NOK Nokia Corp

  By Dominic Chopping 
 

Finland's Nokia Corp. (NOK) reported results for the fourth quarter on Thursday. Here's what we watched:

SALES: Sales for the quarter rose 0.5% to 6.9 billion euros ($7.6 billion), in line with analysts' expectations.

NET PROFIT: The company's adjusted net profit for the three-month period ended Dec. 31 was EUR821 million, compared with EUR728 million a year earlier. Analysts polled by FactSet had expected a net profit of EUR694 million. On a nonadjusted basis, Nokia reported a net profit of EUR563 million against EUR367 million expected.

WHAT WE WATCHED:

5G MOMENTUM: In its key networks business, Nokia saw growth driven by South Korea and Japan, partially offset by declines in Greater China and North America. "In 4Q 2019, we experienced continued temporary capital expenditure constraints in North America related to customer merger activity, as well as continued competitive intensity," the company said. It said its 4G plus 5G mobile radio market share, excluding China, was approximately 27% in the fourth quarter of 2019 and it expects to end 2020 at approximately 27%.

MARGINS AND GUIDANCE: The networks gross margin slipped to 34.2% from 36.3%, mainly due to high 5G product costs, as well as elevated levels of deployment services, partially offset by improvements in operational execution, with a focus on cost discipline and initiatives to improve service delivery digitalization and automation. The networks operating margin rose to 12.3% from 9.8%. The company still expects 2020 adjusted earnings per share of EUR0.25 plus or minus 5 cents, with an adjusted operating margin of 9.5% plus or minus 1.5 percentage points. Nokia introduced two new pieces of commentary. Firstly, that the 2020 market, excluding China, will be flat on the year with Nokia performing in-line. Secondly, that seasonality in 2020 will be similar to 2019. It also said there is potential for a temporary disruption, particularly in its supply chain, due to the coronavirus outbreak.

DIVIDEND: Nokia suspended dividend payments in the third quarter after saying it needed to save cash to cover the high costs of rolling out 5G networks. It said at the time that payments will resume when its net cash position improves to approximately EUR2 billion. Its net cash position at the end of the fourth quarter stood at EUR1.7 billion, and Nokia said it doesn't expect to resume dividend payments during the first three quarters of the year. "We recognize... that we have faced challenges in Mobile Access and in cash generation," Chief Executive Rajeev Suri said. "We will have a sharp focus on these two areas over the course of 2020, which we believe to be a year of progressive improvement as the actions we have underway start to deliver results," he said.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

February 06, 2020 06:57 ET (11:57 GMT)

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