International ratings agency Moody's has downgraded its outlook for Nokia ratings to negative from stable. Moody’s said that while it sees improvement for Nokia financials accelerating into 2020, growth will be too slow this year to keep the rating at stable. The agency sees a weaker than expected improvement this year in company revenue growth, operating profit and cash flow trends, including restructuring charges.
Moody’s said it had expected a relatively weaker operating and financial result in 2018 followed by a stronger cyclical rebound this year, supported by 5G market growth and improving operating profitability. This would have been supported by potential structural market shifts related to Chinese telecom equipment vendors and Nokia’s own 2019-2020 cost savings initiatives. But now, the agency is forecasting for a lower than expected operating cash flow this year.
Moody's continues to view the company's liquidity as very good, supported by its balance sheet gross cash and other liquid assets. Nokia has also signed loan agreements with the European Investment Bank and Nordic Investment Bank. These should amply cover Nokia's debt maturities over the next years.
The agency has kept its other ratings for the company, with a Ba1 given for corporate family rating (CFR), a Ba1-PD for probability of default, a Ba1 for senior unsecured long-term ratings, a (P)Ba1 senior unsecured medium term note (MTN) programme rating, and a Not Prime (NP) short-term rating.
