April 26- This is a summary of the Nokia Corporation financial report for Q1 2018 published today. The complete financial report for Q1 2018 with tables is available at www.nokia.com/financials. Investors should not rely on summaries of our financial reports only, but should review the complete financial reports with tables.
FINANCIAL HIGHLIGHTS
-
Net sales in Q1 2018 were EUR 4.9bn, compared to EUR 5.4bn in Q1 2017. On a constant currency basis, net sales would have been flat year-on-year.
-
Non-IFRS diluted EPS in Q1 2018 was EUR 0.02, compared to EUR 0.03 in Q1 2017. Reported diluted EPS in Q1 2018 was negative EUR 0.06, compared to negative EUR 0.08 in Q1 2017.
Nokia’s Networks business net sales were EUR 4.3bn, with operating profit of EUR 43mn
-
Q1 net sales and profitability were impacted primarily by lower net sales in North America. However, order intake and backlog were excellent in Q1. Therefore, Nokia expects the net sales trajectory in North America, as well as profitability, to improve significantly in the second half of 2018.
-
Based on firm orders, Nokia sees customer demand for 5G accelerating further, particularly in North America, where we expect commercial 5G network deployments to begin near the end of 2018.
-
Encouraging progress was made in Q1 with our strategy to diversify and grow by targeting attractive adjacent markets. Strong momentum continued with large enterprise vertical and webscale customers, with double-digit year-on-year growth in net sales and order intake.
-
Momentum in our end-to-end strategy continued, with one third of our sales pipeline now comprised of solutions, products and services from multiple business groups.
Nokia Technologies net sales were EUR 365mn, with operating profit of EUR 274mn
-
Strong track record continued, with 48% year-on-year net sales growth and 136% year-on-year operating profit increase in Q1, primarily related to license agreements entered into in 2017.
-
Nokia Technologies continued to make good progress on new patent licensing agreements, as well as brand and technology licensing agreements; no major agreements were announced in Q1.
Outlook
-
Nokia reiterates all of its full year 2018 Nokia-level guidance, despite expected weakness in its Networks business in the first half of 2018.
-
In its Networks business, Nokia sees market conditions improving and 5G accelerating further, with strong momentum building by year end. Nokia now sees a stronger primary addressable market for its Networks business in full year 2018 and expects its Networks business to outperform its primary addressable market in full year 2018.
-
Nokia remains on target to deliver EUR 1.2 billion of recurring annual cost savings in full year 2018. Our active efforts to drive 5G adoption are expected to result in EUR 100 to 200 million of temporary expenses in 2018 to support 5G customer trials.
-
Nokia continues to see opportunities to build on its track record in Nokia Licensing within Nokia Technologies and drive a compound annual growth rate of approximately 10% for recurring net sales over the 3-year period ending 2020.
-
Please refer to the full details and other targets in the Outlook section of this press release.
|
First quarter 2018 non-IFRS results. Refer to note 1, “Basis of Preparation” and note 15, “Performance measures”, in the “Financial statement information” section for further details1 |
||||
|
EUR million (except for EPS in EUR) |
Q1’18 |
Q1’17 |
YoY change |
Constant currency YoY change |
|
Net sales (non-IFRS) |
4 929 |
5 388 |
(9)% |
0% |
|
Nokia’s Networks business |
4 324 |
4 902 |
(12)% |
(3)% |
|
Nokia Technologies |
365 |
247 |
48% |
49% |
|
Group Common and Other |
252 |
254 |
(1)% |
4% |
|
Gross profit (non-IFRS) |
1 941 |
2 196 |
(12)% |
|
|
Gross margin % (non-IFRS) |
39.4% |
40.8% |
(140)bps |
|
|
Operating profit (non-IFRS) |
239 |
341 |
(30)% |
|
|
Nokia’s Networks business |
43 |
324 |
(87)% |
|
|
Nokia Technologies |
274 |
116 |
136% |
|
|
Group Common and Other |
(78) |
(99) |
(21)% |
|
|
Operating margin % (non-IFRS) |
4.8% |
6.3% |
(150)bps |
|
|
Financial income and expenses (non-IFRS) |
(116) |
(81) |
43% |
|
|
Income taxes (non-IFRS) |
(36) |
(48) |
(25)% |
|
|
Profit for the period (non-IFRS) |
83 |
203 |
(59)% |
|
|
Profit attributable to the equity holders of the parent (non-IFRS) |
86 |
196 |
(56)% |
|
|
Non-controlling interests (non-IFRS) |
(3) |
6 |
|
|
|
EPS, EUR diluted (non-IFRS) |
0.02 |
0.03 |
(33)% |
|
|
|
|
|
|
|
|
First quarter 2018 reported results. Refer to note 1, “Basis of Preparation” and note 15, “Performance measures”, in the “Financial statement information” section for further details1 |
||||
|
EUR million (except for EPS in EUR) |
Q1’18 |
Q1’17 |
YoY change |
Constant currency YoY change |
|
Net sales |
4 924 |
5 378 |
(8)% |
0% |
|
Nokia’s Networks business |
4 324 |
4 902 |
(12)% |
(3)% |
|
Nokia Technologies |
365 |
247 |
48% |
49% |
|
Group Common and Other |
252 |
254 |
(1)% |
4% |
|
Non-IFRS exclusions |
(5) |
(11) |
(55)% |
|