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 July 20, 2023
(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): |
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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): |
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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 Q2 and Half
Year 2023 |
| · | Report for Q2 and Half Year 2023 |
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
Nokia Corporation
Half Year Financial Report
20 July 2023 at 08:00 EEST
Nokia Corporation Financial Report for Q2 and Half Year 2023
Resilient performance amidst macro uncertainty
| · | Q2 net sales flat
y-o-y in constant currency (-3% reported). |
| · | Enterprise net sales
grew 27% y-o-y in constant currency (25% reported). |
| · | Comparable gross margin
declined 180bps y-o-y to 38.8% (reported declined 200bps to 38.2%) due to regional mix in
Mobile Networks, partly offset by a strong Network Infrastructure margin and catch-up net
sales in Nokia Technologies. |
| · | Comparable operating
margin declined y-o-y by 120bps to 11.0% (reported declined 130bps to 8.3%), due to the above
mentioned gross margin factors, partly offset by lower operating expenses and higher other
operating income. |
| · | Comparable diluted
EPS of EUR 0.07; reported diluted EPS of EUR 0.05. |
| · | Free cash flow negative
EUR 0.4bn, net cash balance of EUR 3.7bn. |
| · | As announced on 14
July 2023, Nokia now expects full year 2023 net sales in the range of EUR 23.2 billion
to EUR 24.6bn with a comparable operating margin in the range of 11.5% to 13.0%. |
This is a summary of the Nokia Corporation
Financial Report for Q2 and Half Year 2023 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 Q2 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 reports with tables.
PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q2 2023 RESULTS
In Q2 we delivered stable net sales in constant currency compared
to the prior year. As a result of prudent management of our costs, we were able to deliver a solid comparable operating margin of 11.0%
despite the regional mix headwinds faced in our Mobile Networks business. Considering the significant
decline in major North American operators' investments, our operating margin has proved resilient, even adjusting for the EUR 80 million
of catch-up net sales in Nokia Technologies.
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
The highlight of the quarter was the new long-term patent license
agreement signed with Apple. This is another major milestone in our smartphone license renewal cycle. Our performance in Enterprise was
also a highlight with net sales increasing by 27% in constant currency illustrating how well we are executing on this strategic pillar.
Our Network Infrastructure business saw a 6% decline in net sales
in constant currency as macro uncertainty impacted the business, particularly in IP Networks which declined 11%. We also saw a decline
in Fixed Networks, driven by Fixed Wireless Access and some modest inventory management, nonetheless fiber demand remains robust. In
Optical Networks we saw continued strength with 16% growth. Supportive product mix in the quarter along with good cost discipline led
to operating margin improving 160bps year-on-year.
Our Mobile Networks business continued to benefit from 5G deployments
in India offsetting on-going weakness in North America, delivering 5% net sales growth in constant currency. Gross margin was largely
in line with Q1 and continued cost discipline led to an operating margin of 7.9% in Q2.
Cloud and Network Services achieved net sales growth of 2% in constant
currency and delivered a 2.2% operating margin in the quarter. We recently announced a strategic partnership with Red Hat for cloud infrastructure,
another important milestone on the path to rebalancing the portfolio.
Nokia Technologies’ annual net sales run-rate remained approximately
EUR 1.0 billion in Q2 excluding the catch-up benefit. Considering our current base of agreements, we now see that our net sales annual
run-rate would be EUR 1.1 billion from January 2024, subject to any other material developments. We remain confident Nokia Technologies
will return to an annual run-rate of EUR 1.4-1.5 billion as we work through the smartphone license renewal cycle and grow in new areas.
Earlier in the year I highlighted that we were starting to see signs
of macroeconomic challenges along with inventory digestion impacting customer spending and this has intensified through the second quarter.
In the second half we expect these trends to continue to impact our business, meaning we now see second half net sales broadly similar
to the first half in both Network Infrastructure and Mobile Networks with some sequential improvement visible into Q4.
We have therefore reduced our net sales outlook for 2023 to EUR 23.2
billion to EUR 24.6 billion from the prior EUR 24.6 billion to EUR 26.2 billion. Proactive action by our business groups to manage cost
is largely mitigating the impact to our operating margin and hence we only narrow the range to 11.5% to 13.0% from the prior 11.5% to
14.0%.
Looking beyond 2023, in Network Infrastructure we believe these impacts
are mostly short-term in nature and that moving forward we see growth opportunities supported by the work we have been doing to diversify
our customer base by growing in enterprise and webscale. In Mobile Networks there is still substantial need for operators to invest in
5G globally with only approximately 25% of the potential mid-band 5G base stations so far deployed outside China. We also remain focused
on taking the necessary actions to improve our operating margin to double-digit. For the Group we remain committed to achieving at least
14% comparable operating margin longer-term.
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
Finally, given
the strength of our balance sheet and EUR 3.7 billion net cash position I'm confident we have a firm foundation from which to navigate
this period of uncertainty. I would like to thank all the Nokia employees for their hard work, cost focus and continued commitment.
FINANCIAL RESULTS
EUR million (except for EPS in EUR) | |
Q2'23 | | |
Q2'22 | | |
YoY
change | | |
Constant
currency
YoY
change | | |
Q1-Q2'23 | | |
Q1-Q2'22 | | |
YoY
change | | |
Constant
currency
YoY
change | |
Reported results | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Net sales | |
| 5 710 | | |
| 5 873 | | |
| (3 | )% | |
| 0 | % | |
| 11 569 | | |
| 11 220 | | |
| 3 | % | |
| 4 | % |
Gross margin % | |
| 38.2 | % | |
| 40.2 | % | |
| (200 | )bps | |
| | | |
| 37.8 | % | |
| 40.4 | % | |
| (260 | )bps | |
| | |
Research and development expenses | |
| (1 045) | | |
| (1 091) | | |
| (4 | )% | |
| | | |
| (2 154) | | |
| (2 163) | | |
| 0 | % | |
| | |
Selling, general and administrative expenses | |
| (703 | ) | |
| (728 | ) | |
| (3 | )% | |
| | | |
| (1 432) | | |
| (1 403) | | |
| 2 | % | |
| | |
Operating profit | |
| 474 | | |
| 564 | | |
| (16 | )% | |
| | | |
| 900 | | |
| 918 | | |
| (2 | )% | |
| | |
Operating margin % | |
| 8.3 | % | |
| 9.6 | % | |
| (130 | )bps | |
| | | |
| 7.8 | % | |
| 8.2 | % | |
| (40 | )bps | |
| | |
Profit for the period | |
| 289 | | |
| 460 | | |
| (37 | )% | |
| | | |
| 578 | | |
| 679 | | |
| (15 | )% | |
| | |
EPS, diluted | |
| 0.05 | | |
| 0.08 | | |
| (38 | )% | |
| | | |
| 0.10 | | |
| 0.12 | | |
| (17 | )% | |
| | |
Net cash and interest-bearing financial investments | |
| 3 660 | | |
| 4 546 | | |
| (19 | )% | |
| | | |
| 3 660 | | |
| 4 546 | | |
| (19 | )% | |
| | |
Comparable results | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net sales | |
| 5 710 | | |
| 5 873 | | |
| (3 | )% | |
| 0 | % | |
| 11 569 | | |
| 11 220 | | |
| 3 | % | |
| 4 | % |
Gross margin % | |
| 38.8 | % | |
| 40.6 | % | |
| (180 | )bps | |
| | | |
| 38.2 | % | |
| 40.7 | % | |
| (250 | )bps | |
| | |
Research and development expenses | |
| (1 026) | | |
| (1 069) | | |
| (4 | )% | |
| | | |
| (2 119) | | |
| (2 122) | | |
| 0 | % | |
| | |
Selling, general and administrative expenses | |
| (618 | ) | |
| (623 | ) | |
| (1 | )% | |
| | | |
| (1 259) | | |
| (1 204) | | |
| 5 | % | |
| | |
Operating profit | |
| 626 | | |
| 714 | | |
| (12 | )% | |
| | | |
| 1 106 | | |
| 1 296 | | |
| (15 | )% | |
| | |
Operating margin % | |
| 11.0 | % | |
| 12.2 | % | |
| (120 | )bps | |
| | | |
| 9.6 | % | |
| 11.6 | % | |
| (200 | )bps | |
| | |
Profit for the period | |
| 414 | | |
| 585 | | |
| (29 | )% | |
| | | |
| 756 | | |
| 1 001 | | |
| (24 | )% | |
| | |
EPS, diluted | |
| 0.07 | | |
| 0.10 | | |
| (30 | )% | |
| | | |
| 0.13 | | |
| 0.17 | | |
| (24 | )% | |
| | |
ROIC1 | |
| 13.9 | % | |
| 18.5 | % | |
| (460 | )bps | |
| | | |
| 13.9 | % | |
| 18.5 | % | |
| (460 | )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 Q2 and Half Year 2023 for details.
Business group results | |
| Network
Infrastructure
| | |
| Mobile
Networks
| | |
| Cloud
and Network
Services | | |
| Nokia
Technologies
| | |
| Group
Common
and Other | |
EUR million | |
| Q2'23 | | |
| Q2'22 | | |
| Q2'23 | | |
| Q2'22 | | |
| Q2'23 | | |
| Q2'22 | | |
| Q2'23 | | |
| Q2'22 | | |
| Q2'23 | | |
| Q2'22 | |
Net sales | |
| 1 978 | | |
| 2 153 | | |
| 2 623 | | |
| 2 593 | | |
| 742 | | |
| 753 | | |
| 334 | | |
| 305 | | |
| 35 | | |
| 77 | |
YoY change | |
| (8 | )% | |
| | | |
| 1 | % | |
| | | |
| (1 | )% | |
| | | |
| 10 | % | |
| | | |
| (55 | )% | |
| | |
Constant currency YoY change | |
| (6 | )% | |
| | | |
| 5 | % | |
| | | |
| 2 | % | |
| | | |
| 10 | % | |
| | | |
| (53 | )% | |
| | |
Gross margin % | |
| 37.1 | % | |
| 35.4 | % | |
| 33.4 | % | |
| 40.2 | % | |
| 36.5 | % | |
| 37.2 | % | |
| 100.0 | % | |
| 99.7 | % | |
| (2.9 | )% | |
| (5.2 | )% |
Operating profit/(loss) | |
| 260 | | |
| 247 | | |
| 206 | | |
| 291 | | |
| 16 | | |
| (5 | ) | |
| 236 | | |
| 217 | | |
| (91 | ) | |
| (36 | ) |
Operating margin % | |
| 13.1 | % | |
| 11.5 | % | |
| 7.9 | % | |
| 11.2 | % | |
| 2.2 | % | |
| (0.7 | )% | |
| 70.7 | % | |
| 71.1 | % | |
| (260.0 | )% | |
| (46.8 | )% |
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
SHAREHOLDER DISTRIBUTION
Dividend
Under the authorization by the
Annual General Meeting held on 4 April 2023, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR
0.12 per share to be paid in respect of financial year 2022. 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.
On 20 July 2023, the Board
resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is on 25 July 2023 and the dividend will be paid
on 3 August 2023. 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,
the Board’s remaining distribution authorization is a maximum of EUR 0.06 per share.
Share buyback program
In February 2022, Nokia’s
Board of Directors initiated a share buyback program to repurchase shares to return up to EUR 600 million of cash to shareholders in
tranches over a period of two years. The second EUR 300 million phase of the share buyback program started in January 2023 and it
will end at the latest by 21 December 2023. Under this phase, Nokia has by 30 June 2023 repurchased 40 145 500 of its own shares
at an average price per share of approximately EUR 4.14.
OUTLOOK
|
Full
Year 2023 |
Net
sales1 |
EUR
23.2 billion to EUR 24.6 billion (-4% to +2% growth in constant currency) |
Comparable
operating margin2 |
11.5
to 13.0% |
Free
cash flow2 |
20
to 50% conversion from comparable operating profit |
1Assuming the rate 1 EUR = 1.09 USD as
of 30 June 2023 continues for the remainder of 2023 along with actual H1 foreign exchange rates (adjusted from prior 1.09 USD rate
as of 31 March 2023).
2 Please refer to Performance measures section in Nokia
Corporation Financial Report for Q2 and Half Year 2023 for a full explanation of how these terms are defined.
Nokia announced an update to its financial outlook for 2023 on 14
July 2023. Nokia's financial outlook prior to this was for net sales of EUR 24.6 billion to EUR 26.2 billion, a comparable operating
margin of 11.5% to 14.0% and free cash flow of 20 to 50% conversion from comparable operating profit. The updates to Nokia's outlook
assumptions highlighted below are already incorporated in the revised guidance.
The outlook, long-term targets and all
of the underlying outlook assumptions described below are forward-looking statements subject to a number of risks and uncertainties as
described or referred to in the Risk Factors section later in this release. Along with Nokia's official outlook targets provided
above, below are outlook assumptions by business group that support the group level outlook. The comments for relative growth by business
group are provided to give a reference on how we expect each to perform relative to the overall group.
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
|
2023
total addressable market |
Nokia
business group assumptions |
|
Size
(EUR bn)1 |
Constant
currency growth |
Net
sales growth |
Operating
margin |
Network
Infrastructure2 |
44
(update) |
1%
(update) |
Below
group (update) |
12.0
to 14.0% (update) |
Mobile
Networks3 |
47
(update) |
-2%
(update) |
Faster
than group |
6.0
to 8.0% (update) |
Cloud
and Network Services |
27
(update) |
3% |
Faster
than group (update) |
6.0
to 8.0% (update) |
1 Total addressable market forecasts assume the rate 1
EUR = 1.09 USD as of 30 June 2023 continues for the remainder of 2023 along with actual H1 foreign exchange rates. The addressable
market is excluding Russia and Belarus.
2 Excluding Submarine Networks.
3 Excluding China.
Nokia provides the following approximate outlook assumptions for additional
items concerning 2023:
|
Full
year 2023 |
Comment |
Nokia
Technologies operating profit |
Largely
stable |
Assuming closure of outstanding litigation / renewal discussions
we expect largely stable operating profit in Nokia Technologies in 2023.
Nokia currently assumes free cash flow will be meaningfully greater
than operating profit in Nokia Technologies. (update) |
Group
Common and Other operating profit |
Negative
EUR
400 million (update) |
This
includes central function costs which are expected to be largely stable at below EUR 200 million and an increase in investment in
long-term research now above EUR 100 million. This line also accounts for Radio Frequency Systems (RFS) and could be impacted by
any positive or negative revaluations in Nokia's venture funds in 2023. |
Comparable
financial income and expenses |
EUR
0 to negative EUR 100 million (update) |
Reflecting
year-to-date results and the impact of higher interest expenses. |
Comparable
income tax rate |
~25% |
Following
the re-recognition of deferred tax assets at the end of 2022 we now provide an assumption based on a % tax rate instead of an absolute
amount. |
Cash
outflows related to income taxes |
EUR
700 million |
Cash
outflows related to income taxes are expected to increase due to mandatory capitalization of R&D costs under U.S. tax laws as
well as evolving regional mix. |
Capital
Expenditures |
EUR
700 million |
|
LONG-TERM TARGETS
Nokia's long-term targets remain unchanged from those introduced with
its Q4 2021 financial results. The targets had an associated timeline of 3-5 years which remains unchanged and implies by 2024-2026.
These targets remain intended to show Nokia's ambition to deliver continuous improvement in the business over the time period.
Net
sales |
Grow
faster than the market |
Comparable
operating margin1 |
≥
14% |
Free
cash flow1 |
55
to 85% conversion from comparable operating profit |
1 Please refer to Performance measures section in Nokia Corporation Financial Report for Q2 and Half Year 2023 for a full explanation of how these terms are defined.
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
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; |
| · | Potential economic
impact and disruption of global pandemics; |
| · | War or other geopolitical
conflicts, disruptions and potential costs thereof; |
| · | Other macroeconomic,
industry and competitive developments; |
| · | Timing and value of
new, renewed 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; on-going
litigation with respect to licensing and regulatory landscape for patent licensing; |
| · | The outcomes of on-going
and potential disputes and litigation; |
| · | 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 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 2022 annual report on Form 20-F published on 2 March 2023 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, licenses, 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 potential global pandemics and the general
or regional 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 flows, 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; E) impact on revenue with respect to litigation/renewal discussions; and F) 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.
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
ANALYST WEBCAST
· | Nokia's webcast will begin on 20 July 2023
at 11.30 a.m. Finnish time (EEST). The webcast will last approximately 60 minutes. |
· | The webcast will be a presentation
followed by a Q&A session. Presentation slides will be available for download at www.nokia.com/financials. |
· | 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 2023
| · | Nokia plans to publish
its third quarter and January-September 2023 results on 19 October 2023. |
About Nokia
At Nokia, we create technology that helps the world act together.
As a B2B technology innovation leader, we are pioneering networks
that sense, think and act by leveraging our work across mobile, fixed and cloud networks. In addition, we create value with intellectual
property and long-term research, led by the award-winning Nokia Bell Labs.
Service providers, enterprises and partners worldwide trust Nokia
to deliver secure, reliable and sustainable networks today – and work with us to create the digital services and applications of
the future.
Inquiries:
Nokia
Communications
Phone: +358 10 448 4900
Email: press.services@nokia.com
Kaisa Antikainen,
Communications Manager
| |
STOCK EXCHANGE
RELEASE 20 July 2023 |
Nokia
Investor Relations
Phone: +358 4080 3 4080
Email: investor.relations@nokia.com
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg001.jpg)
| Report for Q2 and Half Year 2023
Resilient performance amidst macro uncertainty
▪ Q2 net sales flat y-o-y in constant currency (-3% reported).
▪ Enterprise net sales grew 27% y-o-y in constant currency (25% reported).
▪ Comparable gross margin declined 180bps y-o-y to 38.8% (reported declined 200bps to 38.2%) due to regional mix in
Mobile Networks, partly offset by a strong Network Infrastructure margin and catch-up net sales in Nokia Technologies.
▪ Comparable operating margin declined y-o-y by 120bps to 11.0% (reported declined 130bps to 8.3%), due to the above
mentioned gross margin factors, partly offset by lower operating expenses and higher other operating income.
▪ Comparable diluted EPS of EUR 0.07; reported diluted EPS of EUR 0.05.
▪ Free cash flow negative EUR 0.4bn, net cash balance of EUR 3.7bn.
▪ As announced on 14 July 2023, Nokia now expects full year 2023 net sales in the range of EUR 23.2 billion to EUR 24.6bn
with a comparable operating margin in the range of 11.5% to 13.0%.
EUR million (except for EPS in EUR) Q2'23 Q2'22
YoY
change
Constant
currency
YoY
change Q1-Q2'23 Q1-Q2'22
YoY
change
Constant
currency
YoY
change
Reported results
Net sales 5 710 5 873 (3) % 0% 11 569 11 220 3% 4%
Gross margin % 38.2% 40.2% (200) bps 37.8% 40.4% (260) bps
Research and development expenses (1 045) (1 091) (4) % (2 154) (2 163) 0%
Selling, general and administrative expenses (703) (728) (3) % (1 432) (1 403) 2%
Operating profit 474 564 (16) % 900 918 (2) %
Operating margin % 8.3% 9.6% (130) bps 7.8% 8.2% (40) bps
Profit for the period 289 460 (37) % 578 679 (15) %
EPS, diluted 0.05 0.08 (38) % 0.10 0.12 (17) %
Net cash and interest-bearing financial investments 3 660 4 546 (19) % 3 660 4 546 (19) %
Comparable results
Net sales 5 710 5 873 (3) % 0% 11 569 11 220 3% 4%
Gross margin % 38.8% 40.6% (180) bps 38.2% 40.7% (250) bps
Research and development expenses (1 026) (1 069) (4) % (2 119) (2 122) 0%
Selling, general and administrative expenses (618) (623) (1) % (1 259) (1 204) 5%
Operating profit 626 714 (12) % 1 106 1 296 (15) %
Operating margin % 11.0% 12.2% (120) bps 9.6% 11.6% (200) bps
Profit for the period 414 585 (29) % 756 1 001 (24) %
EPS, diluted 0.07 0.10 (30) % 0.13 0.17 (24) %
ROIC1
13.9% 18.5% (460) bps 13.9% 18.5% (460) 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.
Network
Infrastructure
Mobile
Networks
Cloud and Network
Services
Nokia
Technologies
Group Common and
Other
EUR million Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22
Net sales 1 978 2 153 2 623 2 593 742 753 334 305 35 77
YoY change (8) % 1% (1) % 10 % (55) %
Constant currency YoY change (6) % 5% 2% 10 % (53) %
Gross margin % 37.1% 35.4% 33.4% 40.2% 36.5% 37.2% 100.0% 99.7% (2.9) % (5.2) %
Operating profit/(loss) 260 247 206 291 16 (5) 236 217 (91) (36)
Operating margin % 13.1% 11.5% 7.9% 11.2% 2.2% (0.7) % 70.7% 71.1% (260.0) % (46.8) %
20 July 2023 1 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg002.jpg)
| In Q2 we delivered stable net sales in constant currency
compared to the prior year. As a result of prudent
management of our costs, we were able to deliver a solid
comparable operating margin of 11.0% despite the regional
mix headwinds faced in our Mobile Networks business.
Considering the significant decline in major North American
operators' investments, our operating margin has proved
resilient, even adjusting for the EUR 80 million of catch-up net
sales in Nokia Technologies.
The highlight of the quarter was the new long-term patent
license agreement signed with Apple. This is another major
milestone in our smartphone license renewal cycle. Our
performance in Enterprise was also a highlight with net sales
increasing by 27% in constant currency illustrating how well we
are executing on this strategic pillar.
Our Network Infrastructure business saw a 6% decline in net
sales in constant currency as macro uncertainty impacted the
business, particularly in IP Networks which declined 11%. We
also saw a decline in Fixed Networks, driven by Fixed Wireless
Access and some modest inventory management, nonetheless
fiber demand remains robust. In Optical Networks we saw
continued strength with 16% growth. Supportive product mix
in the quarter along with good cost discipline led to operating
margin improving 160bps year-on-year.
Our Mobile Networks business continued to benefit from 5G
deployments in India offsetting on-going weakness in North
America, delivering 5% net sales growth in constant currency.
Gross margin was largely in line with Q1 and continued cost
discipline led to an operating margin of 7.9% in Q2.
Cloud and Network Services achieved net sales growth of 2% in
constant currency and delivered a 2.2% operating margin in
the quarter. We recently announced a strategic partnership
with Red Hat for cloud infrastructure, another important
milestone on the path to rebalancing the portfolio.
Nokia Technologies’ annual net sales run-rate remained
approximately EUR 1.0 billion in Q2 excluding the catch-up
benefit. Considering our current base of agreements, we now
see that our net sales annual run-rate would be EUR 1.1 billion
from January 2024, subject to any other material
developments. We remain confident Nokia Technologies will
return to an annual run-rate of EUR 1.4-1.5 billion as we work
through the smartphone license renewal cycle and grow in new
areas.
Earlier in the year I highlighted that we were starting to see
signs of macroeconomic challenges along with inventory
digestion impacting customer spending and this has intensified
through the second quarter. In the second half we expect these
trends to continue to impact our business, meaning we now
see second half net sales broadly similar to the first half in both
Network Infrastructure and Mobile Networks with some
sequential improvement visible into Q4.
We have therefore reduced our net sales outlook for 2023 to
EUR 23.2 billion to EUR 24.6 billion from the prior EUR 24.6
billion to EUR 26.2 billion. Proactive action by our business
groups to manage cost is largely mitigating the impact to our
operating margin and hence we only narrow the range to
11.5% to 13.0% from the prior 11.5% to 14.0%.
Looking beyond 2023, in Network Infrastructure we believe
these impacts are mostly short-term in nature and that moving
forward we see growth opportunities supported by the work we
have been doing to diversify our customer base by growing in
enterprise and webscale. In Mobile Networks there is still
substantial need for operators to invest in 5G globally with only
approximately 25% of the potential mid-band 5G base stations
so far deployed outside China. We also remain focused on
taking the necessary actions to improve our operating margin
to double-digit. For the Group we remain committed to
achieving at least 14% comparable operating margin longer-term.
Finally, given the strength of our balance sheet and EUR 3.7
billion net cash position I'm confident we have a firm
foundation from which to navigate this period of uncertainty. I
would like to thank all the Nokia employees for their hard work,
cost focus and continued commitment.
Shareholder distribution
Dividend
Under the authorization by the Annual General Meeting held on
4 April 2023, the Board of Directors may resolve on the
distribution of an aggregate maximum of EUR 0.12 per share to
be paid in respect of financial year 2022. 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.
On 20 July 2023, the Board resolved to distribute a dividend of
EUR 0.03 per share. The dividend record date is on 25 July
2023 and the dividend will be paid on 3 August 2023. 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, the Board’s remaining
distribution authorization is a maximum of EUR 0.06 per share.
Share buyback program
In February 2022, Nokia’s Board of Directors initiated a share
buyback program to repurchase shares to return up to EUR
600 million of cash to shareholders in tranches over a period of
two years. The second EUR 300 million phase of the share
buyback program started in January 2023 and it will end at the
latest by 21 December 2023. Under this phase, Nokia has by 30
June 2023 repurchased 40 145 500 of its own shares at an
average price per share of approximately EUR 4.14.
20 July 2023 2 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg003.jpg)
| Outlook
Full Year 2023
Net sales1
EUR 23.2 billion to EUR 24.6 billion (-4% to +2% growth in constant currency)
Comparable operating margin2
11.5 to 13.0%
Free cash flow2
20 to 50% conversion from comparable operating profit
1
Assuming the rate 1 EUR = 1.09 USD as of 30 June 2023 continues for the remainder of 2023 along with actual H1 foreign exchange rates (adjusted from prior 1.09 USD rate as of 31 March
2023). 2
Please refer to Performance measures section in this report for a full explanation of how these terms are defined.
Nokia announced an update to its financial outlook for 2023 on 14 July 2023. Nokia's financial outlook prior to this was for net
sales of EUR 24.6 billion to EUR 26.2 billion, a comparable operating margin of 11.5% to 14.0% and free cash flow of 20 to 50%
conversion from comparable operating profit. The updates to Nokia's outlook assumptions highlighted below are already
incorporated in the revised guidance.
The outlook, long-term targets and all of the underlying outlook assumptions described below are forward-looking statements
subject to a number of risks and uncertainties as described or referred to in the Risk Factors section later in this report. Along
with Nokia's official outlook targets provided above, below are outlook assumptions by business group that support the group
level outlook. The comments for relative growth by business group are provided to give a reference on how we expect each to
perform relative to the overall group.
2023 total addressable market Nokia business group assumptions
Size (EUR bn)1
Constant currency growth Net sales growth Operating margin
Network Infrastructure2
44 (update) 1% (update) Below group (update) 12.0 to 14.0% (update)
Mobile Networks3
47 (update) -2% (update) Faster than group 6.0 to 8.0% (update)
Cloud and Network Services 27 (update) 3% Faster than group (update) 6.0 to 8.0% (update)
1
Total addressable market forecasts assume the rate 1 EUR = 1.09 USD as of 30 June 2023 continues for the remainder of 2023 along with actual H1 foreign exchange rates. The addressable
market is excluding Russia and Belarus. 2
Excluding Submarine Networks. 3 Excluding China.
Nokia provides the following approximate outlook assumptions for additional items concerning 2023:
Full year 2023 Comment
Nokia Technologies operating profit Largely stable
Assuming closure of outstanding litigation / renewal discussions we expect largely
stable operating profit in Nokia Technologies in 2023.
Nokia currently assumes free cash flow will be meaningfully greater than operating
profit in Nokia Technologies. (update)
Group Common and Other operating profit
Negative
EUR 400 million
(update)
This includes central function costs which are expected to be largely stable at below
EUR 200 million and an increase in investment in long-term research now above EUR
100 million. This line also accounts for Radio Frequency Systems (RFS) and could be
impacted by any positive or negative revaluations in Nokia's venture funds in 2023.
Comparable financial income and expenses
EUR 0 to negative
EUR 100 million
(update)
Reflecting year-to-date results and the impact of higher interest expenses.
Comparable income tax rate ~25% Following the re-recognition of deferred tax assets at the end of 2022 we now provide
an assumption based on a % tax rate instead of an absolute amount.
Cash outflows related to income taxes EUR 700 million Cash outflows related to income taxes are expected to increase due to mandatory
capitalization of R&D costs under U.S. tax laws as well as evolving regional mix.
Capital Expenditures EUR 700 million
Long-term targets
Nokia's long-term targets remain unchanged from those introduced with its Q4 2021 financial results. The targets had an
associated timeline of 3-5 years which remains unchanged and implies by 2024-2026. These targets remain intended to show
Nokia's ambition to deliver continuous improvement in the business over the time period.
Net sales Grow faster than the market
Comparable operating margin1
≥ 14%
Free cash flow1
55 to 85% conversion from comparable operating profit
1
Please refer to Performance measures section in this report for a full explanation of how these terms are defined.
20 July 2023 3 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg004.jpg)
| Financial Results
Q2 2023 compared to Q2 2022
Net sales
In Q2 2023, reported net sales decreased 3% and were
negatively impacted by foreign exchange rate fluctuations.
On a constant currency basis, Nokia's net sales were flat year-on-year, with growth across all business groups except Network
Infrastructure. Mobile Networks increased 5% as India 5G
deployments drove growth for the business, while North
American customers continued to evaluate overall spending
and deplete inventories reducing net sales in this region. Nokia
Technologies grew 10%, reflecting EUR 80 million of catch-up
net sales related to deals signed in the quarter, while Cloud and
Network Services increased 2%. Network Infrastructure
declined 6%, reflecting short-term challenges related to the
macroeconomic environment primarily impacting North
America.
Gross margin
Reported gross margin decreased 200 basis points to 38.2% in
Q2 2023 and comparable gross margin decreased 180 basis
points to 38.8%. Gross margin performance reflected the
negative impact of regional mix in Mobile Networks, somewhat
offset by stronger gross margin in Network Infrastructure and
the catch-up net sales in Nokia Technologies.
Operating profit and margin
Reported operating profit in Q2 2023 was EUR 474 million, or
8.3% of net sales, down from 9.6% in the year-ago quarter.
Comparable operating profit decreased to EUR 626 million,
while comparable operating margin was 11.0%, down from
12.2% in the year-ago quarter. The lower gross margin was
somewhat offset by lower operating expenses, mainly
reflecting cost discipline and lower variable pay accruals, as well
as a net positive fluctuation in other operating income and
expenses, related to hedging and the sale of digital assets,
partly offset by the impact from Nokia's venture fund
investments.
Nokia's venture fund investments generated a loss of
approximately EUR 10 million in Q2 2023 compared to a
benefit of approximately EUR 40 million in Q2 2022. The
impact of hedging in Q2 2023 was positive EUR 29 million,
compared to a negative impact of EUR 24 million in Q2 2022.
In Q2 2023, the difference between reported and comparable
operating profit was primarily related to the amortization of
acquired intangible assets, restructuring and associated
charges, the change in provisions related to past acquisitions
and the partial reversal of provision associated with a country
exit that was made in Q1 2022. In Q2 2022, the difference
between reported and comparable operating profit was
primarily related to the amortization of acquired intangible
assets and restructuring and associated charges.
Profit for the period
Reported net profit in Q2 2023 was EUR 289 million, compared
to EUR 460 million in Q2 2022. Comparable net profit in Q2
2023 was EUR 414 million, compared to EUR 585 million in Q2
2022. The decline in comparable net profit was primarily driven
by the lower comparable operating profit, higher income tax as
we benefited in the prior year from an off-balance sheet
deferred tax asset and a net negative fluctuation in financial
income and expenses, which mainly reflected unfavorable
foreign exchange fluctuations.
Apart from the items impacting comparability included in
operating profit (and their associated tax effects), the
difference between reported and comparable net profit in Q2
2023 was related to the divestment of business and the
change in financial liability to acquire Nokia Shanghai-Bell non-controlling interest. In Q2 2022, 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 0.05 in Q2 2023, compared to
EUR 0.08 in Q2 2022. Comparable diluted EPS was EUR 0.07 in
Q2 2023 compared to EUR 0.10 in Q2 2022.
Comparable return on Invested Capital (ROIC)
Q2 2023 comparable ROIC was 13.9%, compared to 18.5% in
Q2 2022. The decrease reflected higher average invested
capital for the rolling four quarters, combined with slightly
lower operating profit after tax for the rolling four quarters.
The higher average invested capital reflected growth in average
total equity and a decrease in average total cash and interest-bearing financial investments, partially offset by a decrease in
average total interest-bearing liabilities.
Cash performance
During Q2 2023, net cash decreased EUR 644 million, resulting
in an end-of-quarter net cash balance of EUR 3.7 billion. Total
cash decreased EUR 783 million sequentially to EUR 7.8 billion.
Free cash flow was negative EUR 380 million in Q2 2023.
20 July 2023 4 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg005.jpg)
| Segment Details
Network Infrastructure
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Net sales 1 978 2 153 (8) % (6) % 4 227 4 127 2% 3%
- IP Networks 618 716 (14) % (11) % 1 400 1 394 0 % 1%
- Optical Networks 492 437 13% 16% 1 025 801 28% 29%
- Fixed Networks 596 713 (16) % (14) % 1 246 1 383 (10) % (10) %
- Submarine Networks 272 287 (5) % (5) % 556 549 1% 3%
Gross profit 734 763 (4) % 1 590 1 447 10%
Gross margin % 37.1% 35.4% 170bps 37.6% 35.1% 250bps
Operating profit 260 247 5% 604 442 37%
Operating margin % 13.1% 11.5% 160bps 14.3% 10.7% 360bps
Network Infrastructure net sales declined 8% on a reported
basis and 6% on a constant currency basis in the second
quarter. The business is currently experiencing some short-term challenges which are largely related to a return to more
normal lead times, as well as macroeconomic uncertainty. While
this is impacting visibility, Network Infrastructure continues to
develop opportunities to gain market share across the
portfolio.
IP Networks net sales declined 11% on a constant currency
basis, primarily reflecting weakness in North America CSPs as
customers continue to evaluate their spending, as well as a
small decline in Asia Pacific. All other regions grew, with notably
strong performance in Europe. Net sales to Enterprise
customers grew at a double-digit rate year-on-year.
Optical Networks net sales grew 16% on a constant currency
basis showing continued strong momentum and customer
engagement with our PSE-V solutions. Growth was driven
primarily by India.
Fixed Networks net sales declined 14% on a constant currency
basis, in comparison to a strong year-ago quarter. The overall
decline was driven by North America, where the slowdown in
fixed wireless access continued to impact the business, as it
remains sensitive to a small number of customers. Elsewhere,
net sales grew in Europe and Middle East & Africa.
Submarine Networks net sales declined 5% on a constant
currency basis, mainly related to project timing as the business
executes against its strong order backlog.
Gross margin increased year-on-year primarily due to positive
product mix and lower indirect cost of sales such as logistics
costs compared to the year-ago period.
Operating margin improved year-on-year, driven by the gross
margin expansion as well as a positive impact from the change
in loss allowances on certain trade receivables, hedging and the
sale of digital assets, all recorded in other operating income
and expenses.
Mobile Networks
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Net sales 2 623 2 593 1% 5% 5 190 4 860 7% 9%
Gross profit 877 1 043 (16) % 1 744 1 945 (10) %
Gross margin % 33.4% 40.2% (680) bps 33.6% 40.0% (640) bps
Operating profit 206 291 (29) % 342 462 (26) %
Operating margin % 7.9% 11.2% (330) bps 6.6% 9.5% (290) bps
In Q2 2023, Mobile Networks net sales grew 1% on a reported
and 5% on a constant currency basis.
Growth in Q2 was once again largely driven by the continuation
of 5G deployments in India and market share expansion in the
region. Mobile Networks also grew in Europe where we
continued to gain market share. These were somewhat offset
by declines in other regions, particularly in North America, as
customers continued to evaluate spending and deplete their
inventories in the quarter.
The decline in gross margin in the second quarter was primarily
related to regional mix. Given the slower recovery in North
America, we expect gross margin to only improve towards the
end of the year.
Operating margin declined year-on-year in Q2 2023 mainly
reflecting the regional mix that impacted gross margin. This
was somewhat mitigated by a decline in operating expenses,
reflecting lower variable pay accruals year-on-year, and the
positive impacts from hedging and the sale of digital assets,
both of which are recorded in other operating income and
expenses.
20 July 2023 5 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg006.jpg)
| Cloud and Network Services
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Net sales 742 753 (1) % 2% 1 501 1 490 1% 2%
Gross profit 271 280 (3) % 521 564 (8) %
Gross margin % 36.5% 37.2% (70) bps 34.7% 37.9% (320) bps
Operating profit/(loss) 16 (5) (420) % (4) 14 (129) %
Operating margin % 2.2 % (0.7) % 290bps (0.3) % 0.9% (120) bps
Cloud and Network Services net sales declined 1% on a
reported basis, but grew 2% on a constant currency basis.
From a product perspective, on a constant currency basis
growth in Core Networks and Enterprise Solutions was partly
offset by declines in both Cloud and Cognitive Services and
Business Applications.
From a regional perspective, on a constant currency basis
Cloud and Network Services saw strong growth in Europe and
Middle East & Africa, more than offsetting a decline in North
America along with some small movements in other regions.
Gross margin declined, as the business once again saw a shift
from software sales towards lower margin hardware sales in the
quarter.
Operating margin increased year-on-year as the lower gross
profit was more than offset by the positive impacts from
hedging and the sale of digital assets in other operating income
and expense, as well as a decline in operating expenses,
reflecting lower variable pay accruals year-on-year. As we
progress with portfolio rebalancing in Cloud and Network
Services, we also remain focused on carefully managing the
cost base of the business.
Nokia Technologies
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Net sales 334 305 10% 10% 576 611 (6) % (6) %
Gross profit 334 304 10% 576 609 (5) %
Gross margin % 100.0% 99.7% 30bps 100.0% 99.7% 30bps
Operating profit 236 217 9% 385 437 (12) %
Operating margin % 70.7% 71.1% (40) bps 66.8% 71.5% (470) bps
Nokia Technologies net sales increased 10% on both a
reported basis and constant currency basis in the second
quarter. Net sales benefited from EUR 80 million of catch-up
net sales related to deals signed in the quarter. Excluding this -
net sales would have declined due to the same factors that
impacted the first quarter. In the second quarter Nokia
Technologies' annual net sales run-rate remains approximately
EUR 1.0 billion.
In the second quarter Nokia signed a number of new licensing
agreements. Considering our current base of agreements, we
now see that Nokia Technologies' net sales annual run-rate
would be EUR 1.1 billion from January 2024, subject to any
other material developments.
Nokia remains in litigation/renewal situations with Oppo and
Vivo regarding their license agreements that ended during
2021. Nokia will continue to prioritize protecting the value of
its portfolio over achieving specific timelines. Nokia continues
to expect to return to an annual run-rate of EUR 1.4-1.5 billion
of revenue as we work through the smartphone license renewal
cycle and continue to grow in new focus areas such as
automotive, consumer electronics, IoT and multimedia.
Operating profit increased while operating margin declined
year-on-year as higher net sales were somewhat offset by an
increase in operating expenses.
Group Common and Other
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Net sales 35 77 (55) % (53) % 84 152 (45) % (46) %
Gross profit/(loss) (1) (4) (8) (2)
Gross margin % (2.9) % (5.2) % 230bps (9.5) % (1.3) % (820) bps
Operating profit/(loss) (91) (36) (222) (59)
Operating margin % (260.0) % (46.8) % (21 320) bps (264.3) % (38.8) % (22 550) bps
Group Common and Other net sales declined 55% on a
reported basis and 53% on a constant currency basis related
to reduced net sales from Radio Frequency Systems, mainly
driven by the divested business carved out during Q2 2023.
The decrease in operating result was primarily driven by
Nokia's venture fund investments, as well as higher
operating expenses. Venture fund losses were approximately
EUR 10 million in Q2 2023, compared to gains of approximately
EUR 40 million in Q2 2022.
20 July 2023 6 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg007.jpg)
| Net sales by region
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Asia Pacific 527 575 (8) % (3) % 1 105 1 209 (9) % (5) %
Europe 1 523 1 378 11% 11% 2 996 2 777 8% 8%
Greater China 344 418 (18) % (12) % 680 810 (16) % (12) %
India 1 043 241 333% 355% 1 896 440 331% 341%
Latin America 230 275 (16) % (15) % 462 501 (8) % (8) %
Middle East & Africa 478 484 (1) % 3% 915 892 3% 5%
North America 1 293 2 216 (42) % (40) % 2 959 4 042 (27) % (27) %
Submarine Networks1
272 287 (5) % (5) % 556 549 1% 3%
Total 5 710 5 873 (3) % 0% 11 569 11 220 3% 4%
1Nokia provides net sales for the Submarine Networks business separately from the rest of the Group to improve the usefulness of disclosed information by removing volatility caused by the
specific nature of the Submarine Networks business.
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
fluctuations. The commentary is based on regions excluding
Submarine Networks, given the nature of that business leads to
significant regional volatility between periods.
The net sales performance in Asia Pacific reflected slight
declines in Network Infrastructure, Mobile Networks and Cloud
and Network Services.
Europe net sales were positively impacted by growth in Nokia
Technologies (which is entirely reported in Europe). Excluding
Nokia Technologies, net sales in Europe increased at a double-digit rate driven by growth across all business groups with
particularly strong performances in IP Networks and Fixed
Networks within Network Infrastructure and continued traction
in Mobile Networks.
Within Greater China net sales decreased in both Mobile
Networks and Network Infrastructure.
The strong growth in net sales in India was related to Mobile
Networks, as 5G deployments continued to ramp in Q2 2023.
Network Infrastructure also saw strong growth, mainly driven
by Optical Networks.
Net sales performance in Latin America primarily reflected a
decline in Mobile Networks.
Middle East & Africa growth was driven by Network
Infrastructure and Cloud and Network Services, somewhat
offset by a decline in Mobile Networks.
The strong decline in North America reflected the expected
decline in Mobile Networks following a strong year of
deployments in 2022, in addition to customers continuing to
evaluate spending and deplete their inventories in the quarter.
Network Infrastructure also saw a strong decline driven by IP
Networks and Fixed Networks. To a lesser extent, Cloud and
Network Services declined driven by both Core Networks and
Business Applications.
Net sales by customer type
EUR million Q2'23 Q2'22 YoY change
Constant
currency YoY
change Q1-Q2'23 Q1-Q2'22 YoY change
Constant
currency YoY
change
Communications service providers (CSP) 4 561 4 803 (5) % (2) % 9 286 9 176 1% 3%
Enterprise 510 409 25% 27% 1 076 752 43% 43%
Licensees 334 305 10% 10% 576 611 (6) % (6) %
Other1
304 356 (15) % (14) % 631 681 (7) % (6) %
Total 5 710 5 873 (3) % 0% 11 569 11 220 3% 4%
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 enterprise customers and communications service providers.
Macroeconomic uncertainty impacted CSP spending in Q2
2023, which drove a net sales decline of 2% in constant
currency.
Enterprise net sales increased 27% in constant currency in Q2
2023, as we witnessed strong growth to both enterprise
verticals and webscale customers, particularly benefiting
Network Infrastructure. Customer engagement also remains
positive as we added 90 new Enterprise customers in
the quarter. Private wireless continued to show strong double-digit growth in the quarter and now has more than 635
customers.
Refer to the Nokia Technologies section of this report for a
discussion on net sales to Licensees.
The decline in ‘Other’ net sales relates to a decrease in net
sales in both Submarine Networks and RFS.
20 July 2023 7 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg008.jpg)
| Q2 2023 to Q2 2022 bridge for net sales and operating profit
EUR million Q2'23
Volume,
price, mix
and other
Venture fund
valuation
Foreign
exchange
impact
Items affecting
comparability Q2'22
Net sales 5 710 11 — (174) — 5 873
Operating profit 474 (66) (53) 31 (2) 564
Operating margin % 8.3% 9.6%
The table above shows the change in net sales and operating
profit compared to the year-ago quarter. Net sales benefited
slightly from an operational standpoint, but was negatively
impacted by foreign exchange rate fluctuations. Operating
profit saw a negative impact from an operational standpoint, a
negative impact from Nokia's venture fund valuations, a
positive impact from foreign exchange rate fluctuations, as well
as a slight negative impact from items affecting comparability
as further described below. The positive impact to operating
profit seen from foreign exchange rate fluctuations is a
combination of a negative impact 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 Q2'23 Q2'22 YoY change Q1-Q2'23 Q1-Q2'22 YoY change
Reported operating profit 474 564 (16) % 900 918 (2) %
Amortization of acquired intangible assets 87 100 176 200
Restructuring and associated charges 53 50 81 80
Change in provisions related to past acquisitions 20 — 20 —
Costs associated with country exit (13) — (48) 104
Divestment of businesses 4 — (22) —
Other, net 1 (1) (1) (6)
Comparable operating profit 626 714 (12) % 1 106 1 296 (15) %
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 Q2 2023 the main adjustments related to the amortization
of acquired intangible assets which is primarily related to
purchase price allocation of the Alcatel-Lucent acquisition,
restructuring charges mainly related to the ongoing
restructuring program (discussed later in this interim report),
the change in provisions related to past acquisitions and the
partial reversal of a provision associated with a country exit
that was made in Q1 2022.
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| Cash and cash flow in Q2 2023
EUR billion
EUR million, at end of period Q2'23 Q1'23 QoQ change Q4'22 YTD change
Total cash and interest-bearing financial investments 7 831 8 614 (9) % 9 244 (15) %
Net cash and interest-bearing financial investments1
3 660 4 304 (15) % 4 767 (23) %
1Net 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 Q2 2023, Nokia’s free cash flow was negative EUR 380
million, as operating profit was more than 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 821 million.
▪ Approximately EUR 90 million of restructuring and associated
cash outflows, related to our current and previous cost
savings programs.
▪ Excluding the restructuring and associated cash outflows, the
decrease in net cash related to net working capital was
approximately EUR 870 million, as follows:
◦ The decrease in receivables was approximately EUR 50
million primarily related to an increase in the balance
sheet impact from the sale of receivables in the quarter.
◦ The increase in inventories was approximately EUR 50
million.
◦ The decrease in liabilities was approximately EUR 870
million, primarily related to 2022 performance-related
employee variable pay and a decrease in contract
liabilities, partly offset by an increase in accounts payable.
▪ An outflow related to cash taxes of approximately EUR 200
million.
Net cash used in investing activities
▪ Net cash used in investing activities was related primarily to
capital expenditures of approximately EUR 130 million, partly
offset by net cash inflows related to the sale of assets of
approximately EUR 80 million.
Net cash used in financing activities
▪ Net cash used in financing activities was related primarily to
dividend payments of approximately EUR 170 million, the
acquisition of treasury shares of approximately EUR 80
million and lease payments of approximately EUR 60 million.
Change in total cash and net cash
In Q2 2023, the approximately EUR 140 million difference
between the change in total cash and net cash was primarily
due to repayment of debt and changes in the carrying amounts
of certain issued bonds, as a result of interest rate
fluctuations.
Foreign exchange rates had a minimal impact on net cash.
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| January-June 2023 compared to
January–June 2022
Net sales
In the first six months of 2023, reported net sales increased
3%, negatively impacted by foreign exchange rate fluctuations.
On a constant currency basis, Nokia net sales increased 4%
with growth in Mobile Networks, Network Infrastructure and
Cloud and Network Services. Group Common and Other and
Nokia Technologies net sales decreased.
Gross margin
Both reported and comparable gross margin declined year-on-year in the first six months of 2023. Reported gross margin
decreased 260 basis points to 37.8% and comparable gross
margin decreased 250 basis points to 38.2%. The gross margin
decline was primarily driven by unfavorable regional mix in
Mobile Networks, partially offset by Network Infrastructure.
Operating profit and margin
Reported operating profit in the first six months of 2023 was
EUR 900 million, or 7.8% of net sales, down from EUR 918 or
8.2% in the year-ago period. Comparable operating profit
decreased to EUR 1 106 million from EUR 1 296 million year-on-year, while comparable operating margin declined 200 basis
points year-on-year to 9.6%. Comparable operating profit
decreased in the first six months of 2023 mainly due to lower
gross profit.
In the first six months of 2023, the difference between
reported and comparable operating profit was primarily related
to the amortization of acquired intangible assets, restructuring
and associated charges and the partial reversal of provision
associated with a country exit. In the first six months of 2022,
the difference between reported and comparable operating
profit was primarily related to the amortization of acquired
intangible assets, provision associated with a country exit and
restructuring and associated charges.
Profit for the period
Reported net profit in the first six months of 2023 was EUR
578 million, compared to EUR 679 million in the year-ago
period. Comparable net profit was EUR 756 million, compared
to EUR 1 001 million in the year-ago period. The decrease in
comparable net profit reflects a decrease in comparable
operating profit and higher income taxes. This was partly offset
by lower share of losses of associates and joint ventures and a
net positive fluctuation in financial income and expenses.
Apart from the items impacting comparability included in
operating profit (and their associated tax effects), the
difference between reported and comparable net profit in the
first six months of 2023 was related to the divestment of
business and the change in financial liability to acquire Nokia
Shanghai-Bell non-controlling interest. In the year-ago, the
difference between reported and comparable net profit was
related to loss allowances on customer financing offset by the
change in financial liability to acquire Nokia Shanghai-Bell non-controlling interest.
Earnings per share
Reported diluted EPS in the first six months of 2023 was EUR
0.10, compared to EUR 0.12 in the year-ago period.
Comparable diluted EPS in the first six months of 2023 was
EUR 0.13 compared to EUR 0.17 in the year-ago period.
Cash performance
During the first six months of 2023, net cash decreased
EUR 1 107 million, resulting in an end-of-period net cash
balance of EUR 3.7 billion. Total cash decreased EUR 1 413
million, resulting in total cash balance of EUR 7.8 billion. Free
cash flow was negative EUR 527 million in the first six months
of 2023.
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| Sustainability
Our strategy and focus areas
Nokia’s refreshed corporate strategy states our ambition to develop ESG into a competitive advantage and maximize our positive
impact on other industries, society, and the world around us. Our ESG strategy will help us achieve those ambitions. It focuses on
five areas: environment, industrial digitalization, security and privacy, bridging the digital divide, and responsible business. Here
we share some developments across our focus areas from the past quarter.
Environment
Nokia is keenly aware of its responsibilities to reduce emissions.
That is why we have set ourselves a target to reduce our GHG
emissions by 50% between 2019 and 2030 across our value
chain. In April, our work to reach and exceed this and other
targets was recognized by the Financial Times who named us
one of Europe’s Climate Leaders.
One of the most important ways we will achieve our climate
goals is by creating products and services with market-leading
energy-efficiency. In the second quarter we launched our new
expanded portfolio of energy-efficient site solutions designed
for our industry-leading AirScale baseband portfolio.
In April, Nokia commenced its 14th annual supplier climate data
collection program. The 2023 program invites 624 of our
suppliers to disclose key climate datapoints such as their scope
1, 2 and 3 emissions, renewable electricity use and climate
targets. We also invite them to identify potential future
opportunities to collaborate with us on CO2e reduction.
Industrial Digitalization
In June we were able to share that the Irish energy company
ESB Networks had awarded a contract to Sigma Wireless and
Nokia for the development of a purpose-built, leading-edge,
mission-critical private mobile network. This network will help
ESB Networks to integrate more renewable energy to the grid
and decarbonize the electrical network among other benefits.
Later in June we partnered with DXC Technology, a Fortune
500 global technology services company, to launch DXC Signal
Private LTE and 5G, a managed secure private wireless network
and digitalization platform solution that helps industrial
enterprises digitally transform their operations, especially in
key market segments including manufacturing, energy,
healthcare, logistics, transportation, and education.
Security and privacy
During the quarter, Nokia and its partners announced the
successful completion of Europe’s first live hybrid quantum
encryption key trial. The trial with Proximus highlights how
quantum cryptography can be implemented in a live network to
keep users safe and secure.
In May, we announced that Nokia had been ranked as an
industry leader in network security by analysts at GigaOm. The
recognition was specifically awarded for the flexible and secure
Nokia XDR solution, “NetGuard Cybersecurity Dome", available
as-a-service, which allows security operations teams to select
from a comprehensive use case catalog to cover their entire
critical infrastructure technology, from the Core to Transport.
Bridging the digital divide
At Nokia, we create technology that helps the world act
together. This is a fundamentally democratic purpose – we
believe that everyone deserves top-quality connectivity.
In the second quarter, we were selected by MetaLINK to expand
fixed wireless broadband access across rural America. The
partnership will leverage MetaLINK’s CBRS spectrum, as well as
radio access solutions from Nokia’s AirScale portfolio, to
provide high-bandwidth internet services for people who have
limited access.
In June, we announced the launch of purpose-built 5G Fixed
Wireless Access receiver to connect the North American
underserved. The Nokia FastMile 5G receiver uses a high gain
antenna to deliver high speeds over long distances making it
ideally suited to serve both suburban and rural underserved
communities.
Responsible business
Sustainable business requires the responsible and conflict-free
sourcing of minerals via legitimate trade that benefits the
countries and communities in which minerals are found. We are
part of the Responsible Minerals initiative program under the
Responsible Business Alliance and in May we have once again
released our annual Conflict Minerals Report.
We do not tolerate slavery, servitude, human trafficking nor
forced or bonded labor in our own operations or in our supply
chain. At the end of the second quarter, we also published our
latest Modern Slavery Statement.
Regular compliance training and communications are a key
foundational element of our compliance program. Over the
quarter we launched three short and engaging training modules
to keep these high-risk areas top of mind for employees. We
have also implemented newly developed reports based on real-time data analytics, which improve our ability to identify
undisclosed conflicts of interest and ensure that commercial
third parties have completed the appropriate due diligence
process. On the privacy front, we’re introducing live targeted
training sessions for employees in certain roles and making
ongoing enhancements to Nokia’s data privacy governance
structure to reflect changes in law and our global footprint.
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| 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.
Considering the recent macroeconomic uncertainty and its
impact on our end markets, the pace of restructuring has
increased in 2023. However, the overall size of the plan
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 the end of 2023.
We continue to expect total restructuring and associated cash
outflows to be approximately EUR 1 050-1 150 million. This
total includes 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
2021 2022 2023 amount
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 250 150 150 500-600
Restructuring and associated cash outflows1
350 300 300 150 1 050-1 150
1
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 – June 2023
On 25 January 2023, Nokia announced it had appointed Esa
Niinimäki as Chief Legal Officer and member of the Group
Leadership Team. Niinimäki has worked at Nokia for more than
15 years where he has held multiple positions, most recently
Interim Chief Legal Officer.
On 9 February 2023, Nokia announced it commenced an offer
to purchase the outstanding EUR 750 million 2.00% notes due
15 March 2024 (the “2024 Notes”), EUR 500 million 2.375%
notes due 15 May 2025 (the “2025 Notes”) and EUR 750
million 2.00% notes due 11 March 2026 (the “2026 Notes”), up
to a maximum cash consideration of EUR 700 million (the
“Tender Offer”). The purpose of the Tender Offer is to manage
the overall indebtedness of Nokia and to extend Nokia’s debt
maturity profile in an efficient manner.
Nokia accepted tenders for EUR 372 million (49.66% of the
nominal amount) of the 2024 Notes, EUR 208 million (41.57%
of the nominal amount) of the 2025 Notes and EUR 120 million
(15.96% of the nominal amount) of the 2026 Notes. The
Tender Offer was settled on 21 February 2023.
On 21 February 2023, Nokia issued EUR 500 million 4.375%
sustainability-linked Notes due August 2031 under its 5 billion
Euro Medium-Term Note Programme. The proceeds of the new
notes are intended to fund the Tender Offer and for general
corporate purposes.
On 2 March 2023, Nokia informed it had updated its capital
management policy with a focus on sustaining investment
grade rating and improving shareholder returns consistent with
the performance of the business. Nokia now targets to
maintain a net cash position in the range of 10-15% of net
sales. Nokia intends to maintain a net cash position around this
level to ensure it can continue to invest in the necessary R&D
to maintain and further improve its technology leadership, fund
working capital requirements in support of the company’s
growth ambitions and to maintain some flexibility for bolt-on
acquisitions. Nokia’s previous target in terms of cash
management was to maintain a total cash position equivalent
to at least 30% of net sales.
On 4 April 2023, Nokia held its Annual General Meeting (AGM) in
Helsinki. Shareholders were also able to follow the AGM through
a webcast. Approximately 108 000 shareholders representing
approximately 3.2 billion shares and votes were represented at
the meeting. Among others, the following resolutions were
made:
▪ The financial statements were adopted, and the Board of
Directors and President and CEO were discharged from
liability for the financial year 2022.
▪ The AGM decided that no dividend is distributed by a
resolution of the AGM and authorized the Board to decide on
the distribution of an aggregate maximum of EUR 0.12 per
share as dividend from the retained earnings and/or as
assets from the reserve for invested unrestricted equity. The
Board will resolve separately on the amount and timing of
each distribution. The authorization is valid until the opening
of the next AGM.
▪ Sari Baldauf, Thomas Dannenfeldt, Lisa Hook, Jeanette
Horan, Thomas Saueressig, Søren Skou, Carla Smits-Nusteling and Kai Öistämö were re-elected as members of
the Board for a term ending at the close of the next AGM. In
addition, the AGM resolved to elect Timo Ahopelto and
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| Elizabeth Crain as new members of the Board for the same
term. In its assembly meeting that took place after the AGM,
the Board re-elected Sari Baldauf as Chair of the Board and
Søren Skou as Vice Chair of the Board.
▪ The annual fees of the Board members were increased by
EUR 15 000 except for the Board Chair.
▪ The remuneration Report of the company's governing bodies
was supported in an advisory vote.
▪ Deloitte Oy was re-elected as the auditor for Nokia for the
financial year 2024 with Authorized Public Accountant Marika
Nevalainen as the auditor in charge.
▪ The 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 3 October 2024 and they
terminated the corresponding authorizations granted by the
AGM on 5 April 2022.
On 30 June 2023, Nokia announced it had signed a new long-term patent cross-license agreement with Apple which will
replace the current license that is due to expire at the end of
2023. License covers Nokia’s fundamental inventions in 5G and
other technologies. The terms of the agreement remain
confidential between the parties.
Shares
The total number of Nokia shares on 30 June 2023, equaled
5 632 297 576. On 30 June 2023, Nokia and its subsidiary
companies held 84 516 016 Nokia shares, representing
approximately 1.5% of the total number of Nokia shares 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;
▪ Potential economic impact and disruption of global
pandemics;
▪ War or other geopolitical conflicts, disruptions and potential
costs thereof;
▪ Other macroeconomic, industry and competitive
developments;
▪ Timing and value of new, renewed 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; on-going
litigation with respect to licensing and regulatory landscape
for patent licensing;
▪ The outcomes of on-going and potential disputes and
litigation;
▪ 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 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 report, and our 2022 annual report on
Form 20-F published on 2 March 2023 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, licenses,
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 potential global pandemics and the general or
regional 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 flows, 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; E)
impact on revenue with respect to litigation/renewal
discussions; and F) 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.
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| Financial statement information
Consolidated income statement (condensed)
EUR million
Reported Comparable
Note Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22 Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22
Net sales 2, 3 5 710 5 873 11 569 11 220 5 710 5 873 11 569 11 220
Cost of sales (3 530) (3 512) (7 194) (6 690) (3 494) (3 487) (7 146) (6 658)
Gross profit 2 2 180 2 361 4 375 4 530 2 216 2 386 4 423 4 562
Research and development expenses (1 045) (1 091) (2 154) (2 163) (1 026) (1 069) (2 119) (2 122)
Selling, general and administrative expenses (703) (728) (1 432) (1 403) (618) (623) (1 259) (1 204)
Other operating income and expenses 43 22 111 (46) 54 20 61 60
Operating profit 2 474 564 900 918 626 714 1 106 1 296
Share of results of associates and joint ventures (13) (6) (19) (32) (13) (6) (19) (32)
Financial income and expenses (54) (18) (74) (90) (52) (27) (61) (67)
Profit before tax 407 541 808 797 562 681 1 026 1 197
Income tax expense 5 (116) (74) (227) (153) (148) (95) (270) (196)
Profit from continuing operations 290 467 581 644 414 585 756 1 001
(Loss)/profit from discontinued operations (2) (7) (2) 35 — — — —
Profit for the period 289 460 578 679 414 585 756 1 001
Attributable to
Equity holders of the parent 290 457 569 669 415 582 746 991
Non-controlling interests (1) 3 9 10 (1) 3 9 10
Earnings per share attributable to equity holders of the parent
Basic earnings per share, EUR
Continuing operations 0.05 0.08 0.10 0.11 0.07 0.10 0.13 0.18
Profit for the period 0.05 0.08 0.10 0.12 0.07 0.10 0.13 0.18
Average number of shares ('000 shares) 5 558 878 5 625 142 5 568 389 5 629 913 5 558 878 5 625 142 5 568 389 5 629 913
Diluted earnings per share, EUR
Continuing operations 0.05 0.08 0.10 0.11 0.07 0.10 0.13 0.17
Profit for the period 0.05 0.08 0.10 0.12 0.07 0.10 0.13 0.17
Average number of shares ('000 shares) 5 616 185 5 677 742 5 623 523 5 686 387 5 616 185 5 677 742 5 623 523 5 686 387
The above condensed consolidated income statement should be read in conjunction with accompanying notes.
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| Consolidated statement of comprehensive income (condensed)
EUR million
Reported
Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22
Profit for the period 289 460 578 679
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined benefit plans (225) (42) (146) 221
Income tax related to items that will not be reclassified to profit or loss 56 (6) 37 (80)
Items that may be reclassified subsequently to profit or loss
Translation differences (32) 902 (313) 1 240
Net investment hedges 36 (199) 111 (271)
Cash flow and other hedges (16) 1 (15) 19
Financial assets at fair value through other comprehensive income (14) (11) (37) (16)
Other changes, net 3 — — (1)
Income tax related to items that may be reclassified subsequently to profit or loss 4 — (10) —
Other comprehensive (loss)/income, net of tax (188) 645 (373) 1 112
Total comprehensive income for the period 101 1 105 205 1 791
Attributable to:
Equity holders of the parent 105 1 101 200 1 779
Non-controlling interests (4) 4 5 12
The above condensed consolidated statement of comprehensive income should be read in conjunction with accompanying notes.
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| Consolidated statement of financial position (condensed)
EUR million Note 30 June 2023 30 June 2022 31 December 2022
ASSETS
Goodwill 5 591 5 776 5 667
Other intangible assets 1 136 1 489 1 263
Property, plant and equipment 1 962 1 917 2 015
Right-of-use assets 927 987 929
Investments in associated companies and joint ventures 170 211 199
Non-current interest-bearing financial investments 6 865 473 697
Other non-current financial investments 6 802 899 828
Deferred tax assets 5 3 777 1 209 3 834
Other non-current financial assets 6 244 288 252
Defined benefit pension assets 4 6 575 7 813 6 754
Other non-current receivables 236 217 239
Non-current assets 22 287 21 278 22 677
Inventories 3 317 2 910 3 265
Trade receivables 6 5 354 4 663 5 549
Contract assets 1 103 1 146 1 203
Other current receivables 855 1 115 934
Current income tax assets 351 282 153
Other current financial and firm commitment assets 6 513 784 615
Current interest-bearing financial investments 6 1 860 3 253 3 080
Cash and cash equivalents 6 5 106 5 457 5 467
Current assets 18 459 19 609 20 266
Total assets 40 747 40 887 42 943
SHAREHOLDERS' EQUITY AND LIABILITIES
Share capital 246 246 246
Share premium 590 450 503
Treasury shares (515) (492) (352)
Translation differences (46) 570 169
Fair value and other reserves 3 745 4 364 3 905
Reserve for invested unrestricted equity 15 489 15 759 15 487
Retained earnings/(accumulated deficit) 1 671 (1 982) 1 375
Total capital and reserves attributable to equity holders of the parent 21 180 18 915 21 333
Non-controlling interests 96 111 93
Total equity 21 276 19 026 21 426
Long-term interest-bearing liabilities 6, 7 3 584 4 424 4 249
Long-term lease liabilities 839 919 858
Deferred tax liabilities 343 322 332
Defined benefit pension and post-employment liabilities 4 2 395 2 819 2 459
Contract liabilities 127 239 120
Deferred revenue and other non-current liabilities 94 253 103
Provisions 8 581 599 622
Non-current liabilities 7 964 9 574 8 743
Short-term interest-bearing liabilities 6, 7 587 213 228
Short-term lease liabilities 193 182 184
Other financial and firm commitment liabilities 6 899 1 150 1 038
Current income tax liabilities 194 180 185
Trade payables 6 4 257 3 924 4 730
Contract liabilities 1 916 2 174 1 977
Deferred revenue and other current liabilities 6 2 770 3 576 3 619
Provisions 8 690 887 813
Current liabilities 11 507 12 287 12 774
Total shareholders' equity and liabilities 40 747 40 887 42 943
Shareholders' equity per share, EUR 3.82 3.37 3.82
Number of shares (1 000 shares, excluding treasury shares) 5 547 782 5 614 739 5 587 016
The above condensed consolidated statement of financial position should be read in conjunction with accompanying notes.
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| Consolidated statement of cash flows (condensed)
EUR million Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22
Cash flow from operating activities
Profit for the period 289 460 578 679
Adjustments 532 419 988 828
Depreciation and amortization 272 282 538 556
Restructuring charges 56 43 75 59
Financial income and expenses 55 15 73 77
Income tax expense 116 82 228 158
Loss/(gain) from other non-current financial investments 6 (47) 35 (96)
Other 27 44 39 74
Cash flows from operations before changes in net working capital 821 879 1 566 1 507
Change in net working capital (953) (797) (1 459) (717)
Decrease in receivables 48 383 81 732
Increase in inventories (51) (240) (124) (452)
Decrease in non-interest-bearing liabilities (950) (940) (1 416) (997)
Cash flows from operations (132) 82 107 790
Interest received 51 23 81 27
Interest paid (55) (54) (106) (110)
Income taxes paid, net (197) (94) (332) (191)
Net cash flows (used in)/from operating activities (333) (43) (250) 516
Cash flow from investing activities
Purchase of property, plant and equipment and intangible assets (127) (101) (359) (290)
Proceeds from sale of property, plant and equipment and intangible assets 84 32 98 33
Proceeds from disposal of businesses, net of disposed cash (5) — 17 —
Purchase of interest-bearing financial investments (320) (812) (1 335) (1 512)
Proceeds from maturities and sale of interest-bearing financial investments 1 384 269 2 397 367
Purchase of other non-current financial investments (25) (18) (41) (76)
Proceeds from sale of other non-current financial investments 21 14 25 27
Foreign exchange hedging of cash and cash equivalents 51 (21) 29 (46)
Other 3 8 8 7
Net cash flows from/(used in) investing activities 1 066 (629) 839 (1 490)
Cash flow from financing activities
Acquisition of treasury shares (82) (93) (163) (140)
Proceeds from long-term borrowings 1 3 496 8
Repayment of long-term borrowings (85) (1) (798) (1)
(Repayment of)/Proceeds from short-term borrowings (19) 5 (5) 13
Payment of principal portion of lease liabilities (60) (66) (127) (123)
Dividends paid (167) (115) (279) (115)
Net cash flows used in financing activities (412) (267) (876) (358)
Translation differences (42) 55 (74) 98
Net increase/(decrease) in cash and cash equivalents 279 (884) (361) (1 234)
Cash and cash equivalents at beginning of period 4 827 6 341 5 467 6 691
Cash and cash equivalents at end of period 5 106 5 457 5 106 5 457
Consolidated statement of cash flows combines cash flows from both the continuing and the discontinued operations.
The above condensed consolidated statement of cash flows should be read in conjunction with accompanying notes.
20 July 2023 17 |
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| Consolidated statement of changes in shareholders' equity (condensed)
EUR million
Share
capital
Share
premium
Treasury
shares
Translation
differences
Fair value
and other
reserves
Reserve for
invested
unrestricted
equity
Retained
earnings/
(accumulated
deficit)
Attributable
to equity
holders of
the parent
Non-controlling
interests
Total
equity
1 January 2022 246 454 (352) (396) 4 219 15 726 (2 537) 17 360 102 17 462
Profit for the period — — — — — — 669 669 10 679
Other comprehensive income — — — 966 145 — (1) 1 110 2 1 112
Total comprehensive income — — — 966 145 — 668 1 779 12 1 791
Share-based payments — 66 — — — — — 66 — 66
Settlement of share-based
payments — (70) — — — 45 — (25) — (25)
Acquisition of treasury shares1
— — (140) — — (12) — (152) — (152)
Dividend — — — — — — (113) (113) (3) (116)
Total transactions with owners — (4) (140) — — 33 (113) (224) (3) (227)
30 June 2022 246 450 (492) 570 4 364 15 759 (1 982) 18 915 111 19 026
1 January 2023 246 503 (352) 169 3 905 15 487 1 375 21 333 93 21 426
Profit for the period — — — — — — 569 569 9 578
Other comprehensive income — — — (215) (160) — 6 (369) (4) (373)
Total comprehensive income — — — (215) (160) — 575 200 5 205
Share-based payments — 93 — — — — — 93 — 93
Settlement of share-based
payments — (6) — — — 4 — (2) — (2)
Acquisition of treasury shares1
— — (163) — — (2) — (165) — (165)
Disposal of subsidiaries — — — — — — — — (2) (2)
Dividend — — — — — — (279) (279) — (279)
Total transactions with owners — 87 (163) — — 2 (279) (353) (2) (355)
30 June 2023 246 590 (515) (46) 3 745 15 489 1 671 21 180 96 21 276
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 shares repurchased in the first phase of the program between 14 February and 11 November 2022 were canceled on 8 December 2022. The second phase of the
program started on 2 January 2023.
The above condensed consolidated statement of changes in shareholders' equity should be read in conjunction with accompanying notes.
20 July 2023 18 |
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| 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 should be read in conjunction with the annual consolidated financial statements for 2022 prepared in accordance with IFRS as published by
the 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 annual consolidated financial statements for 2022. Percentages and figures presented 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 Directors on 20 July 2023.
Net sales and operating profit of the Nokia Group, particularly in Network Infrastructure, Mobile Networks and Cloud and Network 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.
In 2017, Nokia and China Huaxin Post & Telecommunication Economy Development Center (China Huaxin) commenced operations of the joint venture Nokia
Shanghai Bell (NSB). The contractual arrangement provides China Huaxin with the right to fully transfer its ownership interest in NSB to Nokia and Nokia with
the right to purchase China Huaxin’s ownership interest in NSB in exchange for a future cash settlement. To reflect this, Nokia derecognized the non-controlling interest balance related to NSB and recognized a financial liability based on the estimated future cash settlement to acquire China Huaxin’s
ownership interest. Any changes in the estimated future cash settlement are recorded in financial income and expense. In 2023, the contractual arrangement
was extended until 30 June 2024. If it expires unexercised, Nokia will derecognize the financial liability and record non-controlling interest equal to its share of
NSB’s net assets with any difference recorded within shareholders’ equity.
In the second quarter of 2023, Nokia signed an agreement to sell its 51% ownership interest in TD Tech Holding Limited (”TD Tech”), a Hong Kong based joint
venture, to New East New Materials for an estimated price of EUR 285 million. At 30 June 2023, the carrying value of TD Tech in the consolidated statement
of financial position was EUR 58 million. The estimated gain on sale of EUR 227 million will be recorded in other operating income. The closing is subject to
conditions including a pre-emption right of the joint venture partner and the sale will only take place if and when these conditions are met which could yet
take some time.
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 comparability. In order to allow full visibility on determining comparable results, information on items affecting comparability is presented
separately for each of the components of profit or loss.
Constant currency reporting provides additional information on 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 similarly 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 financial measures should not be considered in isolation from, or as a substitute for, financial information presented in
compliance with 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, such as the US dollar, the Indian rupee 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 cases.
The below table shows the exposure to different currencies for net sales and total costs.
Q2'23 Q2'22 Q1'23
Net sales Total costs Net sales Total costs Net sales Total costs
EUR ~25% ~25% ~20% ~25% ~25% ~25%
USD ~50% ~50% ~55% ~50% ~50% ~50%
INR ~5% ~5% ~0% ~5% ~5% ~5%
CNY ~5% ~5% ~5% ~5% ~5% ~5%
Other ~15% ~15% ~20% ~15% ~15% ~15%
Total 100% 100% 100% 100% 100% 100%
End of Q2'23 balance sheet rate 1 EUR = 1.09 USD, end of Q2'22 balance sheet rate 1 EUR = 1.04 USD and end of Q1'23 balance sheet rate 1 EUR = 1.09 USD
New and amended standards and interpretations
New standards and amendments to existing standards that became effective on 1 January 2023, did not have a material impact on Nokia's consolidated
financial statements, however, the amendments to IAS 1, Presentation of Financial Statements, and IFRS Practice Statement 2 related to disclosure of
accounting policies are expected to affect the accounting policy disclosures in Nokia’s annual consolidated financial statements for 2023. These amendments
aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement to disclose ‘significant’ accounting policies with a
requirement to disclose ‘material’ accounting policies and adding guidance to help entities determine when accounting policy information is material and,
therefore, needs to be disclosed.
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.
20 July 2023 19 |
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| 2. SEGMENT INFORMATION
Nokia has four operating and reportable segments for the financial reporting purposes: (1) Network Infrastructure, (2) Mobile Networks, (3) Cloud and Network
Services and (4) Nokia Technologies. Nokia also presents segment-level information for Group Common and Other. In addition, Nokia provides net sales
disclosure for the following businesses within the Network Infrastructure segment: (i) IP Networks, (ii) Optical Networks, (iii) Fixed Networks and (iv) Submarine
Networks. For detailed segment descriptions, please refer to Note 5, Segment Information, in the annual consolidated financial statements for 2022.
Accounting policies of the segments are the same as those described in Note 2, Significant accounting policies, in the annual consolidated financial
statements for 2022, except that items affecting 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 financial statement
information. Inter-segment revenues and transfers are accounted for as if the revenues were to third parties, that is, at current market prices.
Q2'23
Network
Infrastructure1
Mobile
Networks
Cloud and
Network
Services
Nokia
Technologies
Group Common
and Other
Eliminations
and unallocated
EUR million items Nokia Group
Net sales 1 978 2 623 742 334 35 (2) 5 710
of which to other segments — 1 — — 2 (2) —
Gross profit/(loss) 734 877 271 334 (1) (36) 2 180
Gross margin % 37.1% 33.4% 36.5% 100.0% (2.9) % 38.2%
Research and development expenses (296) (501) (138) (56) (34) (19) (1 045)
Selling, general and administrative expenses (204) (200) (123) (37) (53) (85) (703)
Other operating income and expenses 26 30 6 (6) (2) (11) 43
Operating profit/(loss) 260 206 16 236 (91) (152) 474
Operating margin % 13.1% 7.9% 2.2 % 70.7% (260.0) % 8.3%
Share of results of associates and joint
ventures
— (12) 2 (2) — — (13)
Financial income and expenses (54)
Profit before tax 407
Depreciation and amortization (58) (88) (21) (10) (7) (88) (272)
¹
Includes IP Networks net sales of EUR 618 million, Optical Networks net sales of EUR 492 million, Fixed Networks net sales of EUR 596 million and Submarine Networks net sales
of EUR 272 million.
Q2'22
Network
Infrastructure1
Mobile
Networks
Cloud and
Network
Services
Nokia
Technologies
Group Common
and Other
Eliminations
and unallocated
EUR million items Nokia Group
Net sales 2 153 2 593 753 305 77 (8) 5 873
of which to other segments — — — 3 4 (8) —
Gross profit 763 1 043 280 304 (4) (25) 2 361
Gross margin % 35.4% 40.2% 37.2% 99.7% (5.2) % 40.2%
Research and development expenses (305) (547) (143) (52) (24) (21) (1 091)
Selling, general and administrative expenses (199) (204) (130) (33) (57) (105) (728)
Other operating income and expenses (12) (2) (13) (2) 49 1 22
Operating profit/(loss) 247 291 (5) 217 (36) (150) 564
Operating margin % 11.5% 11.2% (0.7) % 71.1% (46.8) % 9.6%
Share of results of associates and joint
ventures
— (6) 1 (1) — — (6)
Financial income and expenses (18)
Profit before tax 541
Depreciation and amortization (57) (87) (23) (9) (6) (100) (282)
¹
Includes IP Networks net sales of EUR 716 million, Optical Networks net sales of EUR 437 million, Fixed Networks net sales of EUR 713 million and Submarine Networks net sales
of EUR 287 million.
20 July 2023 20 |
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| Q1-Q2'23
Network
Infrastructure1
Mobile
Networks
Cloud and
Network
Services
Nokia
Technologies
Group Common
and Other
Eliminations
and unallocated
EUR million items Nokia Group
Net sales 4 227 5 190 1 501 576 84 (9) 11 569
of which to other segments 1 3 — — 4 (9) —
Gross profit/(loss) 1 590 1 744 521 576 (8) (48) 4 375
Gross margin % 37.6% 33.6% 34.7% 100.0% (9.5) % 37.8%
Research and development expenses (614) (1 036) (290) (113) (66) (35) (2 154)
Selling, general and administrative expenses (410) (410) (253) (70) (116) (173) (1 432)
Other operating income and expenses 38 44 19 (9) (31) 50 111
Operating profit/(loss) 604 342 (4) 385 (222) (206) 900
Operating margin % 14.3% 6.6% (0.3) % 66.8% (264.3) % 7.8%
Share of results of associates and joint
ventures
— (30) 3 9 — — (19)
Financial income and expenses (74)
Profit before tax 808
Depreciation and amortization (113) (176) (44) (19) (9) (177) (538)
¹
Includes IP Networks net sales of EUR 1 400 million, Optical Networks net sales of EUR 1 025 million, Fixed Networks net sales of EUR 1 246 million and Submarine Networks net
sales of EUR 556 million.
Q1-Q2'22
Network
Infrastructure1
Mobile
Networks
Cloud and
Network
Services
Nokia
Technologies
Group Common
and Other
Eliminations
and unallocated
EUR million items Nokia Group
Net sales 4 127 4 860 1 490 611 152 (20) 11 220
of which to other segments 1 3 1 6 9 (20) —
Gross profit/(loss) 1 447 1 945 564 609 (2) (32) 4 530
Gross margin % 35.1% 40.0% 37.9% 99.7% (1.3) % 40.4%
Research and development expenses (607) (1 077) (281) (106) (51) (41) (2 163)
Selling, general and administrative expenses (381) (403) (254) (63) (103) (199) (1 403)
Other operating income and expenses (17) (4) (14) (3) 97 (106) (46)
Operating profit/(loss) 442 462 14 437 (59) (378) 918
Operating margin % 10.7% 9.5% 0.9 % 71.5 % (38.8) % 8.2%
Share of results of associates and joint
ventures
— (33) 3 (2) — — (32)
Financial income and expenses (90)
Profit before tax 797
Depreciation and amortization (110) (172) (46) (17) (12) (199) (556)
¹
Includes IP Networks net sales of EUR 1 394 million, Optical Networks net sales of EUR 801 million, Fixed Networks net sales of EUR 1 383 million and Submarine Networks net
sales of EUR 549 million.
Material reconciling items between operating profit for the Group and total segment operating
profit
EUR million Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22
Operating profit for the Group 474 564 900 918
Amortization of acquired intangible assets 87 100 176 200
Restructuring and associated charges 53 50 81 80
Change in provisions related to past acquisitions 20 — 20 —
Costs associated with country exit (13) — (48) 104
Divestment of businesses 4 — (22) —
Other, net 1 (1) (1) (6)
Total segment operating profit 626 714 1 106 1 296
20 July 2023 21 |
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| 3. NET SALES
Management has determined that Nokia’s geographic areas are considered as the primary determinants to depict how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by economic factors. Nokia’s primary customer base consists of companies that operate on a country-specific or a regional basis. Although Nokia’s technology cycle is similar around the world, different countries and regions are inherently in a different stage of
that cycle, often influenced by macroeconomic conditions specific to those countries and regions. In addition to net sales to external customers by region,
the chief operating decision maker also reviews net sales by customer type disclosed below.
Each reportable segment, as described in Note 2, Segment information, consists of customers that operate in all geographic areas. No reportable segment
has a specific revenue concentration in any geographic area other than Nokia Technologies, which is included within Europe.
Net sales by region
EUR million Q2'23 Q2'22 YoY
change
Q1-Q2'23 Q1-Q2'22 YoY change
Asia Pacific 527 575 (8) % 1 105 1 209 (9) %
Europe 1 523 1 378 11% 2 996 2 777 8%
Greater China 344 418 (18) % 680 810 (16) %
India 1 043 241 333% 1 896 440 331%
Latin America 230 275 (16) % 462 501 (8) %
Middle East & Africa 478 484 (1) % 915 892 3%
North America 1 293 2 216 (42) % 2 959 4 042 (27) %
Submarine Networks1
272 287 (5) % 556 549 1%
Total 5 710 5 873 (3) % 11 569 11 220 3%
1Nokia provides net sales for the Submarine Networks business separately from the rest of the Group to improve the usefulness of disclosed information by removing volatility
caused by the specific nature of the Submarine Networks business.
Net sales by customer type
EUR million Q2'23 Q2'22 YoY
change
Q1-Q2'23 Q1-Q2'22 YoY change
Communications service providers (CSP) 4 561 4 803 (5) % 9 286 9 176 1%
Enterprise 510 409 25% 1 076 752 43%
Licensees 334 305 10 % 576 611 (6) %
Other1
304 356 (15) % 631 681 (7) %
Total 5 710 5 873 (3) % 11 569 11 220 3%
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 enterprise
customers.
20 July 2023 22 |
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| 4. PENSIONS AND OTHER POST-EMPLOYMENT BENEFITS
Nokia operates several post-employment plans in various countries including both defined contribution and defined benefit plans. Defined benefit plans
include pension plans and other post-employment benefit plans, providing retirement healthcare benefits and life insurance coverage. Nokia remeasured
95% of its defined benefit obligations and 98% of the plan assets at 30 June 2023. Nokia's pension and other post-employment plans in the United States
have been remeasured using updated valuations from an external actuary, and the main pension plans outside of the United States have been remeasured
based on 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 not material. At 30 June 2023, the weighted average discount rates used in remeasurement of the most significant
plans were as follows (comparatives at 31 December 2022): US Pension 4.84% (4.86%), US OPEB 4.83% (4.87%), Germany 3.62% (3.70%) and UK 5.14%
(4.76%).
The funded status of Nokia’s defined benefit plans (before the effect of the asset ceiling) decreased from EUR 4 441 million, or 124.6%, at 31 March 2023 to
EUR 4 281 million, or 124.2%, at 30 June 2023. During the quarter the global defined benefit plan asset portfolio was invested approximately 71% in fixed
income, 6% in equities and 23% in other asset classes, mainly private equity and real estate.
Changes in pension and post-employment net asset/(liability)
30 June 2023 30 June 2022 31 December 2022
EUR million Pensions1
US OPEB Total Pensions1
US OPEB Total Pensions1
US OPEB Total
Net asset/(liability) recognized 1
January
5 273 (978) 4 295 5 588 (1 256) 4 332 5 588 (1 256) 4 332
Recognized in income statement 32 (23) 9 (41) (15) (56) (69) (32) (101)
Recognized in other comprehensive
income
(195) 49 (146) 19 202 221 (694) 270 (424)
Contributions and benefits paid 103 6 109 102 (4) 98 177 9 186
Exchange differences and other
movements2
(99) 12 (87) 500 (101) 399 271 31 302
Net asset/(liability) recognized at the
end of the period
5 114 (934) 4 180 6 168 (1 174) 4 994 5 273 (978) 4 295
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 June 2023 31 March 2023 31 December 2022 30 September 2022 30 June 2022
Defined benefit obligation (17 712) (18 054) (18 312) (19 522) (20 029)
Fair value of plan assets 21 993 22 495 22 691 24 681 25 127
Funded status 4 281 4 441 4 379 5 159 5 098
Effect of asset ceiling (101) (90) (84) (121) (104)
Net asset recognized at the end of the period 4 180 4 351 4 295 5 038 4 994
5. DEFERRED TAXES
Deferred tax assets are recognized to the extent it is probable that future taxable profit will be available against which the unused tax losses, unused tax
credits and deductible temporary differences can be utilized in the relevant jurisdictions. At 30 June 2023, Nokia has recognized deferred tax assets of EUR
3.8 billion (EUR 3.8 billion at 31 December 2022).
In addition, at 30 June 2023, Nokia has unrecognized deferred tax assets of approximately EUR 5 billion (EUR 5 billion at 31 December 2022), the majority of
which relate to France (approximately EUR 4 billion). These deferred tax assets have not been recognized due to uncertainty regarding their utilization. A
significant portion of the 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.
Nokia continually evaluates the probability of utilizing its deferred tax assets and considers both positive and negative evidence in its assessment.
20 July 2023 23 |
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| 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 measure 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 on publicly available market information and Level 3 requiring most
management judgment. At the end of each reporting period, Nokia categorizes its financial assets and liabilities to the appropriate level of fair value
hierarchy. Items carried at fair value in the following table are measured at fair value on a recurring basis. For more information about the valuation methods
and principles, refer to note 2, Significant accounting policies, and note 21, Fair value of financial instruments, in the annual consolidated financial statements
for 2022.
30 June 2023 Carrying amounts Fair value
Amortized cost Fair value through profit or loss
Fair value through other
comprehensive income1
EUR million Level 1 Level 2 Level 3 Level 2 Total Total
Other non-current financial investments — 6 — 797 — 803 803
Other non-current financial assets 180 — 97 — 24 301 301
Non-current interest-bearing financial investments 865 — — — — 865 834
Other current financial assets 262 — — — 43 305 305
Derivative assets — — 197 — — 197 197
Trade receivables — — — — 5 354 5 354 5 354
Current interest-bearing financial investments 1 255 — 605 — — 1 860 1 860
Cash and cash equivalents 3 936 — 1 170 — — 5 106 5 106
Total financial assets 6 498 6 2 069 797 5 421 14 791 14 760
Long-term interest-bearing liabilities 3 584 — — — — 3 584 3 568
Other long-term financial liabilities — — — 46 — 46 46
Short-term interest-bearing liabilities 587 — — — — 587 592
Other short-term financial liabilities 55 — — 471 — 526 526
Derivative liabilities — — 397 — — 397 397
Discounts without performance obligations 497 — — — — 497 497
Trade payables 4 257 — — — — 4 257 4 257
Total financial liabilities 8 980 — 397 517 — 9 894 9 883
31 December 2022 Carrying amounts Fair value
Amortized cost Fair value through profit or loss
Fair value through other
comprehensive income1
EUR million Level 1 Level 2 Level 3 Level 2 Total Total
Other non-current financial investments — 5 — 823 — 828 828
Other non-current financial assets 183 — 91 — 27 301 301
Non-current interest-bearing financial investments 697 — — — — 697 659
Other current financial assets 296 — — — 36 332 332
Derivative assets — — 239 — — 239 239
Trade receivables — — — — 5 549 5 549 5 549
Current interest-bearing financial investments 1 447 — 1 633 — — 3 080 3 080
Cash and cash equivalents 4 176 — 1 291 — — 5 467 5 467
Total financial assets 6 799 5 3 254 823 5 612 16 493 16 455
Long-term interest-bearing liabilities 4 249 — — — — 4 249 4 230
Other long-term financial liabilities — — — 48 — 48 48
Short-term interest-bearing liabilities 228 — — — — 228 228
Other short-term financial liabilities 75 — — 502 — 577 577
Derivative liabilities — — 496 — — 496 496
Discounts without performance obligations 539 — — — — 539 539
Trade payables 4 730 — — — — 4 730 4 730
Total financial liabilities 9 821 — 496 550 — 10 867 10 848
1No financial instruments measured at fair value through other comprehensive income are categorized in fair value hierarchy level 1 or level 3.
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 investments managed by NGP Capital
specializing in growth-stage investing. The fair value of level 3 investments is determined 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 consist primarily of a conditional obligation to China Huaxin related to Nokia Shanghai Bell.
20 July 2023 24 |
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| 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 at 31 December 2022 823 (550)
Net (losses)/gains in income statement (46) 32
Additions 26 —
Deductions (6) —
Other movements — 1
Balance at 30 June 2023 797 (517)
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 expenses. A net loss of EUR 15 million (net gain of EUR 23 million in
2022) related to level 3 financial instruments held at 30 June 2023 was included in the profit and loss during 2023.
7. INTEREST-BEARING LIABILITIES
Carrying amount (EUR million)
Issuer/borrower Instrument Currency
Nominal
(million) Final maturity 30 June 2023 30 June 2022 31 December 2022
Nokia Corporation 2.00% Senior Notes1
EUR 378 March 2024 368 748 736
Nokia Corporation EIB R&D Loan EUR 500 February 2025 500 500 500
Nokia Corporation NIB R&D Loan2
EUR 167 May 2025 167 250 250
Nokia Corporation 2.375% Senior Notes1
EUR 292 May 2025 283 491 478
Nokia Corporation 2.00% Senior Notes1
EUR 630 March 2026 595 747 716
Nokia Corporation 4.375% Senior Notes USD 500 June 2027 427 468 436
Nokia of America Corporation 6.50% Senior Notes USD 74 January 2028 68 71 70
Nokia Corporation 3.125% Senior Notes EUR 500 May 2028 460 489 457
Nokia of America Corporation 6.45% Senior Notes USD 206 March 2029 191 200 194
Nokia Corporation 4.375% Sustainability-linked Senior Notes3
EUR 500 August 2031 489 — —
Nokia Corporation 6.625% Senior Notes USD 500 May 2039 471 526 478
Nokia Corporation and various
subsidiaries
Other liabilities 152 147 162
Total 4 171 4 637 4 477
1
In February 2023 Nokia purchased in a tender offer EUR 372 million (49.66% of the nominal amount) of the notes due 15 March 2024, EUR 208 million (41.57% of the nominal
amount) of the notes due 15 May 2025 and EUR 120 million (15.96% of the nominal amount) of the notes due 11 March 2026.
2
The remaining loan from the Nordic Investment Bank (NIB) is repayable in two equal annual installments in 2024 and 2025.
3
In February 2023 Nokia issued EUR 500 million 4.375% sustainability-linked Notes due August 2031 under its 5 billion Euro Medium Term Note Programme.
Significant credit facilities and funding programs
Utilized (million)
Financing arrangement
Committed/
uncommitted Currency Nominal (million) 30 June 2023 30 June 2022 31 December 2022
Revolving Credit Facility1
Committed EUR 1 500 — — —
Finnish Commercial Paper Programme Uncommitted EUR 750 — — —
Euro-Commercial Paper Programme Uncommitted EUR 1 500 — — —
Euro Medium Term Note Programme2
Uncommitted EUR 5000 2 300 2 500 2 500
1
The sustainability-linked 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.
20 July 2023 25 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg026.jpg)
| 8. PROVISIONS
EUR million Restructuring Warranty
Litigation and
Environmental Project losses Other1
Total
At 1 January 2023 193 221 253 207 561 1 435
Charged to income statement
Additions 75 92 37 — 83 287
Reversals — (24) (10) — (78) (112)
Total charged to income statement 75 68 27 — 5 175
Utilized during period2
(113) (66) (14) (89) (48) (330)
Translation differences and other — — (5) — (4) (9)
At 30 June 2023 155 223 261 118 514 1 271
Non-current 49 20 160 111 241 581
Current 106 203 101 7 273 690
1Other 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 55 million remained in accrued expenses at 30 June 2023.
9. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS
EUR million 30 June 2023 30 June 2022 31 December 2022
Contingent liabilities on behalf of Group companies
Guarantees issued by financial institutions
Commercial guarantees 1 317 1 234 1 238
Non-commercial guarantees 574 508 538
Corporate guarantees
Commercial guarantees 497 480 504
Non-commercial guarantees 32 40 32
Financing commitments
Customer finance commitments 17 32 26
Venture fund commitments 399 469 433
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 annual consolidated financial statements for 2022:
Continental
In 2019, Continental Automotive Systems (Continental) brought breach of FRAND (fair, reasonable and non-discriminatory terms) and antitrust claims against
Nokia and others. The antitrust claims were dismissed with prejudice. In 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 2021. In the beginning of 2023, Nokia’s motion to dismiss
was granted in part and denied in part, and the action is proceeding on the remaining claims at this time.
Oppo
In 2021, Nokia commenced patent infringement proceedings against Oppo, OnePlus and Realme in several countries in Asia and Europe. Across these
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 infringement actions against Nokia equipment in Germany, China
and Finland and actions in China against Nokia relating to standard essential patent licensing issues. Nokia filed an additional case in Brazil and obtained a
preliminary injunction. Nokia has had multiple patents confirmed as valid and infringed including in Germany, the Netherlands and the UK.
Vivo
In 2022, Nokia commenced patent infringement proceedings 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 against Nokia relating to standard essential
patent licensing issues. Nokia has had patents confirmed as infringed in Germany.
20 July 2023 26 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg027.jpg)
| 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 financial 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. These financial measures should not be considered in isolation from,
or as a substitute for, financial information presented in compliance with IFRS.
The below tables provide summarized information on the performance measures included in this interim report as well as reconciliations of the performance
measures to the amounts presented in the financial statements.
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
comparability. 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 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.
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 provide 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 its 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 indicates 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 calculate 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 flows 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 free 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 represents 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, reflect 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 resulting 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 restructuring and associated charges, liabilities and cash
outflows to measure the progress of our integration and transformation
activities.
20 July 2023 27 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg028.jpg)
| Comparable to reported reconciliation
Q2'23
Cost of
sales
Research
and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income
and
expenses
Operating
profit
Share of
results of
associates
and joint
ventures
Financial
income
and
expenses
Income
tax
(expense)/
benefit
Profit from
continuing
EUR million operations
Comparable (3 494) (1 026) (618) 54 626 (13) (52) (148) 414
Amortization of acquired intangible assets — (13) (75) — (87) — — 21 (66)
Restructuring and associated charges (36) (6) (11) — (53) — — 10 (43)
Change in provisions related to past acquisitions — — — (20) (20) — — 4 (16)
Costs associated with country exit — — — 13 13 — — (3) 11
Divestment of businesses — — — (4) (4) — (11) (1) (16)
Impairment and write-off of assets, net of
reversals (1) (1) — — (1) — — — (1)
Change in financial liability to acquire NSB non-controlling interest — — — — — — 8 — 8
Items affecting comparability (36) (19) (85) (11) (152) — (2) 32 (124)
Reported (3 530) (1 045) (703) 43 474 (13) (54) (116) 290
Q2'22
Cost of
sales
Research
and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income
and
expenses
Operating
profit
Share of
results of
associates
and joint
ventures
Financial
income
and
expenses
Income
tax
(expense)/
benefit
Profit from
continuing
EUR million operations
Comparable (3 487) (1 069) (623) 20 714 (6) (27) (95) 585
Amortization of acquired intangible assets — (13) (87) — (100) — — 22 (79)
Restructuring and associated charges (26) (8) (17) 1 (50) — — — (50)
Impairment and write-off of assets, net of
reversals — — — — 1 — — — 1
Change in financial liability to acquire NSB non-controlling interest — — — — — — 10 — 10
Items affecting comparability (25) (21) (105) 1 (150) — 10 22 (118)
Reported (3 512) (1 091) (728) 22 564 (6) (18) (74) 467
20 July 2023 28 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg029.jpg)
| Q1-Q2'23
Cost of
sales
Research
and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income
and
expenses
Operating
profit
Share of
results of
associates
and joint
ventures
Financial
income
and
expenses
Income
tax
(expense)/
benefit
Profit from
continuing
EUR million operations
Comparable (7 146) (2 119) (1 259) 61 1 106 (19) (61) (270) 756
Amortization of acquired intangible assets — (26) (151) — (176) — — 42 (135)
Restructuring and associated charges (48) (10) (22) (1) (81) — — 14 (67)
Costs associated with country exit — — — 48 48 — — (10) 39
Divestment of businesses — — — 22 22 — (11) (6) 5
Change in provisions related to past acquisitions — — — (20) (20) — — 4 (16)
Impairment and write-off of assets, net of
reversals — — — — 1 — — — 1
Change in financial liability to acquire NSB non-controlling interest — — — — — — (2) — (2)
Items Affecting comparability (48) (35) (173) 50 (206) — (13) 43 (175)
Reported (7 194) (2 154) (1 432) 111 900 (19) (74) (227) 581
Q1-Q2'22
Cost of
sales
Research
and
development
expenses
Selling,
general and
administrative
expenses
Other
operating
income
and
expenses
Operating
profit
Share of
results of
associates
and joint
ventures
Financial
income
and
expenses
Income
tax
(expense)/
benefit
Profit from
continuing
EUR million operations
Comparable (6 658) (2 122) (1 204) 60 1 296 (32) (67) (196) 1 001
Amortization of acquired intangible assets — (28) (172) — (200) — — 43 (157)
Costs associated with country exit — — — (104) (104) — — (104)
Restructuring and associated charges (35) (16) (28) (1) (80) — — — (80)
Impairment and write-off of assets, net of
reversals 2 3 1 — 6 — — — 6
Loss allowance on customer financing loan — — — — — — (29) — (29)
Change in financial liability to acquire NSB non-controlling interest — — — — — — 7 — 7
Items affecting comparability (32) (41) (199) (106) (378) — (22) 43 (357)
Reported (6 690) (2 163) (1 403) (46) 918 (32) (90) (153) 644
Net cash and interest-bearing financial investments
EUR million 30 June 2023 31 March 2023 31 December 2022 30 September
2022
30 June 2022
Non-current interest-bearing financial investments 865 898 697 715 473
Current interest-bearing financial investments 1 860 2 889 3 080 3 340 3 253
Cash and cash equivalents 5 106 4 827 5 467 5 196 5 457
Total cash and interest-bearing financial investments 7 831 8 614 9 244 9 251 9 183
Long-term interest-bearing liabilities1
3 584 3 704 4 249 4 364 4 424
Short-term interest-bearing liabilities1
587 606 228 232 213
Total interest-bearing liabilities 4 171 4 310 4 477 4 596 4 637
Net cash and interest-bearing financial investments 3 660 4 304 4 767 4 655 4 546
1
Lease liabilities are not included in interest-bearing liabilities.
Free cash flow
EUR million Q2'23 Q2'22 Q1-Q2'23 Q1-Q2'22
Net cash flows from operating activities (333) (43) (250) 516
Purchase of property, plant and equipment and intangible assets (127) (101) (359) (290)
Proceeds from sale of property, plant and equipment and
intangible assets
84 32 98 33
Purchase of other non-current financial investments (25) (18) (41) (76)
Proceeds from sale of other non-current financial investments 21 14 25 27
Free cash flow (380) (116) (527) 210
20 July 2023 29 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg030.jpg)
| Comparable return on invested capital (ROIC)
Q2'23
EUR million
Rolling four
quarters Q2'23 Q1'23 Q4'22 Q3'22
Comparable operating profit 2 917 626 479 1 154 658
Comparable profit before tax 2 887 562 464 1 194 667
Comparable income tax expense (651) (148) (122) (265) (116)
Comparable operating profit after tax 2 256 461 353 898 544
EUR million Average 30 June 2023 31 March 2023
31 December
2022
30 September
2022 30 June 2022
Total equity 20 580 21 276 21 375 21 426 19 797 19 026
Total interest-bearing liabilities 4 438 4 171 4 310 4 477 4 596 4 637
Total cash and interest-bearing financial investments 8 825 7 831 8 614 9 244 9 251 9 183
Invested capital 16 193 17 616 17 071 16 659 15 142 14 480
Comparable ROIC 13.9%
Q1'23
EUR million
Rolling four
quarters Q1'23 Q4'22 Q3'22 Q2'22
Comparable operating profit 3 005 479 1 154 658 714
Comparable profit before tax 3 006 464 1 194 667 681
Comparable income tax expense (598) (122) (265) (116) (95)
Comparable operating profit after tax 2 411 354 899 544 614
EUR million Average 31 March 2023
31 December
2022
30 September
2022 30 June 2022 31 March 2022
Total equity 19 941 21 375 21 426 19 797 19 026 18 083
Total interest-bearing liabilities 4 527 4 310 4 477 4 596 4 637 4 615
Total cash and interest-bearing financial investments 9 162 8 614 9 244 9 251 9 183 9 519
Invested capital 15 306 17 071 16 659 15 142 14 480 13 179
Comparable ROIC 15.8%
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 2 334 614 469 746 505
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 5 081 5 063
Total cash and interest-bearing financial investments 9 220 9 183 9 519 9 268 9 381 8 751
Invested capital 12 649 14 480 13 179 12 847 12 092 10 649
Comparable ROIC 18.5%
20 July 2023 30 |
![GRAPHIC](https://www.sec.gov/Archives/edgar/data/924613/000110465923082513/tm2321705d1_6kmg031.jpg)
| This financial report was approved by the Board of Directors on 20 July 2023.
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 third quarter and January-September 2023 results on 19 October 2023.
20 July 2023 31 |
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: July 20, 2023 Nokia Corporation
|
By: |
/s/ Esa Niinimäki |
|
Name: |
Esa Niinimäki |
|
Title: |
Chief Legal Officer |
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