UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

Report on Form 6-K dated August 1, 2024

(Commission File No. 1-13202)

 

 

Nokia Corporation

Karakaari 7

FI-02610 Espoo

Finland

(Translation of the registrant’s name into English 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:

Form 20-F: ☒   Form 40-F: ☐

 

 

 

EXHIBIT INDEX

The following exhibit is furnished as part of this Form 6-K:

 

Exhibits

     
99.1    Report for Q2 and half year 2024

SIGNATURES

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.

 

    Nokia Corporation
Date: August 1, 2024     By:  

/s/ Johanna Mandelin

      Name: Johanna Mandelin
      Title: Global Head of Corporate Legal
    By:  

/s/ Tatu Simula

      Name: Tatu Simula
      Title: Senior Legal Counsel

Exhibit 99.1

 

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Nokia Group January-June 2024 compared to January-June 2023

 

Net sales

In the first half of 2024, net sales were EUR 8 910 million compared to EUR 11 013 million in the first half of 2023, representing a decrease of 19% compared to the year-ago period. In addition to the negative impact from foreign exchange rate fluctuations, the performance was mainly driven by declines across Mobile Networks, Network Infrastructure and Cloud and Network Services. This was somewhat offset by growth in Nokia Technologies.

Gross margin

In the first half of 2024, gross margin increased 740 basis points to 46.5% compared to the first half of 2023. The gross margin increase was primarily driven by the benefits of catch-up net sales in Nokia Technologies and strong improvements in Mobile Networks which benefited from supportive regional mix and the accelerated recognition of net sales in Q2 2024.

Operating profit and margin

Operating profit in the first half of 2024 was EUR 836 million compared to EUR 890 million. Operating margin in the first half of 2024 was 9.4% compared 8.1% in the first half of 2023. The decrease in operating profit was mainly driven by lower net sales. Operating expenses increased year-on-year mainly reflecting higher restructuring and associated charges. The first half of 2023 benefited from lower variable pay accruals. This was somewhat offset by catch-up net sales in Nokia Technologies, the accelerated recognition of net sales in Mobile Networks and higher other operating income, mainly related to the divestment of businesses and associated companies and a positive fluctuation in loss allowances on certain trade receivables.

Profit from continuing operations

Profit from continuing operations in the first half of 2024 was EUR 821 million, compared to profit of EUR 570 million in the first half of 2023. The increase in profit from continuing operations when compared to the first half of 2023 was mainly driven by a net positive fluctuation in financial income and expenses and lower income tax expenses, which more than offset the decrease in operating profit. The net positive fluctuation in financial income and expenses reflected favorable foreign exchange rates and higher interest income. The lower income tax expenses reflected a change in the recognition of deferred tax assets.

(1) Non-IFRS measures. For the definition and reconciliation of non-IFRS measures to the most directly comparable IFRS measures, refer to the ”Alternative performance measures” section.

Profit/loss from discontinued operations

The loss from discontinued operations in the first half of 2024 was EUR 525 million, compared to a profit of EUR 8 million in the first half of 2023. The loss from discontinued operations in the first half of 2024 reflects the accounting for Submarine Networks being moved into discontinued operations. The loss is mainly related to an impairment charge of EUR 514 million in connection with Submarine Networks.

Earnings per share

Diluted EPS from continuing operations was EUR 0.15 in the first half of 2024, compared to EUR 0.10 in the first half of 2023. Diluted EPS from discontinued operations was negative EUR 0.09 in the first half of 2024, compared to zero in the first half of 2023. Diluted EPS was EUR 0.05 in the first half of 2024, compared to EUR 0.10 in the first half of 2023.

Cash performance

During the first half of 2024, Nokia’s cash and cash equivalents increased EUR 619 million, resulting in an end-of-period balance of EUR 6 853 million. Total cash and interest-bearing financial investments(1) increased EUR 640 million, resulting in an end-of-period balance of EUR 9 154 million. Nokia’s net cash and interest-bearing financial investments(1) increased EUR 1 152 million, resulting in an end-of-period balance of EUR 5 475 million.

 

 

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Cash and cash flow in the first half of 2024

EUR billion

 

 EUR million       30 June 2024      31 December 2023          Change   

 Cash and cash equivalents

      6 853        6 234        10%   

 Total cash and interest-bearing financial investments(1)

      9 154        8 514        8%   

 Net cash and interest-bearing financial investments(1)(2)

      5 475        4 323        27%   

 

(1)

Non-IFRS measures. For the definition and reconciliation of non-IFRS measures to the most directly comparable IFRS measures, refer to the ”Alternative performance measures” section.

(2)

Net cash and interest-bearing financial investments does not include lease liabilities.

 

The cash flow descriptions below include cash flows from both continuing and discontinued operations.

Net cash flows from operating activities

Net cash flows from operating activities were driven by:

 

§   Nokia’s cash flow from operations before changes in net working capital of EUR 1 417 million.
§   The cash inflow related to net working capital in the quarter was approximately EUR 400 million. This included approximately EUR 270 million of restructuring and associated cash outflows, related to our current and previous cost savings programs. The remaining EUR 670 million of inflows can be broken down as follows:
  ○    The decrease in receivables was approximately EUR 1 190 million primarily driven by cash inflows related to 5G deployments in India, somewhat offset by a decrease in the balance sheet impact related to the sale of receivables in the period.
  ○    The decrease in inventories was approximately EUR 40 million.
  ○    The decrease in liabilities was approximately EUR 560 million, primarily related to decreases in accounts payable and contract liabilities.
§   An outflow related to cash taxes of approximately EUR 230 million.

Net cash flows from investing activities

§   Net cash flow from investing activities was related primarily to net cash inflows related to proceeds from interest-bearing financial investments of approximately EUR 660 million, the disposal of shares in associated companies of approximately EUR 180 million, the disposal of businesses of approximately EUR 100 million and the sale of assets of approximately EUR 60 million. This was partially offset by net cash outflows related primarily to purchases of interest-bearing financial investments of approximately EUR 660 million and capital expenditures(1) of approximately EUR 210 million.

(1) Non-IFRS measures. For the definition and reconciliation of non-IFRS measures to the most directly comparable IFRS measures, refer to the ”Alternative performance measures” section.

Net cash flows used in financing activities

§   Net cash flows used in financing activities was related primarily to repayment of long-term borrowings of approximately EUR 460 million, dividend payments of approximately EUR 390 million, lease payments of approximately EUR 110 million and the acquisition of treasury shares of approximately EUR 100 million.

Change in cash and cash equivalents, total cash and interest-bearing financial investments(1), and net cash and interest-bearing financial investments(1)

In the first half of 2024, the approximately EUR 20 million difference between the change in cash and cash equivalents and total cash and interest-bearing financial investments was due to changes in non-current and current interest-bearing financial investments.

In the first half of 2024, the approximately EUR 510 million difference between the change in total cash and interest-bearing financial investments and net cash and interest-bearing financial investments was primarily due to the repayment of debt of approximately EUR 460 million and changes in the carrying amounts of certain issued bonds, as a result of interest rate and foreign exchange rate fluctuations.

Free cash flow(1)

During the first half of 2024, Nokia’s free cash flow was positive EUR 1 349 million, mainly driven by operating profit and cash inflows related to net working capital. These were somewhat offset by capital expenditures, restructuring and income taxes.

 

 

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Shareholder distribution

Dividend

Under the authorization by the Annual General Meeting held on 3 April 2024, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.13 per share to be paid in respect of financial year 2023. 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 18 July 2024, the Board resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is 23 July 2024 and the dividend will be paid on 1 August 2024. 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 January 2024, 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 first EUR 300 million phase of the share buyback program started in March 2024. Under this phase, Nokia had by 30 June 2024 repurchased 29 507 303 of its own shares at an average price per share of approximately EUR 3.41.

On 27 June 2024, Nokia announced its intention to acquire Infinera in a transaction that values Infinera at US$1.7 billion equity value with up to 30% of the consideration to be paid in Nokia American depositary shares (“ADSs”) depending on the elections of Infinera shareholders. Nokia’s Board of Directors is committed to repurchase additional shares on top of the on-going EUR 600 million program to offset the dilution from the transaction to Nokia shareholders. The Board intends to increase the scale of the buyback program once the result of the Infinera shareholder elections are known (between cash and Nokia ADSs). In the interim, Nokia’s Board of Directors intends to accelerate the timeframe for the existing EUR 600 million share buyback program with the aim of completing the full EUR 600 million by the end of this year instead of the initial two year timeframe.

 

 

 

Significant events

 

January – June 2024

On 25 January 2024, Nokia announced that its Board of Directors is initiating a share buyback program to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The repurchases under the first phase of the program commenced on 20 March 2024.

On 8 February 2024, Nokia announced it had signed its last remaining major smartphone patent license agreement that remained under negotiation and concluded its smartphone patent license renewal cycle which began in 2021. In addition to license agreements signed with Apple and Samsung in 2023, and Huawei in December 2022, Nokia Technologies announced agreements with Honor, OPPO and vivo, among others at the beginning of 2024. Nokia Technologies has now entered a period of stability with no major smartphone license agreements expiring for a number of years. Refer to the Segment details section in this report for more information on the financial impact of completion of the patent license renewal cycle.

On 27 June 2024, Nokia announced it has entered into a put option agreement to sell Alcatel Submarine Networks (ASN), a leading submarine networks business, to the French State for an enterprise value of EUR 350 million, subject to informing and consulting with the relevant employee representatives at ASN and Nokia. Nokia will retain a 20% shareholding with board representation to ensure a smooth transition until targeted exit, at which point the French State would acquire Nokia’s remaining interest. The sale is expected to close at the end of 2024 or beginning of 2025, subject to customary closing conditions and regulatory approvals.

On 27 June 2024, Nokia and Infinera, a global supplier of innovative open optical networking solutions and advanced optical semiconductors, announced a definitive agreement under which Nokia will acquire Infinera, in a transaction valuing the company at $6.65 per share or an enterprise value of US$ 2.3 billion. At least 70% of the consideration will be paid in cash and Infinera’s shareholders can elect to receive up to 30% of the aggregate consideration in the form of Nokia ADSs. In conjunction with this transaction, Nokia’s Board of Directors has committed to increasing and accelerating Nokia’s on-going share buyback program to mitigate any dilution from the equity component of the acquisition. Nokia and Infinera see a significant opportunity in merging to improve scale and profitability, enabling the combined business to accelerate the development of new products and solutions to benefit customers.

 

 

 

 

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Additional topics

 

Sale of Submarine Networks

On 27 June 2024, Nokia announced it has entered into a put option agreement to sell Alcatel Submarine Networks (ASN) to the French State, represented by the Agence des participations de l’Etat (APE), subject to informing and consulting with the relevant employee representatives at ASN and Nokia, along with other customary closing conditions and regulatory approvals. The put option agreement contemplates the sale of ASN for an enterprise value of EUR 350 million, while the final proceeds will depend on the working capital and net debt balances of ASN at closing. In Q2 2024, Nokia recorded a noncash impairment charge of EUR 514 million related to the difference between the carrying value of the business and the expected proceeds from the sale. Beginning with Q2 2024, Nokia is accounting for ASN as a discontinued operation.

Update on TD Tech

Nokia holds a 51% ownership interest in TD Tech Holding Limited (“TD Tech HK”), a Hong Kong based joint venture holding company which Nokia has accounted for as an investment in associates and joint ventures. In the second quarter of 2024, TD Tech HK completed the divestment of the entire business of the joint venture through the sale of its operating subsidiaries to a consortium consisting of Huawei Technologies, Chengdu High-tech Investment Group and other buyers. Following the divestment, Nokia is in the process of exiting from its shareholding in the parent company TD Tech HK. Nokia considers the transactions as a sale of associated companies and joint ventures and has recorded a gain of EUR 186 million and net proceeds of EUR 173 million from the sale.

Vodafone Idea

In Q2 2024, Nokia Solutions and Networks India Private Limited entered into an agreement with Vodafone Idea Limited (“VIL”) to settle outstanding dues and convert them to an equity stake in VIL. The transaction was approved by VIL shareholders in July. The impact of the transaction is expected to be visible in Nokia’s Q3 results and the equity stake is subject to a six-month lock-up period.

 

 

 

 

Shares

The total number of Nokia shares on 30 June 2024, equaled 5 613 496 565. On 30 June 2024, Nokia and its subsidiary companies held 115 511 381 Nokia shares, representing approximately 2.1% of the total number of Nokia shares and voting rights.

 

 

 

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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 as some competitors seek to take share;
§   Changes in customer network investments related to their ability to monetize the network;
§   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;
§   Impact of 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 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;
§   Our ability to execute, complete and realize the expected benefits from our ongoing transactions;
§   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 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 2023 annual report on Form 20-F published on 29 February 2024 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, projects, programs, 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, geopolitical conflicts and the general or regional macroeconomic conditions on our businesses, our supply chain, the timing of market changes or turning points in demand 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, cost savings, 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 our ongoing transactions and 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”, “envisage”, ”estimate”, “expect”, “aim”, “will”, “target”, “likely”, “intend”, “may”, “could”, “would”, “see”, “forecast”, “plan” 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       Note      Q2’24     Q2’23     Q1-Q2’24     Q1-Q2’23  

Net sales

      2, 4        4 466       5 438       8 910       11 013  

Cost of sales

               (2 530 )      (3 290 )      (4 764 )      (6 704 ) 

Gross profit

      2        1 936       2 148       4 146       4 308  

Research and development expenses

         (1 134 )      (1 034 )      (2 259 )      (2 130 ) 

Selling, general and administrative expenses

         (715 )      (690 )      (1 408 )      (1 407 ) 

Other operating income and expenses

               345       45       358       118  

Operating profit

      2        432       469       836       890  

Share of results of associates and joint ventures

         3       (13 )      3       (19 ) 

Financial income and expenses

               27       (54 )      84       (77 ) 

Profit before tax

         461       402       924       794  

Income tax expense

      6        (92 )      (115 )      (103 )      (224 ) 

Profit from continuing operations

         370       287       821       570  

(Loss)/profit from discontinued operations

               (512 )      2       (525 )      8  

(Loss)/Profit for the period

               (142 )      289       296       578  

Attributable to

            

Equity holders of the parent

         (146 )      290       288       569  

Non-controlling interests

         3       (1 )      8       9  

Earnings per share attributable to equity holders of the parent

 

         

Basic earnings per share, EUR

            

Continuing operations

         0.07       0.05       0.15       0.10  

Discontinued operations

         (0.09 )      0.00       (0.10 )      0.00  

Profit for the period

         (0.03 )      0.05       0.05       0.10  

Average number of shares (‘000 shares)

            5 509 849          5 558 878          5 517 802          5 568 389  

Diluted earnings per share, EUR

            

Continuing operations

         0.07       0.05       0.15       0.10  

Discontinued operations

         (0.09 )      0.00       (0.09 )      0.00  

Profit for the period

         (0.03 )      0.05       0.05       0.10  

Average number of shares (‘000 shares)

               5 562 292       5 616 185       5 563 542       5 623 523  

Beginning from the second quarter of 2024 Nokia has presented its Submarine Networks business as discontinued operation. The comparative information has been recast accordingly.

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       Q2’24        Q2’23      Q1-Q2’24      Q1-Q2’23  

(Loss)/Profit for the period

      (142 )      289       296       578  

Other comprehensive income

         

Items that will not be reclassified to profit or loss

         

Remeasurements of defined benefit plans

      136       (225 )      264       (146 ) 

Income tax related to items that will not be reclassified to profit or loss

      (38 )      56       (73 )      37  

Total of items that will not be reclassified to profit or loss

      98       -169       191       -109  

Items that may be reclassified to profit or loss

         

Translation differences

      89       (32 )      266       (313 ) 

Net investment hedges

      (9 )      36       (16 )      111  

Cash flow and other hedges

      5       (16 )      25       (15 ) 

Financial assets at fair value through other comprehensive income

      5       (14 )      13       (37 ) 

Other changes, net

      (3 )      3       1       —  

Income tax related to items that may be reclassified subsequently to profit or loss

      1       4       4       (10 ) 

Total of items that may be reclassified to profit or loss

      88       (19 )      293       (264 ) 

Other comprehensive income/(loss), net of tax

      186       (188 )      484       (373 ) 

Total comprehensive income for the period

      44       101       780       205  

Attributable to:

         

Equity holders of the parent

      40       105       772       200  

Non-controlling interests

      4       (4 )      8       5  

Total comprehensive income/expense attributable to equity holders of the parent arises from:

         

Continuing operations

      548       96       1 277       201  

Discontinued operations

      (508 )      9       (505 )      (1 ) 

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 2024       30 June 2023      31 December 2023  

ASSETS

          

Goodwill

         5 601       5 591       5 504  

Other intangible assets

         961       1 136       1 086  

Property, plant and equipment

         1 361       1 962       1 951  

Right-of-use assets

         815       927       906  

Investments in associated companies and joint ventures

         89       170       88  

Non-current interest-bearing financial investments

      7        438       865       715  

Other non-current financial assets

      7        1 104       1 047       1 100  

Defined benefit pension assets

      5        6 590       6 575       6 258  

Deferred tax assets

      6        3 691       3 777       3 873  

Other non-current receivables

               196       236       213  

Total non-current assets

               20 844       22 287       21 694  

Inventories

         2 479       3 317       2 719  

Trade receivables

      7        3 572       5 354       4 921  

Contract assets

         782       1 103       1 136  

Current income tax assets

         344       351       307  

Other current receivables

         933       855       764  

Current interest-bearing financial investments

      7        1 863       1 860       1 565  

Other current financial and firm commitment assets

      7        362       513       441  

Cash and cash equivalents

      7        6 853       5 106       6 234  

Total current assets

               17 186       18 459       18 087  

Assets held for sale

               828       —       79  

Total assets

               38 859       40 747       39 860  

 

                                  

SHAREHOLDERS’ EQUITY AND LIABILITIES

          

Share capital

         246       246       246  

Share premium

         733       590       628  

Treasury shares

         (449 )      (515 )      (352 ) 

Translation differences

         13       (46 )      (249 ) 

Fair value and other reserves

         3 826       3 745       3 605  

Reserve for invested unrestricted equity

         15 249       15 489       15 255  

Retained earnings

               1 305       1 671       1 404  

Total shareholders’ equity

         20 924       21 180       20 537  

Non-controlling interests

               94       96       91  

Total equity

               21 018       21 276       20 628  

Long-term interest-bearing liabilities

      7, 8        2 747       3 584       3 637  

Long-term lease liabilities

         719       839       799  

Defined benefit pension and post-employment liabilities

      5        2 127       2 395       2 299  

Deferred tax liabilities

         664       343       725  

Contract liabilities

         234       127       210  

Other non-current liabilities

         106       94       111  

Provisions

      9        534       581       518  

Total non-current liabilities

               7 131       7 964       8 299  

Short-term interest-bearing liabilities

      7, 8        932       587       554  

Short-term lease liabilities

         209       193       198  

Other financial and firm commitment liabilities

      7        756       899       830  

Contract liabilities

         1 851       1 916       2 157  

Current income tax liabilities

         169       194       203  

Trade payables

      7        2 901       4 257       3 423  

Other current liabilities

      7        2 415       2 770       2 824  

Provisions

      9        676       690       744  

Total current liabilities

               9 909       11 507       10 933  

Liabilities associated with assets held for sale

      3        801       —       —  

Total shareholders’ equity and liabilities

               38 859       40 747       39 860  

 

          

Shareholders’ equity per share, EUR

         3.81       3.82       3.72  

Number of shares (1 000 shares, excluding treasury shares)

               5 497 985       5 547 782       5 525 601  

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       Q2’24        Q2’23       Q1-Q2’24       Q1-Q2’23  

Cash flow from operating activities

         

(Loss)/Profit for the period

      (142 )      289       296       578  

Adjustments

      767       532       1 121       988  

Impairment charges

      527       (1 )      544       (4 ) 

Depreciation and amortization

      268       272       529       538  

(Gain)/loss on sale of businesses and associated companies

      (252 )      8       (252 )      (18 ) 

Restructuring charges

      140       56       222       75  

Financial income and expenses

      (30 )      55       (81 )      73  

Income tax expense

      91       116       104       228  

Other

      23       26       55       96  

Cash flows from operations before changes in net working capital

      625       821       1 417       1 566  

Change in net working capital

      (26 )      (953 )      401       (1 459 ) 

Decrease in receivables

      427       48       1 192       81  

Decrease/(increase) in inventories

      12       (51 )      44       (124 ) 

Decrease in non-interest-bearing liabilities

      (465 )      (950 )      (835 )      (1 416 ) 

Cash flows from/(used in) operations

      599       (132 )      1 818       107  

Interest received

      58       51       112       81  

Interest paid

      (56 )      (55 )      (140 )      (106 ) 

Income taxes paid, net

      (112 )      (197 )      (234 )      (332 ) 

Net cash flows from/(used in) operating activities

      489       (333 )      1 556       (250 ) 

Cash flow from investing activities

         

Purchase of property, plant and equipment and intangible assets

      (95 )      (127 )      (207 )      (359 ) 

Proceeds from sale of property, plant and equipment and intangible assets

      31       84       56       98  

Acquisition of businesses, net of cash acquired

      (6 )      —       (6 )      —  

Proceeds from disposal of businesses, net of cash disposed

      100       (5 )      100       17  

Proceeds from disposal of shares in associated companies

      183       —       183       4  

Purchase of interest-bearing financial investments

      (257 )      (320 )      (655 )      (1 335 ) 

Proceeds from interest-bearing financial investments

      314       1 384       658       2 397  

Purchase of other non-current financial assets

      (27 )      (25 )      (35 )      (41 ) 

Proceeds from other non-current financial assets

      20       21       50       25  

Foreign exchange hedging of cash and cash equivalents

      12       51       30       29  

Other

      4       3       5       4  

Net cash flows from investing activities

      279       1 066       179       839  

Cash flow from financing activities

         

Acquisition of treasury shares

      (90 )      (82 )      (98 )      (163 ) 

Proceeds from long-term borrowings

      —       1       —       496  

Repayment of long-term borrowings

      (84 )      (85 )      (459 )      (798 ) 

(Repayment of)/proceeds from short-term borrowings

      (4 )      (19 )      (40 )      (5 ) 

Payment of principal portion of lease liabilities

      (54 )      (60 )      (107 )      (127 ) 

Dividends paid

      (225 )      (167 )      (391 )      (279 ) 

Net cash flows used in financing activities

      (457 )      (412 )      (1 095 )      (876 ) 

Translation differences

      9       (42 )      7       (74 ) 

Net increase/(decrease) in cash and cash equivalents

      320       279       647       (361 ) 

Cash and cash equivalents at beginning of period

      6 561       4 827       6 234       5 467  

Cash and cash equivalents at end of period(1)

      6 881       5 106       6 881       5 106  

 

(1)

Cash and cash equivalents at the end of Q2’24 includes EUR 28 million presented as assets held for sale in the statement of financial position.

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.

 

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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		      Total
shareholders’
equity		      Non-
controlling
interests		      Total
equity		  

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 loss

      —        —        —        (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 shares(1)

      —        —        (163)        —        —        (2)        —        (165)        —        (165)  

Disposal of subsidiaries

      —        —        —        —        —        —        —        —        (2)        (2)  

Dividends

      —        —        —        —        —        —        (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 January 2024

      246        628        (352)        (249)        3 605        15 255        1 404        20 537        91        20 628  

Profit for the period

      —        —        —        —        —        —        288        288        8        296  

Other comprehensive income

      —        —        —        262        221        —        —        484        —        484  

Total comprehensive income

      —        —        —        262        221        —        288        772        8        780  

Share-based payments

      —        115        —        —        —        —        —        115        —        115  

Settlement of share-based

      —        (10)        —        —        —        6        —        (4)        —        (4)  

payments

                              

Acquisition of treasury shares(1)

      —        —        (97)        —        —        (12)        —        (109)        —        (109)  

Dividends

      —        —        —        —        —        —        (386)        (386)        (5)        (391)  

Total transactions with owners

      —        105        (97)        —        —        (6)        (386)        (384)        (5)        (389)  

30 June 2024

      246        733        (449)        13        3 826        15 249        1 305        20 924        94        21 018  

 

(1)

Treasury shares acquired during 2024 are acquired as part of the share buyback program announced on 25 January 2024. The repurchases started on 20 March 2024. The purpose of the repurchases is to optimize Nokia’s capital structure through the reduction of capital. The repurchased shares will be cancelled.

 

 

Treasury shares acquired during 2023 were acquired as part of the share buyback program announced on 3 February 2022. The repurchased shares were cancelled on 30 November 2023.

 

 

The repurchases are funded using funds in the reserve for invested unrestricted equity and the repurchases will reduce total unrestricted equity.

The above condensed consolidated statement of changes in shareholders’ equity should be read in conjunction with accompanying notes.

 

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Notes to Financial statements

1. GENERAL INFORMATION

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 2023 prepared in accordance with IFRS Accounting Standards as published by the IASB and as 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 2023 except for the following:

Starting from the first quarter of 2024 Nokia provides regional net sales information for the Nokia group and its reportable segments based on three geographical areas: 1) Americas, 2) APAC, and 3) EMEA. Net sales information for the group is further divided into sub-regions as follows: Americas consists of North America and Latin America, APAC consists of Greater China, India and Rest of APAC (formerly reported as Asia Pacific region), and EMEA consists of Europe and Middle East & Africa. The purpose of the change is to increase transparency of net sales information for the reportable segments.

In the second quarter of 2024 Nokia entered into a put option agreement to sell Alcatel Submarine Networks (ASN) to the French State, represented by the Agence des participations de l’Etat (APE), subject to informing and consulting with the relevant employee representatives at ASN and Nokia along with other customary closing conditions and regulatory approvals. Beginning from the second quarter of 2024, the Submarine Networks business, which was previously reported as part of Network Infrastructure operating segment, is presented as discontinued operation. Comparative financial information presented in the consolidated income statement and disclosed in the relevant notes has been recast accordingly. For more information on the discontinued operations, refer to Note 3. Discontinued operations and disposal groups held for sale.

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. The financial results included in this report have been authorized for issue by the Board of Directors on 18 July 2024.

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.

Nokia Shanghai Bell

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 the second quarter of 2024 the contractual arrangement set to expire on 30 June 2024 was extended until 30 September 2024. If the arrangement 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.

TD Tech

Nokia holds a 51% ownership interest in TD Tech Holding Limited (“TD Tech HK”), a Hong Kong based joint venture holding company which Nokia has accounted for as an investment in associated companies and joint ventures. In the second quarter of 2024, TD Tech HK completed the divestment of the entire business of the joint venture through the sale of its operating subsidiaries to a consortium consisting of Huawei Technologies, Chengdu High-tech Investment Group and other buyers. Following the divestment, Nokia is in the process of exiting from its shareholding in the parent company TD Tech HK. Nokia considers the transactions as a sale of associated companies and joint ventures and has recorded a gain of EUR 186 million related to the sale and received a cash consideration of EUR 173 million from the sale in the quarter.

Device Management and Service Management Platform businesses

In the second quarter of 2024 Nokia closed the sale of its Device Management and Service Management Platform businesses, which were part of Cloud and Network Services, to Lumine Group Inc. Nokia recorded a gain of EUR 68 million related to the sale and received a cash consideration of EUR 105 million from the sale.

 

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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 of Nokia’s continuing and discontinued operations to different currencies for net sales and total costs.

 

     Q2’24   Q2’23   Q1’24
        Net sales       Total costs       Net sales       Total costs       Net sales       Total costs  

EUR

        ~25 %       ~30 %       ~25 %       ~25 %       ~20 %       ~35 %

USD

        ~55 %       ~45 %       ~50 %       ~50 %       ~60 %       ~40 %

INR

        ~0 %       ~5 %       ~5 %       ~5 %       ~0 %       ~5 %

CNY

        ~5 %       ~5 %       ~5 %       ~5 %       ~5 %       ~5 %

Other

        ~15 %       ~15 %       ~15 %       ~15 %       ~15 %       ~15 %

Total

        100 %       100 %       100 %       100 %       100 %       100 %

End of Q2’24 balance sheet rate 1 EUR = 1.07 USD, end of Q2’23 balance sheet rate 1 EUR = 1.09 USD and end of Q1’24 balance sheet rate 1 EUR = 1.08 USD

New and amended standards and interpretations

New standards and amendments to existing standards that became effective on 1 January 2024, did not have a material impact on Nokia’s consolidated financial statements. New standards and amendments to existing standards issued by the IASB that are not yet effective are not expected to have a material impact on Nokia’s consolidated financial statements when adopted, except for IFRS 18 Presentation and Disclosure in Financial Statements which was published in April 2024.

IFRS 18 sets out the requirements for presentation and disclosures in financial statements and it will replace IAS 1 Presentation of Financial Statements. The new standard is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. IFRS 18 is yet to be endorsed by the EU. Nokia is assessing the impact of IFRS 18 on its consolidated financial statements but as it’s not changing the recognition and measurement requirements it is not expected to have significant impact other than on the presentation of financial information.

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 business divisions within the Network Infrastructure segment: (i) IP Networks, (ii) Optical Networks and (iii) Fixed Networks. For detailed segment descriptions, please refer to Note 2.2. Segment Information, in the annual consolidated financial statements for 2023. Beginning from the second quarter of 2024, Nokia has presented its Submarine Networks business, which was previously reported as part of Network Infrastructure operating segment, as discontinued operation. Comparative information for Network Infrastructure segment has been revised accordingly.

Accounting policies of the segments are the same as those for the group, except that segment operating profit excludes intangible asset amortization and other purchase price fair value adjustments, goodwill impairments, restructuring-related charges and certain other items of income and expenses that may not be indicative of the business operating results. Inter-segment revenues and transfers are accounted for as if the revenues were to third parties, that is, at current market prices.

 

 Q2’24

 

 EUR million

    Network
Infrastructure(1)		     Mobile
Networks		     Cloud and
Network
Services		     Nokia
Technologies		     Group Common
and Other		     Eliminations
and unallocated
items		     Nokia Group  

Net sales to external customers

      1 522       1 969       615       356       4       —       4 466  

Net sales to other segments

      —       1       —       —       —       (1 )      —  

Operating profit/(loss)

      97       171       (25 )      258       (78 )      9       432  

Share of results of associates and joint

      —       —       2       —       0       —       3  

ventures

               

Financial income and expenses

                                                      27  

Profit before tax

                  461  

Depreciation and amortization

      (41 )      (98 )      (18 )      (9 )      (4 )      (98 )      (268 ) 

 

(1)

Includes IP Networks net sales of EUR 586 million, Optical Networks net sales of EUR 405 million and Fixed Networks net sales of EUR 532 million.

 

 Q2’23

 

 EUR million

    Network
Infrastructure(1)		     Mobile
Networks		     Cloud and
Network
Services		     Nokia
Technologies		     Group Common
and Other		    

Eliminations

and unallocated

items

     Nokia Group  

Net sales to external customers

      1 706       2 622       742       334       33       —       5 438  

Net sales to other segments

      —       1       —       —       2       (2 )      —  

Operating profit/(loss)

      252       206       16       236       (91 )      (150 )      469  

Share of results of associates and joint

      —       (12 )      2       (2 )      —       —       (13 ) 

ventures

               

Financial income and expenses

                                                      (54 ) 

Profit before tax

                  402  

Depreciation and amortization

      (42 )      (88 )      (21 )      (10 )      (7 )      (104 )      (272 ) 

 

(1)

Includes IP Networks net sales of EUR 618 million, Optical Networks net sales of EUR 492 million and Fixed Networks net sales of EUR 596 million.

 

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 Q1-Q2’24

 

 EUR million

    Network
Infrastructure(1)		     Mobile
Networks		     Cloud and
Network
Services		     Nokia
Technologies		     Group Common
and Other		     Eliminations
and unallocated
items		     Nokia Group  

Net sales to external customers

      2 961       3 545       1 265       1 113       25       —       8 910  

Net sales to other segments

      —       2       1       —       1       (3 )      —  

Operating profit/(loss)

      183       129       (52 )      916       (153 )      (187 )      836  

Share of results of associates and joint

      —       —       3       —       —       —       3  

ventures

               

Financial income and expenses

                                                      84  

Profit before tax

                  924  

Depreciation and amortization

      (84 )      (187 )      (37 )      (17 )      (8 )      (196 )      (529 ) 

 

(1)

Includes IP Networks net sales of EUR 1 179 million, Optical Networks net sales of EUR 749 million and Fixed Networks net sales of EUR 1 032 million.

 

 Q1-Q2’23

 

 EUR million

    Network
Infrastructure(1)		     Mobile
Networks		     Cloud and
Network
Services		     Nokia
Technologies		     Group Common
and Other		     Eliminations
and unallocated
items		     Nokia Group  

Net sales to external customers

      3 669       5 187       1 501       576       80       —       11 013  

Net sales to other segments

      1       3       —       —       4       (8 )      —  

Operating profit/(loss)

      588       342       (4 )      385       (222 )      (201 )      890  

Share of results of associates and joint

      —       (30 )      3       9       0       —       (19 ) 

ventures

               

Financial income and expenses

                                                      (77 ) 

Profit before tax

                  794  

Depreciation and amortization

      (84 )      (176 )      (44 )      (19 )      (9 )      (206 )      (538 ) 

 

(1)

Includes IP Networks net sales of EUR 1 400 million, Optical Networks net sales of EUR 1 025 million and Fixed Networks net sales of EUR 1 246 million.

Material reconciling items between total segment operating profit and the group operating profit

 

 EUR million        Q2’24         Q2’23        Q1-Q2’24        Q1-Q2’23  

Total segment operating profit

      423       619       1 023       1 090  

Divestment of businesses and associated companies

      253       (4 )      253       22  

Restructuring and associated charges

      (150 )      (53 )      (253 )      (81 ) 

Amortization of acquired intangible assets

      (78 )      (85 )      (156 )      (171 ) 

Impairment and write-off of assets, net of reversals

      (11 )      (1 )      (25 )      1  

Change in provisions related to past acquisitions

      —       (20 )      —       (20 ) 

Costs associated with country exit

      —       13       —       48  

Other, net

      (5 )      —       (5 )      1  

Operating profit for the group

      432       469       836       890  

3. DISCONTINUED OPERATIONS AND DISPOSAL GROUPS HELD FOR SALE

In the second quarter of 2024, Nokia entered into a put option agreement to sell Alcatel Submarine Networks (ASN) to the French State, represented by the Agence des participations de l’Etat (APE), subject to informing and consulting with the relevant employee representatives at ASN and Nokia along with other customary closing conditions and regulatory approvals. The put option agreement contemplates the sale of ASN for an enterprise value of EUR 350 million, while the final proceeds will depend on the working capital and net debt balances of ASN at closing. Upon entering into the agreement Nokia classified the assets and liabilities of ASN as held for sale and recorded an impairment loss of EUR 514 million on the measurement of ASN’s net assets to fair value less costs to sell (categorized in fair value hierarchy level 3). Beginning from the second quarter of 2024 the Submarine Networks business, which was previously reported as part of Network Infrastructure operating segment, is presented as discontinued operation.

Results of discontinued operations

 

 EUR million       Q2’24        Q2’23      Q1-Q2’24       Q1-Q2’23  

Net sales

      237       272       460       556  

Expenses

      (238 )      (268 )      (466 )      (548 ) 

Operating (loss)/profit

      (1 )      4       (7 )      9  

Financial income and expenses

      3       (1 )      (3 )      4  

Impairment loss recognized on the remeasurement to fair value less costs to sell

      (514 )      —       (514 )      —  

(Loss)/profit from discontinued operations before tax

      (512 )      3       (524 )      12  

Income tax expense

      —       (1 )      (1 )      (4 ) 

(Loss)/profit from discontinued operations(1)

      (512 )      2       (525 )      8  

(1) Loss/profit from discontinued operations is attributable to the equity holders of the parent in its entirety.

 

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Cash flows from discontinued operations

 

 EUR million      Q2’24       Q2’23       Q1-Q2’24       Q1-Q2’23  

Net cash flows (used in)/from operating activities

      (16 )      (48 )      3       (218 ) 

Net cash flows used in investing activities

      (13 )      (11 )      (21 )      (19 ) 

Net cash flows used in financing activities

      (4 )      (4 )      (8 )      (9 ) 

Net cash flow used in discontinued operations

      (33 )      (63 )      (26 )      (246 ) 

Assets and liabilities of disposal group classified as held for sale

 

 EUR million    30 June 2024  

ASSETS

   

Property, plant and equipment

      65  

Deferred tax assets

      81  

Inventories

      181  

Trade receivables

      103  

Contract assets

      242  

Other current financial and firm commitment assets(1)

      77  

Other assets

      51  

Cash and cash equivalents

      28  

Assets held for sale(2)

      828  

 

   

LIABILITIES

         

Lease liabilities

      30  

Provisions

      45  

Other financial and firm commitment liabilities(1)

      83  

Trade payables

      80  

Contract liabilities

      272  

Accrued expenses related to customer projects

      166  

Other liabilities

      126  

Liabilities associated with assets held for sale

      801  

 

(1)

Other current financial assets include EUR 26 million of derivative assets and other financial liabilities include EUR 68 million of derivative liabilities.

(2)

The comparative amount for assets held for sale at 31 December 2023 of EUR 79 million relates to the the carrying amount of Nokia’s investment in TD Tech Holding Limited and the assets of Device Management and Service Management Platform businesses which were both disposed of in the second quarter of 2024.

4. 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 reviews segment net sales by aggregated regions and 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.

Group net sales by region

 

 EUR million       Q2’24         Q2’23       YoY change        Q1-Q2’24       Q1-Q2’23       YoY change  

Americas

      1 559        1 523        2%        2 763        3 421        (19)%  

Latin America

      216        230        (6)%        388        462        (16)%  

North America

      1 343        1 293        4%        2 374        2 959        (20)%  

APAC

      1 068        1 913        (44)%        2 015        3 681        (45)%  

Greater China

      295        344        (14)%        537        680        (21)%  

India

      329        1 043        (68)%        594        1 896        (69)%  

Rest of APAC

      445        527        (16)%        884        1 105        (20)%  

EMEA

      1 839        2 003        (8)%        4 133        3 912        6%  

Europe

      1 366        1 525        (10)%        3 200        2 998        7%  

Middle East & Africa

      473        478        (1)%        933        915        2%  

Total

      4 466        5 438        (18)%        8 910        11 013        (19)%  

 

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Segment net sales by region

 

 EUR million    Q2’24      Q2’23         YoY change    Q1-Q2’24      Q1-Q2’23         YoY change

Network Infrastructure

      1 522        1 706      (11)%      2 961        3 670      (19)%

Americas

      662        653      1%      1 207        1 517      (20)%

APAC

      314        405      (22)%      601        890      (32)%

EMEA

      546        649      (16)%      1 154        1 263      (9)%

Mobile Networks

      1 970        2 623      (25)%      3 547        5 190      (32)%

Americas

      698        582      20%      1 114        1 286      (13)%

APAC

      602        1 344      (55)%      1 111        2 464      (55)%

EMEA

      670        697      (4)%      1 322        1 439      (8)%

Cloud and Network Services

      615        742      (17)%      1 266        1 501      (16)%

Americas

      197        275      (28)%      440        580      (24)%

APAC

      149        158      (6)%      295        316      (7)%

EMEA

      268        308      (13)%      531        605      (12)%

Nokia Technologies

      356        334      7%      1 113        576      93%

Group Common and Other(1)

      3        33      (91)%      23        76      (69)%

Total

          4 466            5 438      (18)%          8 910           11 013      (19)%

 

(1)

Includes eliminations of inter-segment revenues.

Net sales by customer type

 

 EUR million    Q2’24      Q2’23       YoY change     Q1-Q2’24       Q1-Q2’23       YoY change

Communications service providers (CSP)

      3 591        4 561      (21)%      6 816        9 286      (27)%

Enterprise

      516        510      1%      959        1 076      (11)%

Licensees

      356        334      7%      1 113        576      93%

Other(1)

      3        32      (91)%      23        75      (69)%

Total

       4 466         5 438      (18)%      8 910        11 013      (19)%

 

(1)

Includes net sales of Radio Frequency Systems (RFS), which is being managed as a separate entity, and certain other items, such as eliminations of inter-segment revenues. RFS net sales also include revenue from communications service providers and enterprise customers.

 

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5. 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 2024. 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 2024, the weighted average discount rates used in remeasurement of the most significant plans were as follows (comparatives at 31 December 2023): US Pension 5.20% (4.67%), US OPEB 5.20% (4.68%), Germany 3.60% (3.17%) and UK 5.13% (4.51%).

The funded status of Nokia’s defined benefit plans (before the effect of the asset ceiling) increased from 126.1%, or EUR 4 332 million, at 31 March 2024 to 128.1% or EUR 4 548 million, at 30 June 2024. During the quarter the global defined benefit plan asset portfolio was invested approximately 72% in fixed income, 6% in equities and 22% in other asset classes, mainly private equity and real estate.

Changes in pension and post-employment net asset/(liability)

 

     30 June 2024          30 June 2023          31 December 2023  
 EUR million    Pensions(1)      US OPEB     Total           Pensions(1)     US OPEB     Total          Pensions(1)     US OPEB     Total  

Net asset/(liability) recognized 1 January

      4 755        (796 )      3 959          5 273       (978 )      4 295          5 273       (978 )      4 295  

Recognized in income statement

      22        (19 )      3          32       (23 )      9          77       (46 )      31  

Recognized in other comprehensive income

      152        120       272          (195 )      49       (146 )         (409 )      66       (343 ) 

Contributions and benefits paid

      82        —       82          103       6       109          136       7       143  

Exchange differences and other movements(2)

      177        (30 )      147            (99 )      12       (87 )           (322 )      155       (167 ) 

Net asset/(liability) recognized at the end of the period

      5 188        (725 )      4 463          5 114       (934 )      4 180          4 755       (796 )      3 959  

 

(1)

Includes pensions, retirement indemnities and other post-employment plans.

(2)

Includes Section 420 transfers, medicare subsidies and other transfers, including a reclassification of EUR 17 million defined benefit obligation to liabilities associated with assets held for sale in the second quarter of 2024.

Funded status

 

 EUR million      30 June 2024       31 March 2024     31 December 2023     30 September 2023       30 June 2023  

Defined benefit obligation

      (16 202 )      (16 590 )      (16 868 )      (16 632 )      (17 712 ) 

Fair value of plan assets

      20 750       20 922       20 914       20 818       21 993  

Funded status

      4 548       4 332       4 046       4 186       4 281  

Effect of asset ceiling

      (85 )      (82 )      (87 )      (91 )      (101 ) 

Net asset recognized at the end of the period

      4 463       4 250       3 959       4 095       4 180  

6. 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 2024, Nokia has recognized deferred tax assets of EUR 3.7 billion (EUR 3.9 billion at 31 December 2023). In addition, at 30 June 2024 assets held for sale include EUR 81 million of deferred tax assets related to disposal group held for sale.

In addition, at 30 June 2024, Nokia has unrecognized deferred tax assets of approximately EUR 5 billion (EUR 5 billion at 31 December 2023), 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.

 

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7. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets and liabilities measured at fair value are categorized based on the availability of observable 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 for continuing operations carried at fair value in the following table are measured at fair value on a recurring basis. For items related to discontinued operations, please refer to Note 3. Discontinued operations and disposal groups held for sale. For more information about the valuation methods and principles, refer to Note 5.2. Financial assets and liabilities, and Note 5.3. Derivative and firm commitment assets and liabilities in the annual consolidated financial statements for 2023.

 

     Carrying amounts          Fair value  
 30 June 2024    Amortized
cost		          Fair value through profit or
loss		          Fair value through
other  comprehensive
income(1)		                    
 EUR million                Level 1      Level 2      Level 3          Level 2      Total          Total  

Non-current interest-bearing financial investments

      438          —        —        —          —        438          445  

Investments in venture funds

      —          2        —        797          —        799          799  

Other non-current financial assets

      161          —        102        —          43        306          306  

Other current financial assets

      317          —        —        —          23        340          340  

Derivative assets

      —          —        89        —          —        89          89  

Trade receivables

      —          —        —        —          3 572        3 572          3 572  

Current interest-bearing financial investments

      751          —        1 112        —          —        1 863          1 854  

Cash and cash equivalents

      5 337            —        1 516        —            —        6 853            6 853  

Total financial assets

      7 004            2        2 819        797            3 638        14 260            14 258  

Long-term interest-bearing liabilities

      2 747          —        —        —          —        2 747          2 803  

Other long-term financial liabilities

      27          —        —        43          —        70          70  

Short-term interest-bearing liabilities

      932          —        —        —          —        932          932  

Other short-term financial liabilities

      75          —        —        475          —        550          550  

Derivative liabilities

      —          —        216        —          —        216          216  

Discounts without performance obligations

      353          —        —        —          —        353          353  

Trade payables

      2 901            —        —        —            —        2 901            2 901  

Total financial liabilities

      7 035            —        216        518            —        7 769            7 825  
     Carrying amounts          Fair value  
 31 December 2023    Amortized
cost		          Fair value through profit or
loss		          Fair value through
other comprehensive
income(1)		                    
 EUR million                 Level 1      Level 2      Level 3           Level 2      Total           Total  

Non-current interest-bearing financial investments

      715          —        —        —          —        715          717  

Investments in venture funds

      —          5        —        779          —        784          784  

Other non-current financial assets

      161          —        96        —          59        316          316  

Other current financial assets

      263          —        —        —          22        285          285  

Derivative assets

      —          —        134        —          —        134          134  

Trade receivables

      —          —        —        —          4 921        4 921          4 921  

Current interest-bearing financial investments

      874          —        691        —          —        1 565          1 565  

Cash and cash equivalents

      4 791            —        1 443        —            —        6 234            6 234  

Total financial assets

      6 804            5        2 364        779            5 002        14 954            14 956  

Long-term interest-bearing liabilities

      3 637          —        —        —          —        3 637          3 614  

Other long-term financial liabilities

      33          —        —        28          —        61          61  

Short-term interest-bearing liabilities

      554          —        —        —          —        554          555  

Other short-term financial liabilities

      65          —        —        471          —        536          536  

Derivative liabilities

      —          —        286        —          —        286          286  

Discounts without performance obligations

      404          —        —        —          —        404          404  

Trade payables

      3 423            —        —        —            —        3 423            3 423  

Total financial liabilities

      8 116            —        286        499            —        8 901            8 879  

 

(1)

No 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.

 

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Changes in level 3 financial assets and liabilities measured at fair value:

 

 EUR million    Financial Assets     Financial Liabilities  
     

 1 January 2024

      779       (499 ) 

 Net gains in income statement

      12       (6 ) 

 Additions

      29       (13 ) 

 Deductions

      (18 )      —  

 Transfer out of level 3

      (5 )      —  
     

 30 June 2024

      797       (518 ) 

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 gain of EUR 7 million related to level 3 financial instruments held at 30 June 2024 was included in the profit and loss during 2024 (net loss of EUR 42 million related to level 3 financial instruments held at 31 December 2023 during 2023).

8. INTEREST-BEARING LIABILITIES

 

                         Carrying amount (EUR million)  
 Issuer/borrower    Instrument    Currency    Nominal
(million)		    Final maturity    30 June 2024      30 June 2023      31 December 2023  

Nokia Corporation

    2.00% Senior Notes    EUR    378    3/2024      —        368        375  

Nokia Corporation

    EIB R&D Loan    EUR    500    2/2025      500        500        500  

Nokia Corporation

    NIB R&D Loan(1)    EUR    83    5/2025      83        167        167  

Nokia Corporation

    2.375% Senior Notes    EUR    292    5/2025      289        283        289  

Nokia Corporation

    2.00% Senior Notes    EUR    630    3/2026      611        595        614  

Nokia Corporation

    4.375% Senior Notes    USD    500    6/2027      437        427        430  

Nokia of America Corporation

    6.50% Senior Notes    USD    74    1/2028      69        68        67  

Nokia Corporation

    3.125% Senior Notes    EUR    500    5/2028      473        460        479  

Nokia of America Corporation

    6.45% Senior Notes    USD    206    3/2029      193        191        187  

Nokia Corporation

    4.375% Sustainability-linked Senior Notes(2)    EUR    500    8/2031      497        489        510  

Nokia Corporation

    6.625% Senior Notes    USD    500    5/2039      452        471        463  

Nokia Corporation and various subsidiaries

    Other liabilities               75        152        110  
               

Total

                          3 679        4 171        4 191  

 

(1)

The remaining loan from the Nordic Investment Bank (NIB) is repayable in one annual installment in 2025.

(2)

The bond has a one-time redemption premium at maturity of EUR 4 million in case Nokia does not meet its commitment to reduce its greenhouse gas (GHG) emissions (in tCO2 e) across its value chain (Scope 1, 2, and 3) by 50% between 2019 and 2030. This target is one of Nokia’s key sustainability targets and has been selected to be the Sustainability Performance Target in Nokia’s Sustainable Finance Framework that enables the issuance of sustainability-linked financing instruments.

Nokia has a committed Revolving Credit Facility with nominal value of EUR 1 412 million maturing in June 2026. For information about Nokia’s uncommitted funding programs, refer to Note 5.4. Financial risk management in the annual consolidated financial statements for 2023. All borrowings and credit facilities are senior unsecured and have no financial covenants.

 

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9. PROVISIONS

 

 EUR million    Restructuring      Warranty     Litigation and
Environmental		     Project
losses		        Other(1)        Total  
             

 At 1 January 2024

      255        200       251       110          446          1 262  

 Charged to income statement

                    

Additions

      222        133       34       4          103          496  

Reversals

      —        (13 )      (12 )      —          (64 )         (89 ) 

 Total charged to income statement

      222        120       22       4          39          407  

 Utilized during period(2)

      (249 )       (64 )      (51 )      (4 )         (51 )         (419 ) 

 Translation differences and other(3)

      —        (38 )      4       1          (8 )         (41 ) 
             

 At 30 June 2024

      228        218       226       111          426          1 209  

 Non-current

      108        19       152       91          163          534  

 Current

      120        199       74       19          263          676  

 

(1)

Other provisions include provisions for various obligations such as material liability, indirect tax provisions, divestment-related 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 75 million remained in accrued expenses at 30 June 2024.

(3)

Includes reclassifications of EUR 37 million of warranty provision and EUR 8 million of other provisions to liabilities associated with assets held for sale.

10. COMMITMENTS, CONTINGENCIES AND LEGAL PROCEEDINGS

 

 EUR million    30 June 2024      30 June 2023      31 December 2023  

 Contingent liabilities on behalf of group companies

         

 Guarantees issued by financial institutions

         

Commercial guarantees

      1 519        1 317        1 477  

Non-commercial guarantees

      502        574        615  

 Corporate guarantees

         

Commercial guarantees

      305        497        325  

Non-commercial guarantees

      33        32        35  

 Financing commitments

         

 Customer finance commitments

      4        17        5  

 Venture fund commitments

      365        399        381  

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 2023:

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 and the decision became final in 2022. Continental also brought breach of contract and FRAND-related claims against Nokia in 2021. Continental has now withdrawn that action.

Amazon

In 2023, Nokia commenced patent infringement proceedings against Amazon in several countries. The patents in suit cover video-related technologies implemented in Amazon’s services and devices.

HP

In 2023, Nokia commenced patent infringement proceedings against HP in several countries. The patents in suit cover video coding technologies implemented in HP’s products.

Verifone

In 2024, Nokia commenced patent infringement proceedings against Verifone in several countries, in relation to patents covering cellular technologies implemented in Verifone’s devices.

 

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Alternative 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.

This section provides summarized information on the alternative performance measures included in this interim report as well as reconciliations of the alternative performance measures to the amounts presented in the financial statements.

 

 Performance measure    Definition    Purpose

Total cash and interest-bearing financial investments

    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 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.    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 operating activities less purchases of property, plant and equipment and intangible assets (capital expenditures).    Free cash flow is the cash that Nokia generates after investments in property, plant and equipment and intangible assets, and we believe it provides meaningful supplemental information as it represents the cash available to service and repay interest-bearing financial liabilities, including lease liabilities, make investments to grow business and distribute funds to shareholders. 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.

Total cash and interest-bearing financial investments

 

 EUR million    30 June 2024      31 March 2024      31 December 2023      30 September 2023      30 June 2023  

Cash and cash equivalents

      6 853        6 561        6 234        4 605        5 106  

Non-current interest-bearing financial investments

      438        509        715        794        865  

Current interest-bearing financial investments

      1 863        1 837        1 565        1 698        1 860  

Total cash and interest-bearing financial investments

      9 154        8 907        8 514        7 097        7 831  
Net cash and interest-bearing financial investments

 

 EUR million    30 June 2024      31 March 2024      31 December 2023      30 September 2023      30 June 2023  

Cash and cash equivalents

      6 853        6 561        6 234        4 605        5 106  

Non-current interest-bearing financial investments

      438        509        715        794        865  

Current interest-bearing financial investments

      1 863        1 837        1 565        1 698        1 860  

Total cash and interest-bearing financial investments

      9 154        8 907        8 514        7 097        7 831  

Long-term interest-bearing liabilities(1)

      2 747        3 124        3 637        3 562        3 584  

Short-term interest-bearing liabilities(1)

      932        646        554        575        587  

Total interest-bearing liabilities

      3 679        3 770        4 191        4 137        4 171  

Net cash and interest-bearing financial investments

      5 475        5 137        4 323        2 960        3 660  

 

(1)

Lease liabilities are not included in interest-bearing liabilities

Free cash flow

 

 EUR million        Q2’24         Q2’23      Q1-Q2’24      Q1-Q2’23  

 Net cash flows from operating activities

      489       (333 )      1 556       (250 ) 

 Purchase of property, plant and equipment and intangible assets

      (95 )      (127 )      (207 )      (359 ) 
         

 Free cash flow

      394       (460 )      1 349       (609 ) 

 

20     

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