NOK Nokia Corp

    By Dominic Chopping 
 

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

SALES: Sales fell 4.8% on the year to EUR6.57 billion. Analysts polled by FactSet had expected sales to fall 7.3% to EUR6.4 billion. Nokia said the quarter was boosted by EUR150 million of sales expected in 2021 and a EUR100 million positive fluctuation in Nokia's venture fund investments. Covid-19 hit 2020 sales by around EUR200 million, with the majority of these sales expected to be shifted to future periods rather than being lost, it said.

NET PROFIT: The company's adjusted net profit for the quarter slipped to EUR814 million from EUR821 million a year earlier. Analysts polled by FactSet had expected net profit of EUR622 million. On a nonadjusted basis, Nokia swung to a net loss of EUR2.6 billion, as the company posted a EUR2.9 billion loss due to the derecognition of Finnish deferred tax assets.

WHAT WE WATCHED:

--5G MOMENTUM: Nokia's key networks unit saw a 7% fall in sales but gross margins increased on product cost reductions. "Completing the turnaround in Mobile Networks remains our top priority for 2021, and these visible signs of progress give me confidence that we are on the right track but there is still work to be done," Chief Executive Pekka Lundmark said. In 2020, Nokia's rate of converting its 4G footprint into 5G was impacted by shortfalls in North America and China, but partially offset by footprint gains in Europe. The company reiterated that 2021 is expected to be challenging, with meaningful headwinds due to market share loss and price erosion in North America.

--GUIDANCE: The company backed 2021 guidance for an adjusted operating margin of 7%-10%, and said it now sees net sales adjusted for currency fluctuations of between EUR20.6 billion and EUR21.8 billion. In 2021, Nokia expects a temporary benefit of EUR150 million due to lower travel and personnel expenses related to Covid-19.

--CASH, DIVIDEND: Nokia ended 2020 with a net cash position of EUR2.49 billion, benefiting from an early customer payment of approximately EUR500 million that had been expected in 1Q 2021. However, with the focus on increased investments in 5G and strategic areas, while continuing to establish a track record of sustainable cash generation, the board didn't propose a dividend for 2020.

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

(END) Dow Jones Newswires

February 04, 2021 07:23 ET (12:23 GMT)

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