Nokia improves FY sales, margin outlook after solid Q2 results

Nieuws Algemeen Wereld 29 JUL 2021
Nokia improves FY sales, margin outlook after solid Q2 results

Nokia has raised its outlook as promised, after reporting improved results for the second quarter. The new forecast for revenues of EUR 21.7-22.7 billion in 2021, up from a previous estimate of EUR 20.6-21.8 billion, means the company may grow this year compared to last year's EUR 21.9 billion. In the second quarter, revenues rose 4 percent to EUR 5.3 billion and were up 9 percent on an organic basis, with the same growth rates over the first half of the year.

Nokia's adjusted operating profit jumped 61 percent to EUR 682 million in the second quarter, leading to a margin of 12.8 percent. The result was helped by a EUR 80 million positive impact of a one-time software deal completed in Q2 at Mobile Networks, offset by increased R&D investment to strengthen the mobile portfolio. 

As a result of the strong first half, the company increased the forecast for the full-year margin to a range of 10-12 percent, up from its previous outlook of 7-10 percent. The target for 2023 remains a margin of 10-13 percent. 

Growth in Q2 was led by the Network Infrastructure business, which increased sales across all four of its units, as well as higher licensing income at Nokia Technologies following new deals. Mobile Networks net sales grew on a constant currency basis, primarily driven by strong growth in 5G, partially offset by legacy radio access products. Cloud and Network Services net sales also grew on a constant currency basis, led by Core Networks and Enterprise Solutions. 

From a regional perspective, organic growth was particularly strong in India (+75%), Latin America (+57%) and Europe (+7%). Nokia also grew 4 percent on an organic basis in North America and 11 percent in Greater China. On a customer basis, enterprise sales were down 2 percent excluding forex due to a tough comparison with last year, but Nokia said the pipeline remains strong, with more than 340 customers for private networks.

Net profit rose to EUR 351 million from EUR 99 million a year ago, and Nokia maintained positive free cash flow for a fifth consecutive quarter, at EUR 77 million. Net cash was largely flat after paying out incentives, at EUR 3.7 billion at the end of June. 

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Financial figures, Network equipment

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