TIDMNOKIA
Nokia provides recast comparative segment results for 2020 reflecting
new financial reporting structure
Nokia Corporation
Stock Exchange Release
11 March 2021 at 13:10 EET
Nokia today provides recast comparative segment financial information on
a quarterly and annual basis for 2020, reflecting the previously
announced organizational changes.
Changes in reporting structure, effective from 1 January 2021
On 29 October 2020, Nokia announced the first phase of its new strategy,
outlining high-level strategic principles alongside a new operating
model designed to better position the company for changing markets and
align with customer needs. The new operating model is optimized for
better accountability and transparency, increased simplicity and
improved cost-efficiency. On 16 December 2020, Nokia provided an update
on its new strategic focus areas and operating model together with its
assumptions for its four new business groups and Group Common and Other
in 2021 and over the longer term.
Accordingly, Nokia has revised its financial reporting structure to
reflect its strategy, organizational structure and the way it evaluates
operational performance and allocates resources. Reclassifications have
been made in order to reflect the new organizational structure of the
company.
The new model, effective from 1 January 2021, consists of four discrete
business groups responsible for their own P&Ls and aligned with customer
buying behavior: (i) Mobile Networks, (ii) Network Infrastructure, (iii)
Cloud and Network Services and (iv) Nokia Technologies. As of 1 January
2021, these will also be the four reportable segments. In addition,
Nokia will disclose segment-level data for Group Common and Other.
Within the new Network Infrastructure reportable segment, Nokia intends
to provide net sales disclosure for the following businesses: (i) Fixed
Networks, (ii) IP Networks, (iii) Optical Networks and (iv) Submarine
Networks.
Nokia also intends to continue providing separate net sales disclosure
for its different customer types: (i) Communication Service Providers,
(ii) Enterprises and (iii) Licensees.
Changes from previous financial reporting structure to new financial
reporting structure
The following seven product areas were reclassified into new reportable
segments:
1. Network management was reclassified to Mobile Networks from Nokia
Software
2. Submarine Networks was reclassified to Network Infrastructure from Group
Common and Other
3. Packet Core was reclassified to Cloud and Network Services from Networks
4. Enterprise Solution Services was reclassified to Cloud and Network
Services from Networks
5. Managed Services was reclassified to Cloud and Network Services from
Networks
6. Network Cognitive Services was reclassified to Cloud and Network Services
from Networks
7. Digital Automation and Analytics & IoT was reclassified to Cloud and
Network Services from Group Common and Other
To summarize these changes, the new business groups will be comprised as
follows:
Mobile Networks is now comprised of Mobile Access from our previous
Networks reportable segment, plus the following reclassifications:
Into Mobile Networks:
-- Network management (from Nokia Software)
Out of Mobile Access from our previous Networks reportable segment:
-- Enterprise Solution Services (to Cloud and Network Services)
-- Managed Services (to Cloud and Network Services)
-- Network Cognitive Services (to Cloud and Network Services)
Network Infrastructure is now comprised of Fixed Access, IP Routing, and
Optical Networks from our previous Networks reportable segment, plus the
following reclassifications:
Into Network Infrastructure:
-- Submarine Networks (from Group Common and Other)
Out of IP Routing from our previous Networks reportable segment:
-- Packet Core (to Cloud and Network Services)
Cloud and Network Services is now comprised of our previous Nokia
Software business group, plus the following reclassifications:
Into Cloud and Network Services:
-- Packet Core (from Networks)
-- Enterprise Solution Services (from Networks)
-- Managed Services (from Networks)
-- Network Cognitive Services (from Networks)
-- Digital Automation and Analytics & IoT (from Group Common and Other)
Out of our previous Nokia Software business group:
-- Network management (to Mobile Networks)
Finally, Group Common and Other continues to include Radio Frequency
Systems (RFS), and the following product areas were reclassified into
our new business groups:
-- Submarine Networks was reclassified to Network Infrastructure
-- Digital Automation and Analytics & IoT was reclassified to Cloud and
Network Services
Recast comparative segment financial information for 2020
To provide a basis for comparison, the following summarized tables
present a recasting of Nokia's segment financial information on an
unaudited basis for all four quarters of 2020 separately, as well as for
the full year 2020.
More detailed tables are available in Excel format attached to this
stock exchange release and at
https://www.globenewswire.com/Tracker?data=Q7ExlH8wwCB2mo0V0oefP0LgwfQx9T6ruME5Dxb_PaQULh-ZunagOPQVga6CP3rmufi2xssK2JzXtT0JnrJCnuFYaNawsjBTfrLSnX4ejis=
www.nokia.com/financials.
Mobile Networks (reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales 2 345 2 424 2 448 3 180 10 397
Gross profit 706 848 878 1 232 3 663
Gross margin % 30.1% 35.0% 35.9% 38.7% 35.2%
Operating profit/(loss) (44) 104 182 273 515
Operating margin % (1.9)% 4.3% 7.4% 8.6% 5.0%
Other segment items
Depreciation and amortization (104) (105) (101) (103) (413)
Share of results of associated
companies and joint ventures (4) 6 (2) 21 21
EBITDA 56 215 281 397 949
Mobile Networks (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales 2 345 2 424 2 449 3 181 10 398
Gross profit 729 875 871 1 256 3 732
Gross margin % 31.1% 36.1% 35.6% 39.5% 35.9%
Operating profit/(loss) 15 183 206 415 818
Operating margin % 0.6% 7.5% 8.4% 13.0% 7.9%
Other segment items
Depreciation and amortization (87) (88) (85) (87) (347)
Share of results of associated
companies and joint ventures (4) 6 (2) 21 21
EBITDA 98 277 289 523 1,186
Network Infrastructure
(reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales(1) 1 419 1 545 1 793 1 979 6 736
Gross profit 449 523 635 685 2 292
Gross margin % 31.6% 33.9% 35.4% 34.6% 34.0%
Operating profit/(loss) (125) (49) 118 (102) (158)
Operating margin % (8.8)% (3.2)% 6.6% (5.2)% (2.3)%
Other segment items
Depreciation and amortization (126) (131) (126) (124) (508)
Share of results of associated
companies and joint ventures 0 0 (1) 1 (1)
EBITDA 1 82 243 23 349
(1) Fixed Networks net sales of EUR 350 million in Q1'20, EUR 439
million in Q2'20, EUR 453 million in Q3'20, EUR 517 million in Q4'20
and EUR 1 759 million in Q1-Q4'20. IP Networks net sales of EUR 542
million in Q1'20, EUR 611 million in Q2'20, EUR 670 million in Q3'20,
EUR 761 million in Q4'20 and EUR 2 585 million in Q1-Q4'20. Optical
Networks net sales of EUR 394 million in Q1'20, EUR 363 million in
Q2'20, EUR 463 million in Q3'20, EUR 474 million in Q4'20 and EUR
1 695 million in Q1-Q4'20. Submarine Networks net sales of EUR 132
million in Q1'20, EUR 131 million in Q2'20, EUR 206 million in Q3'20,
EUR 227 million in Q4'20 and EUR 697 million in Q1-Q4'20.
Network Infrastructure (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales(1) 1 419 1 545 1 793 1 980 6 736
Gross profit 461 537 648 715 2 361
Gross margin % 32.5% 34.8% 36.1% 36.1% 35.1%
Operating profit/(loss) (31) 66 212 211 457
Operating margin % (2.2)% 4.3% 11.8% 10.7% 6.8%
Other segment items
Depreciation and amortization (50) (51) (50) (50) (200)
Share of results of associated
companies and joint ventures 0 0 (1) 1 (1)
EBITDA 19 117 261 262 656
(1) Fixed Networks net sales of EUR 350 million in Q1'20, EUR 439
million in Q2'20, EUR 453 million in Q3'20, EUR 517 million in Q4'20
and EUR 1 759 million in Q1-Q4'20. IP Networks net sales of EUR 542
million in Q1'20, EUR 611 million in Q2'20, EUR 670 million in Q3'20,
EUR 761 million in Q4'20 and EUR 2 585 million in Q1-Q4'20. Optical
Networks net sales of EUR 394 million in Q1'20, EUR 363 million in
Q2'20, EUR 463 million in Q3'20, EUR 474 million in Q4'20 and EUR
1 695 million in Q1-Q4'20. Submarine Networks net sales of EUR 132
million in Q1'20, EUR 131 million in Q2'20, EUR 206 million in Q3'20,
EUR 227 million in Q4'20 and EUR 697 million in Q1-Q4'20.
Cloud and Network Services (reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales 744 718 663 962 3 087
Gross profit 240 229 117 259 845
Gross margin % 32.3% 31.9% 17.6% 26.9% 27.4%
Operating profit/(loss) (69) (54) (148) (63) (334)
Operating margin % (9.3)% (7.5)% (22.3)% (6.5)% (10.8)%
Other segment items
Depreciation and amortization (38) (37) (35) (35) (146)
Share of results of associated
companies and joint ventures 1 1 2 2 5
EBITDA (30) (16) (111) (26) (183)
Cloud and Network Services (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales 744 718 663 962 3 087
Gross profit 255 258 130 374 1 016
Gross margin % 34.3% 35.9% 19.6% 38.9% 32.9%
Operating profit/(loss) (39) (6) (119) 97 (67)
Operating margin % (5.2)% (0.8)% (17.9)% 10.1% (2.2)%
Other segment items
Depreciation and amortization (30) (29) (28) (28) (115)
Share of results of associated
companies and joint ventures 1 1 2 2 5
EBITDA (8) 24 (89) 127 53
Nokia Technologies (reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales 347 341 331 382 1 402
Gross profit 345 339 327 380 1 392
Gross margin % 99.4% 99.4% 98.8% 99.5% 99.3%
Operating profit/(loss) 280 271 263 306 1 120
Operating margin % 80.7% 79.5% 79.5% 80.1% 79.9%
Other segment items
Depreciation and amortization (10) (10) (10) (10) (39)
Share of results of associated
companies and joint ventures 0 0 1 0 1
EBITDA 290 281 274 316 1,160
Nokia Technologies (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales 347 341 331 382 1 402
Gross profit 345 339 328 380 1 393
Gross margin % 99.4% 99.4% 99.1% 99.5% 99.4%
Operating profit/(loss) 280 272 264 307 1 123
Operating margin % 80.7% 79.8% 79.8% 80.4% 80.1%
Other segment items
Depreciation and amortization (10) (10) (10) (10) (39)
Share of results of associated
companies and joint ventures 0 0 1 0 1
EBITDA 290 282 275 317 1 163
Group Common and Other (reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales 68 75 67 59 269
Gross profit (4) 2 5 (5) (1)
Gross margin % (5.9)% 2.7% 7.5% (8.5)% (0.4)%
Operating profit/(loss) (118) (103) (65) 28 (258)
Operating margin % (173.5)% (137.3)% (97.0)% 47.5% (95.9)%
Other segment items
Depreciation and amortization (7) (7) (6) (6) (26)
Share of results of associated
companies and joint ventures (1) 0 0 (4) (5)
EBITDA (112) (96) (59) 30 (237)
Group Common and Other (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales 68 75 67 59 269
Gross profit (2) 6 5 (2) 7
Gross margin % (2.9)% 8.0% 7.5% (3.4)% 2.6%
Operating profit/(loss) (108) (91) (77) 26 (251)
Operating margin % (158.8)% (121.3)% (114.9)% 44.1% (93.3)%
Other segment items
Depreciation and amortization (6) (6) (6) (6) (24)
Share of results of associated
companies and joint ventures (1) 0 0 (4) (5)
EBITDA (103) (85) (71) 28 (232)
Nokia Group (reported)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Reported Reported Reported Reported Reported
---------- ---------- ---------- ---------- ----------
Net sales 4 913 5 092 5 294 6 553 21 852
Gross profit 1 736 1 942 1 962 2 553 8 193
Gross margin % 35.3% 38.1% 37.1% 39.0% 37.5%
Operating profit/(loss) (76) 170 350 441 885
Operating margin % (1.5)% 3.3% 6.6% 6.7% 4.0%
Other segment items
Depreciation and amortization (285) (290) (279) (279) (1 132)
Share of results of associated
companies and joint ventures (4) 6 0 20 22
EBITDA 205 466 629 740 2 039
Nokia Group (comparable)
Q1'20 Q2'20 Q3'20 Q4'20 Q1-Q4'20
---------- ---------- ---------- ---------- ----------
EUR million Comparable Comparable Comparable Comparable Comparable
---------- ---------- ---------- ---------- ----------
Net sales 4 914 5 093 5 294 6 554 21 854
Gross profit 1 787 2 017 1 981 2 724 8 509
Gross margin % 36.4% 39.6% 37.4% 41.6% 38.9%
Operating profit/(loss) 116 423 486 1 056 2 081
Operating margin % 2.4% 8.3% 9.2% 16.1% 9.5%
Other segment items
Depreciation and amortization (183) (184) (178) (180) (725)
Share of results of associated
companies and joint ventures (4) 6 0 20 22
EBITDA 295 613 664 1 256 2 828
Illustrative recast of Nokia Software to Cloud and Network Services
The reclassifications affected our new Cloud and Network Services
business group particularly significantly, and therefore we are
providing an illustrative bridge. The comparable operating margin for
our previous Nokia Software reportable segment was 19.2% in 2020,
whereas the comparable operating margin for Cloud and Network Services
was -2.2% in 2020. This was attributable to reclassifying Packet Core,
Enterprise Solution Services, Managed Services, and Network Cognitive
Services to Cloud and Network Services from our previous Networks
reportable segment, as well as reclassifying Digital Automation and
Analytics & IoT to Cloud and Network Services from Group Common and
Other. In addition, Network Management was reclassified to Mobile
Networks from our previous Nokia Software reportable segment.
Please refer to the PDF attached to this release.
About Nokia
We create the critical networks and technologies to bring together the
world's intelligence, across businesses, cities, supply chains and
societies.
With our commitment to innovation and technology leadership, driven by
the award-winning Nokia Bell Labs, we deliver networks at the limits of
science across mobile, infrastructure, cloud, and enabling technologies.
Adhering to the highest standards of integrity and security, we help
build the capabilities we need for a more productive, sustainable and
inclusive world.
For our latest updates, please visit us online
https://www.globenewswire.com/Tracker?data=Q7ExlH8wwCB2mo0V0oefP0DM9SBZVVt113Qh4kHYnIGLYaxvgc-jDR3MePbaYwUY5uz2lLBbgZNQWQc-gUVeKA==
www.nokia.com and follow us on Twitter @nokia.
Investor Enquiries:
Nokia Investor Relations
Tel. +358 4080 3 4080
Email:
https://www.globenewswire.com/Tracker?data=6R1OJsTv3MiY--Cm0MAWauMPirn2P8cJkMJmvS23rzdodl9ID-Izjt6z_xVRl4dUBpZUCyDMotO3EOuLLTwUjUPJYWYlCk-G9btdn9wmBF73kTf7R-fDwb7vwUgr2rWAJale1pGehj-FS9JfjulQJg0la-l5DCEQQJPzBH6frHFcW0Rzqu3_GXS7T8RrfZx0J0l6XdnEwA87bhECVAhel7qZPHeAGeRWUo20qg6YO6mTOziod8gs8qOlAhvE86Np7sr2vTkCzVyFoIzoTga9_Sn8UNNFfqJ4L2c_xwwLDw4=
investor.relations@nokia.com
Media Enquiries:
Nokia
Communications
Phone: +358 10 448 4900
Email:
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press.services@nokia.com
Forward-looking statements
It should be noted that Nokia and its businesses are exposed to various
risks and uncertainties and 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 or
benefits related to our strategies, growth management and operational
key performance indicators; B) expectations, plans or benefits related
to future performance of our businesses (including the expected impact,
timing and duration of that impact of COVID-19 on our businesses, our
supply chain and our customers' businesses) and any future dividends
including timing and qualitative and quantitative thresholds associated
therewith; C) expectations and targets regarding financial performance,
cash generation, results, the timing of receivables, operating expenses,
taxes, currency exchange rates, hedging, cost savings, product cost
reductions and competitiveness, as well as results of operations
including targeted synergies, better commercial management and those
results related to market share, prices, net sales, income and margins;
D) expectations, plans or benefits related to changes in organizational
and operational structure; E) expectations regarding competition within
our market, market developments, general economic conditions and
structural and legal change globally and in national and regional
markets, such as China; F) timing of the deliveries of our products and
services, including our short term and longer term expectations around
the rollout of 5G, investment requirements with such rollout, and our
ability to capitalize on such rollout; G) expectations regarding
restructurings, investments, capital structure optimization efforts,
uses of proceeds from transactions, acquisitions and divestments and our
ability to achieve the financial and operational targets set in
connection with any such restructurings, investments, capital structure
optimization efforts, divestments and acquisitions, including our
current cost savings program; H) expectations, plans or benefits related
to future capital expenditures, reduction of support function costs,
temporary incremental expenditures or other R&D expenditures to develop
or rollout software and other new products, including 5G, ReefShark and
increased digitalization; I) expectations regarding our customers'
future actions, including our customers' capital expenditure constraints
and our ability to satisfy customer's needs and retain their business;
and J) statements preceded by or including "believe", "expect",
"expectations", "deliver", "maintain", "strengthen", "target",
"estimate", "plan", "intend", "assumption", "focus", "continue",
"should", "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, but are not limited to: 1) our strategy is
subject to various risks and uncertainties and we may be unable to
successfully implement our strategic plans, sustain or improve the
operational and financial performance of our business groups, correctly
identify or successfully pursue business opportunities or otherwise grow
our business; 2) general economic and market conditions, general public
health conditions (including its impact on our supply chains) and other
developments in the economies where we operate, including the timeline
for the deployment of 5G and our ability to successfully capitalize on
that deployment; 3) competition and our ability to effectively and
profitably invest in existing and new high-quality products, services,
upgrades and technologies and bring them to market in a timely manner;
4) our dependence on the development of the industries in which we
operate, including the cyclicality and variability of the information
technology and telecommunications industries and our own R&D
capabilities and investments; 5) our dependence on a limited number of
customers and large multi-year agreements, as well as external events
impacting our customers including mergers and acquisitions and the
possibility of our customers awarding business to our competitors; 6)
our ability to manage and improve our financial and operating
performance, cost savings, competitiveness and synergies generally,
expectations and timing around our ability to recognize any net sales
and our ability to implement changes to our organizational and
operational structure efficiently; 7) our global business and exposure
to regulatory, political or other developments in various countries or
regions, including emerging markets and the associated risks in relation
to tax matters and exchange controls, among others; 8) our ability to
successfully realize the expectations, plans or benefits related to any
future collaboration or business collaboration agreements and patent
license agreements or arbitration awards, including income to be
received under any collaboration, partnership, agreement or arbitration
award; 9) our exposure to direct and indirect regulation, including
economic or trade policies, and the reliability of our governance,
internal controls and compliance processes to prevent regulatory
penalties in our business or in our joint ventures; 10) our ability to
successfully complete and capitalize on our order backlogs and continue
converting our sales pipeline into net sales; and 11) the scope and
duration of the COVID-19 impact on the global economy and financial
markets as well as our customers, supply chain, product development,
service delivery, other operations and our financial, tax, pension and
other assets, and the shape of the economic recovery following the
pandemic as well as the risk factors specified in our 2020 annual report
on Form 20-F published on March 4, 2021 under "Operating and financial
review and prospects-Risk factors" and in our other filings or documents
furnished with the U.S. Securities and Exchange Commission. Other
unknown or unpredictable factors or underlying assumptions subsequently
proven to be incorrect could cause actual results to differ materially
from those in the forward-looking statements. We do not undertake any
obligation to publicly update or revise forward-looking statements,
whether as a result of new information, future events or otherwise,
except to the extent legally required.
Attachments
-- Segment_recast_2020_ENG
https://ml-eu.globenewswire.com/Resource/Download/5e30e7c7-bd8b-4307-8aa1-e404c77e5658
-- Indicative_bridge_2020
https://ml-eu.globenewswire.com/Resource/Download/b56c9c7d-0894-4db2-81a5-931c11ed2465
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