
9 879
Lease liabilities are not included in the fair value of financial
instruments.
Level 3 Financial assets include a large number of investments in unlisted equities and unlisted venture funds, including inv
estments managed by NGP Capital
specializing in growth
-
stage investing. The fair value of level 3 investments is dete
rmined using one or more valuation techniques with unobservable inputs,
where the use of the market approach generally consists of using comparable market transactions, while the use of the income
approach generally consists of
calculating the net present
value of expected future cash flows.
Level 3 Financial liabilities include a conditional obligation to China Huaxin related to Nokia Shanghai Bell.
Reconciliation of the opening and closing balances on level 3 financial assets and
liabilities:
EUR million
Level 3 Financial
Assets
Level 3
Financial
Liabilities
Balance as of 31 December 2021
750
(590)
Net gains/(losses) in income statement
107
(14)
Additions
92
0
Deductions
(34)
20
Other movements
3
(7)
Balance as of 30 September 2022
918
(591)
The gains and losses from venture fund and similar investments categorized in level 3 are included in other operating income
and expenses. The gains and
losses from other level 3 financial assets and liabilities are recorded in financial income and expense
s. A net gain of EUR 88 million (net gain of EUR 85 million in
2021) related to level 3 financial instruments held at 30 September 2022 was included in the profit and loss during 2022.
|
|
2
0
Octo
ber
2022
25
7. PROVISIONS
EUR million
Restructuring
Warranty
Litigation
Environmental
Project
losses
Divestment
-
related
Material
liability
Other
1
Total
As of 1 January 2022
312
254
102
149
235
46
89
382
1 569
Translation differences
0
2
6
21
0
(6)
3
33
59
Reclassification
0
0
0
0
1
0
0
(14)
(13)
Charged
to income statement
Additions
72
107
19
7
3
5
85
159
457
Reversals
0
(30)
(5)
(2)
(2)
0
(48)
(25)
(112)
Total charged to income statement
72
77
14
5
1
5
37
134
345
Utilized during period
2
(199)
(91)
(31)
(5)
(37)
0
(26)
(104)
(493)
As of 30 September 2022
185
242
91
170
200
45
103
431
1 467
Non
-
current
79
20
17
150
134
39
11
211
663
Current
106
222
74
20
66
5
91
220
804
1
Other provisions include provisions for various obligations such as costs associated with exiting the
Russian market, indirect tax provisions, employee
-
related
provisions other than restructuring provisions and asset retirement obligations.
2
The utilization of restructuring provision includes items transferred to accrued expenses, of which EUR 58 million remained i
n accrued expenses as of 30
September 2022.
8. INTEREST
-
BEARING LIABILITIES
Carrying amount (EUR million)
Issuer/borrower
Instrument
Currency
Nominal
(million)
Final maturity
30
September
2022
30
September
2021
31
December
2021
Nokia Corporation
3.375% Senior Notes
1
USD
500
June 2022
0
437
0
Nokia Corporation
2.00% Senior Notes
EUR
750
March 2024
740
759
759
Nokia Corporation
EIB R&D Loan
EUR
500
February 2025
500
500
500
Nokia Corporation
NIB R&D Loan
2
EUR
250
May 2025
250
250
250
Nokia Corporation
2.375% Senior Notes
EUR
500
May 2025
483
497
497
Nokia Corporation
2.00% Senior Notes
EUR
750
March
2026
723
760
760
Nokia Corporation
4.375% Senior Notes
USD
500
June 2027
471
462
464
Nokia of America Corporation
6.50% Senior Notes
USD
74
January 2028
76
64
66
Nokia Corporation
3.125% Senior Notes
EUR
500
May 2028
461
497
497
Nokia of
America Corporation
6.45% Senior Notes
USD
206
March 2029
213
179
183
Nokia Corporation
6.625% Senior Notes
USD
500
May 2039
514
546
553
Nokia Corporation and various subsidiaries
Other liabilities
165
130
124
Total
4 596
5 081
4 653
1
Nokia redeemed USD 500 million of the 3.375% Senior Notes due June 2022 in December 2021.
2
The loan from the Nordic Investment Bank (NIB) is repayable in three equal annual installments in 2023, 2024 and 2025.
Significant credit
facilities and funding programs
Utilized (million)
Financing arrangement
Committed/
uncommitted
Currency
Nominal
(million)
30
September
2022
30
September
2021
31
December
2021
Revolving Credit Facility
1
Committed
EUR
1 500
0
0
0
Finnish Commercial Paper Programme
Uncommitted
EUR
750
0
0
0
Euro
-
Commercial Paper Programme
Uncommitted
EUR
1 500
0
0
0
Euro Medium Term Note Programme
2
Uncommitted
EUR
5 000
2 500
2 500
2 500
1
The facility has its maturity in June 2026,
except for EUR 88 million having its maturity in June 2024.
2
All euro
-
denominated bonds have been issued under the Euro Medium Term Note Programme.
All borrowings and credit facilities presented in the tables above are senior unsecured and have no
financial covenants.
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26
9. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
EUR million
30 September 2022
30 September 2021
31 December 2021
Contingent liabilities on behalf of Group companies
Guarantees issued by financial
institutions
Commercial guarantees
1 311
1 233
1 281
Non
-
commercial guarantees
506
435
442
Corporate guarantees
Commercial guarantees
490
461
457
Non
-
commercial guarantees
32
40
35
Financing commitments
Customer finance commitments
28
36
21
Venture fund commitments
1
482
148
137
1
In January 2022, Nokia agreed on capital commitment of USD 400 million to NGP Capital’s Fund V. The fund’s emphasis on compan
ies
developing emerging 5G use cases for industrial and business transformation aligns closely with Nokia’s technology leadership
vision and its
efforts to maximize the value shift towards cloud. Per industry standard practice, the capital will be called throughout the
10 year lifecycle of the
fund.
The amounts in the table above represent the maximum principal amount of commitments and contingencies, and these amounts do
not reflect
management's expected outcomes.
Litigations and proceedings
Significant changes to information about
litigation and proceedings presented in Nokia's consolidated financial statements for 2021:
Continental
In 2019, Continental Automotive Systems (Continental) brought breach of FRAND (fair, reasonable and non
-
discriminatory terms) and antitrust
claims agai
nst Nokia and others. The antitrust claims were dismissed with prejudice. In the third quarter of 2022, this decision became
final after
Continental lost on appeal and reconsideration requests. Continental also brought breach of contract and FRAND
-
related
claims against Nokia in
another US court in 2021, which Nokia has moved to dismiss. That motion is pending.
Oppo
In 2021, Nokia commenced patent infringement proceedings against Oppo, OnePlus and Realme in several countries in Asia and Eu
rope. Across
thes
e actions, more than 30 patents are in suit, covering a mix of cellular standards and technologies such as connectivity, user
interface and
security. Oppo responded by filing invalidation actions against certain Nokia patents, a number of patent infringeme
nt actions against Nokia
equipment in Germany and China and actions in China against Nokia relating to standard essential patent licensing issues. In
the second and third
quarter of 2022, five of Nokia’s patents have been held by German Regional Courts to
be infringed by Oppo and injunctions granted. Two of these
patents were also held to be valid and infringed by an Oppo entity by a Dutch District Court and injunctions granted in third
quarter of 2022.
Vivo
In 2022, Nokia commenced patent infringement pro
ceedings against Vivo in Germany and several countries in Asia. Vivo responded by filing a
number of patent infringement actions against Nokia equipment in Germany and China. They also filed an action in China agains
t Nokia relating to
standard essential p
atent licensing issues.
|
|
2
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Octo
ber
2022
27
Performance measures
Certain financial measures presented in this interim report are not measures of financial performance, financial position or
cash flows defined in IFRS, and
therefore may not be directly comparable with fina
ncial measures used by other companies, including those in the same industry. The primary rationale for
presenting these measures is that the management uses these measures in assessing the financial performance of Nokia and beli
eves that these measures
pr
ovide meaningful supplemental information on the underlying business performance. These financial measures should not be cons
idered in isolation from, or as
a substitute for, financial information presented in compliance with IFRS.
The below tables provid
e summarized information on the performance measures included in this interim report as well as reconciliations of the perfor
mance
measures to the amounts presented in the financial statements.
In the first quarter of 2022 Nokia replaced its performance m
easures total cash and current financial investments (”total cash”) and net cash and current financial
investments (”net cash”) with total cash and interest
-
bearing financial investments (”total cash”) and net cash and interest
-
bearing financial investment
s (”net
cash”). The definitions of these performance measures were updated accordingly to reflect the changes made to Nokia’s stateme
nt of financial position. The
purpose for using these measures, as stated in the table below, did not change. The modificat
ions to the performance measures were made as in the first quarter
of 2022 Nokia commenced investing in highly liquid corporate bonds that are primarily classified as non
-
current interest
-
bearing financial investments based on
their initial maturity.
Performance measure
Definition
Purpose
Comparable measures
Comparable measures exclude intangible asset amortization and other purchase
price fair value adjustments, goodwill impairments, restructuring related charges
and certain other items affecting com
parability. Reconciliation of reported and
comparable consolidated statement of income is presented below.
We believe that our comparable results provide meaningful supplemental
information to both management and investors regarding Nokia’s underlying
bus
iness performance by excluding certain items of income and expenses that may
not be indicative of Nokia’s business operating results. Comparable operating profit
is used also in determining management remuneration.
Constant currency net
sales / Net
sales adjusted
for currency fluctuations
When net sales are reported on a constant currency basis / adjusted for currency
fluctuations, exchange rates used to translate the amounts in local currencies to
euro, our reporting currency, are the average actual
periodic exchange rates for the
comparative financial period. Therefore, the constant currency net sales / net sales
adjusted for currency fluctuations exclude the impact of changes in exchange rates
during the current period in comparison to euro.
We pr
ovide additional information on net sales on a constant currency basis /
adjusted for currency fluctuations in order to better reflect the underlying business
performance.
Comparable return on
invested capital (ROIC)
Comparable operating profit
after tax, last four quarters / Invested capital, average
of last five quarters’ ending balances. Calculation of comparable return on invested
capital is presented below.
Comparable return on invested capital is used to measure how efficiently Nokia
uses i
ts capital to generate profits from its operations.
Comparable operating
profit after tax
Comparable operating profit
-
(comparable operating profit x (
-
comparable income
tax expense / comparable profit before tax))
Comparable operating profit after tax i
ndicates the profitability of Nokia's
underlying business operations after deducting the income tax impact. We use
comparable operating profit after tax to calculate comparable return on invested
capital.
Invested capital
Total equity + total
interest
-
bearing liabilities
-
total cash and interest
-
bearing
financial investments
Invested capital indicates the book value of capital raised from equity and debt
instrument holders less cash and liquid assets held by Nokia. We use invested
capital to c
alculate comparable return on invested capital.
Total cash and interest
-
bearing financial
investments ("Total cash")
Total cash and interest
-
bearing financial investments consist of cash and cash
equivalents and current interest
-
bearing financial
investments and non
-
current
interest
-
bearing financial investments.
Total cash and interest
-
bearing financial investments is used to indicate funds
available to Nokia to run its current and invest in future business activities as well as
provide return for
security holders.
Net cash and interest
-
bearing financial
investments ("Net cash")
Net cash and interest
-
bearing financial investments equals total cash and interest
-
bearing financial investments less long
-
term and short
-
term interest
-
bearing
liabilities
. Lease liabilities are not included in interest
-
bearing liabilities.
Reconciliation of net cash and interest
-
bearing financial investments to the
amounts in the consolidated statement of financial position is presented below.
Net cash and interest
-
bearing
financial investments is used to indicate Nokia's
liquidity position after cash required to settle the interest
-
bearing liabilities.
Free cash flow
Net cash from/(used in) operating activities
-
purchases of property, plant and
equipment and
intangible assets (capital expenditures) + proceeds from sale of
property, plant and equipment and intangible assets
–
purchase of other non
-
current financial investments + proceeds from sale of other non
-
current financial
investments. Reconciliation of fr
ee cash flow to the amounts in the consolidated
statement of cash flows is presented below.
Free cash flow is the cash that Nokia generates after net investments to tangible
and intangible assets, as well as non
-
current financial investments and it represe
nts
the cash available for distribution among its security holders. It is a measure of cash
generation, working capital efficiency and capital discipline of the business.
Capital expenditure
Purchases of property, plant and equipment and
intangible assets (excluding assets
acquired under business combinations).
We use capital expenditure to describe investments in profit generating activities in
the future.
Recurring/One
-
time
measures
Recurring measures, such as recurring net sales, are based on revenues that are
likely to continue in the future. Recurring measures exclude e.g. the impact of
catch
-
up net sales relating to prior periods. One
-
time measures, such as one
-
time
net sales, ref
lect the revenues that are not likely to continue in the future.
We use recurring/one
-
time measures to improve comparability between financial
periods.
Adjusted profit/(loss)
Adjusted profit/(loss) equals the cash from operations before changes in net
working capital subtotal in the consolidated statement of cash flows.
We use adjusted profit/(loss) to provide a structured presentation when describing
the cash flows.
Recurring annual cost
savings
Reduction in cost of sales and operating expenses result
ing from the cost savings
program and the impact of which is considered recurring in nature.
We use recurring annual cost savings measure to monitor the progress of our cost
savings program established after the Alcatel
-
Lucent transaction against plan.
Restructuring and
associated charges,
liabilities and cash
outflows
Charges, liabilities and cash outflows related to activities that either meet the strict
definition of restructuring under IFRS or are closely associated with such activities.
We use restr
ucturing and associated charges, liabilities and cash outflows to
measure the progress of our integration and transformation activities.
|
|
2
0
Octo
ber
2022
28
Comparable to reported reconciliation
Q3'22
Net sales
Cost of sales
Research and
development
expenses
Selling, general
and
administrative
expenses
Other
operating
income and
expenses
Operating profit
Financial
income and
expenses
Income tax
(expense)/
benefit
Profit from
continuing
operations
EUR million
Comparable
6 241
(3 719)
(1 139)
(674)
(51)
658
29
(116)
551
Amortization of acquired intangible assets
(14)
(91)
(105)
23
(82)
Impairment and write
-
off of assets, net of
reversals
(8)
(10)
(1)
(18)
(18)
Restructuring and associated charges
(9)
(2)
(6)
(17)
(17)
Change in financial liability to acquire NSB non
-
controlling interest
0
3
3
Release of cumulative exchange differences
related to abandonment of foreign operations
0
(20)
(20)
Items affecting comparability
0
(17)
(26)
(97)
0
(141)
(17)
23
(135)
Reported
6 241
(3 736)
(1 165)
(771)
(52)
518
12
(93)
417
Q3'21
Net sales
Cost of sales
Research and
development
expenses
Selling, general
and
administrative
expenses
Other
operating
income and
expenses
Operating profit
Financial
income and
expenses
Income tax
(expense)/
benefit
Profit from
continuing
operations
EUR million
Comparable
5 399
(3 194)
(1 007)
(583)
19
633
(47)
(117)
463
Amortization of acquired intangible assets
(15)
(84)
(99)
21
(78)
Restructuring and associated charges
(8)
(15)
(7)
(3)
(34)
(34)
Impairment and write
-
off of assets, net of
reversals
(1)
2
1
1
Change in financial liability to acquire NSB non
-
controlling interest
0
(3)
(3)
Items affecting comparability
0
(9)
(28)
(91)
(3)
(131)
(3)
21
(113)
Reported
5 399
(3 203)
(1 036)
(674)
16
502
(50)
(95)
350
|
|
2
0
Octo
ber
2022
29
Q1
–
Q3'22
Net sales
Cost of sales
Research and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income and
expenses
Operating
profit
Financial
income and
expenses
Income tax
(expense)/
benefit
Profit from
continuing
operations
EUR million
Comparable
17 462
(10 377)
(3 261)
(1 878)
8
1 955
(38)
(312)
1 552
Amortization of acquired intangible assets
(42)
(263)
(305)
66
(239)
Costs associated with country exit
(104)
(104)
(104)
Restructuring and associated charges
(44)
(19)
(33)
(1)
(97)
(97)
Impairment and write
-
off of
assets, net of reversals
(6)
(7)
(13)
(13)
Loss allowance on customer financing loan
0
(29)
(29)
Change in financial liability to acquire NSB non
-
controlling
interest
0
10
10
Release of cumulative exchange differences related to
abandonment of foreign operations
0
(20)
(20)
Items affecting comparability
0
(49)
(67)
(297)
(106)
(519)
(39)
66
(492)
Reported
17 462
(10 426)
(3 328)
(2 174)
(97)
1 436
(78)
(245)
1 061
Q1
–
Q3'21
Net sales
Cost
of sales
Research and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income and
expenses
Operating
profit
Financial
income and
expenses
Income tax
(expense)/
benefit
Profit from
continuing
operations
EUR million
Comparable
15 788
(9 394)
(2 992)
(1 719)
185
1 867
(138)
(341)
1 377
Amortization of acquired intangible assets
(42)
(251)
(293)
62
(230)
Restructuring and associated charges
(88)
(56)
(62)
(4)
(211)
(211)
Settlement of legal
disputes
80
80
80
Impairment and write
-
off of assets, net of reversals
(5)
(6)
(1)
(21)
(32)
(32)
Gain on sale of fixed assets
23
23
23
Fair value changes of legacy IPR fund
(16)
(16)
(16)
Costs associated with contract exit
(1)
(1)
(1)
Change in financial liability to acquire NSB non
-
controlling
interest
0
(35)
(35)
Deferred tax expense due to tax rate changes
0
17
17
Items affecting comparability
0
(94)
(103)
(315)
63
(449)
(35)
80
(405)
Reported
15
788
(9 488)
(3 096)
(2 034)
248
1 418
(173)
(261)
973
|
|
2
0
Octo
ber
2022
30
Net cash and interest
-
bearing financial investments
EUR million
30 September
2022
30 June
2022
31 March
2022
31 December
2021
30 September
2021
Non
-
current interest
-
bearing financial
investments
715
473
493
0
0
Current interest
-
bearing financial investments
3 340
3 253
2 685
2 577
2 478
Cash and cash equivalents
5 196
5 457
6 341
6 691
6 903
Total cash and interest
-
bearing financial investments
9 251
9 183
9 519
9 268
9 381
Long
-
term interest
-
bearing liabilities
1
4 364
4 424
4 489
4 537
4 524
Short
-
term interest
-
bearing liabilities
1
232
213
126
116
557
Total interest
-
bearing liabilities
4 596
4 637
4 615
4 653
5 081
Net cash and interest
-
bearing financial
investments
4 655
4 546
4 904
4 615
4 300
1
Lease liabilities are not included in interest
-
bearing liabilities.
Free cash flow
EUR million
Q3'22
Q3'21
Q1
–
Q3'22
Q1
–
Q3'21
Net cash from operating activities
391
729
907
2 139
Purchase of property, plant and equipment and intangible
assets
(116)
(129)
(406)
(401)
Proceeds from sale of property, plant and equipment and
intangible assets
0
8
33
56
Purchase of other non
-
current financial investments
(26)
(13)
(102)
(55)
Proceeds from sale of other non
-
current financial investments
17
111
44
244
Free cash flow
266
706
476
1 983
|
|
2
0
Octo
ber
2022
31
Comparable return on invested capital (ROIC)
Q3'22
EUR million
Rolling four
quarters
Q3'22
Q2'22
Q1'22
Q4'21
Comparable operating profit
2 863
658
714
583
908
Comparable profit before tax
2 755
667
681
516
891
Comparable income tax expense
(471)
(116)
(95)
(101)
(159)
Comparable operating profit after tax
2 374
544
614
469
746
EUR million
Average
30 September
2022
30 June 2022
31 March 2022
31 December 2021
30 September
2021
Total equity
18 152
19 797
19 026
18 083
17 462
16 392
Total interest
-
bearing liabilities
4 716
4 596
4 637
4 615
4 653
5 080
Total cash and
interest
-
bearing financial investments
9 320
9 251
9 183
9 519
9 268
9 381
Invested capital
13 548
15 143
14 480
13 179
12 847
12 091
Comparable ROIC
17.5%
Q2'22
EUR million
Rolling four
quarters
Q2'22
Q1'22
Q4'21
Q3'21
Comparable operating profit
2 838
714
583
908
633
Comparable profit before tax
2 668
681
516
891
580
Comparable income tax expense
(472)
(95)
(101)
(159)
(117)
Comparable operating profit after tax
2 336
614
469
746
505
EUR
million
Average
30 June 2022
31 March 2022
31 December
2021
30 September
2021
30 June 2021
Total equity
17 060
19 026
18 083
17 462
16 392
14 337
Total interest
-
bearing liabilities
4 810
4 637
4 615
4 653
5 080
5 063
Total cash and
interest
-
bearing financial investments
9 220
9 183
9 519
9 268
9 381
8 751
Invested capital
12 650
14 480
13 179
12 847
12 091
10 649
Comparable ROIC
18.5%
Q3'21
EUR million
Rolling four
quarters
Q3'21
Q2'21
Q1'21
Q4'20
Comparable operating profit
2 923
633
682
551
1 056
Comparable profit before tax
2 781
580
643
495
1 063
Comparable income tax expense
(620)
(117)
(104)
(120)
(279)
Comparable operating profit after tax
2 271
505
572
417
779
EUR million
Average
30 September
2021
30 June 2021
31 March 2021
31 December 2020
30 September
2020
Total equity
14 453
16 392
14 337
13 771
12 545
15 220
Total interest
-
bearing liabilities
5 327
5 080
5 063
5 153
5 576
5 763
Total cash and
interest
-
bearing financial investments
8 533
9 381
8 751
8 842
8 061
7 632
Invested capital
11 247
12 091
10 649
10 082
10 060
13 351
Comparable ROIC
20.2%
|
|
2
0
Octo
ber
2022
32
This financial report was
approved by the Board of Directors
on
2
0
October
2022.
Media and Investor Contacts:
Communications, tel. +358 10 448 4900 email:
press.services@nokia.com
Investor Relations, tel. +358 4080 3 4080 email:
investor.relations@nokia.com
•
Nokia plans to publish its
fourth
quarter and
full year
2022 results on 2
6
January
202
3
.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant, Nokia Corporation, has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: October 20, 2022 |
Nokia Corporation |
|
|
|
By: |
/s/ Esa Niinimäki |
|
Name: |
Esa Niinimäki |
|
Title: |
Interim Chief Legal Officer; Corporate |
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