29 April 2021 at 08:00 EET
Nokia Corporation Financial Report for Q1 2021
Sales growth in Q1 driving margin increase and strong cash generation
This is a summary of the Nokia Corporation financial report for Q1 2021 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. Investors should not solely rely on summaries of Nokia's financial reports but should also review the complete reports with tables.
PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q1 2021 RESULTS
We have delivered a robust start to the year with strong net sales, operating margin and cash flow. Today’s results demonstrate that we are on track to deliver on our three-phased plan to achieve sustainable, profitable growth and technology leadership as announced at our recent Capital Markets Day.
I was particularly pleased by strong sales growth across our Network Infrastructure business group driven by increasing demand for next generation connectivity; good progress in Mobile Networks in securing full portfolio competitiveness; continued double-digit sales growth with our Enterprise customers; double-digit sales growth in North America; and good net sales development for Nokia Technologies.
At this point we are maintaining our Outlook for the full year, as we want to see how 2021 continues to develop. The solid first quarter provides a good foundation for achieving the higher end of the 7 to 10% comparable operating margin range. We expect our typical quarterly earnings seasonality to be less pronounced in 2021, and we continue to monitor overall market developments including visibility for semiconductor availability. I am proud of how we have continued to successfully deliver to our customers during the global semiconductor shortage.
I want to recognize all the hard work that the Nokia team has put in and thank them for delivering such a strong first quarter.
|EUR million (except for EPS in EUR)||Q1'21||Q1'20||YoY change||Constant currency YoY change|
|Net sales||5 076||4 913||3%||9%|
|Gross margin %1||37.9%||35.3%||260bps|
|Research and development expenses1||(996)||(1 007)||(1)%|
|Selling, general and administrative expenses1||(649)||(780)||(17)%|
|Operating margin %||8.5%||(1.5)%|
|Profit/(loss) for the period||263||(115)|
|Net cash and current financial investments||3 689||1 320||179%|
|Net sales||5 076||4 914||3%||9%|
|Gross margin %||38.2%||36.4%||180bps|
|Research and development expenses||(973)||(974)|
|Selling, general and administrative expenses||(552)||(672)||(18)%|
|Operating margin %||10.9%||2.4%||850bps|
|Profit for the period||375||33||1 036%|
1) In Q4 2020, Nokia reclassified certain items of income and expenses from other operating income and expenses to the functions. The comparative reported results for Q1’20 have been revised accordingly. Refer to Note 1, Basis of preparation, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details.
|2) Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details.|
|Reconciliation of reported operating profit/(loss) to comparable operating profit|
|EUR million||Q1'21||Q1'20||YoY change|
|Reported operating profit/(loss)||431||(76)|
|Amortization of acquired intangible assets||97||101|
|Restructuring and associated charges||36||87|
|Gain on sale of fixed assets||(15)||0|
|Comparable operating profit||551||116||375%|
|Full year 2021||Full year 2023|
|Net sales, adjusted for currency fluctuations1||EUR 20.6 billion to EUR 21.8 billion||Grow faster than the market|
|Comparable operating margin2||7 to 10%||10 to 13%|
|Free cash flow3||Positive||Clearly positive|
|Comparable ROIC2,4||10 to 15%||15 to 20%|
1) Assuming continuation of 2020 year-end EUR/USD rate of 1.23
2) Comparable measures exclude intangible asset amortization and other purchase price fair value adjustments, goodwill impairments, restructuring related charges and certain other items affecting comparability. Refer to Note 10, Performance measures, in the Financial statement information included in Nokia Corporation Financial Report for Q1 2021 for details.
3) Free cash flow = net cash from/(used in) operating activities - capital expenditures + proceeds from sale of property, plant and equipment and intangible assets – purchase of non-current financial investments + proceeds from sale of non-current financial investments.
4) Comparable ROIC = comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details.
|Full year 2021||Full year 2023|
|Mobile Networks||-1% to +2%||5 to 8%|
|Network Infrastructure||7 to 10%||9 to 12%|
|Cloud and Network Services||3 to 6%||8 to 11%|
Nokia and its business are exposed to a number of risks and uncertainties which include but are not limited to:
as well as the risk factors specified under Forward-looking Statements of this release, and our 2020 annual report on Form 20-F published on March 4, 2021 under Operating and financial review and prospects-Risk factors.
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, growth management and operational key performance indicators; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact, timing and duration of that impact of COVID-19 on our businesses, our supply chain and our customers’ businesses) and any future dividends; C) expectations and targets regarding financial performance, cash generation, results, the timing of receivables, operating expenses, taxes, currency exchange rates, hedging, cost savings, product cost reductions and competitiveness, as well as results of operations including targeted synergies, better commercial management and those results related to market share, prices, net sales, income and margins; D) ability to execute, expectations, plans or benefits related to changes in organizational and operational structure and cash or cost savings arrangements; and (E) any statements preceded by or including "continue", “believe”, “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.
Nokia's video webcast will begin on 29 April 2021 at 3 p.m. Finnish time. A link to the webcast will be available at www.nokia.com/financials. Media representatives can follow the presentation via the link, or alternatively call +1-412-717-9224.
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