Nokia reported fourth-quarter sales down 5 percent year-on-year to EUR 6.6 billion, hurt by continued weakness in its Mobile Access business. The company's net result was a loss of EUR 0.46 per share, versus a profit of EUR 0.10 a year ago, due to a EUR 2.9 billion reversal of deferred tax assets in Finland. Nokia reported adjusted profits for the full year at the high end of its reduced outlook issued in October, while warning that 2021 would be a "year of transition" as it works on improving its position in the 5G market.
Adjusted operating profit fell 4 percent in Q4 to EUR 1.1 billion, giving a margin of 16.6 percent compared to 16.4 percent a year ago. Over the full year 2020, the margin rose 110 basis points to 9.7 percent, at the high end of the company's guidance, and adjusted EPS increased 19 percent to EUR 0.26, also at the top of the reduced expectations. Nokia said the Q4 results benefitted from positive movements in its venture capital investments.
Nokia reported positive free cash flow for the third consecutive quarter, helped by an early payment of EUR 0.5 billion from one customer, which had not been expected until Q1 2021. The company improved its net cash position 44 percent over the year to EUR 2.5 billion, but maintained its plan to not pay a dividend for the year and reserve cash for 5G investments. Nokia first paused quarterly dividends in October 2019 and said it would review the dividend payments again in Q4 2021, based on the outlook for 2022.
Excluding currency effects, net sales rose 1 percent in Q4 and fell 4 percent over the full year. Nokia said the Covid-19 pandemic resulted in around EUR 200 million less sales, which are more likely delayed to later periods, as well as EUR 250 million in reduced costs, from less travel and lower personnel expenses.
For 2021, the company maintained its forecast for an adjusted operating margin of 7-10 percent and said free cash flow should be positive. It added a forecast for net sales of EUR 20.6-21.8 billion, down from EUR 21.9 billion in 2020. This includes an expected "significant decline" in Mobile Networks, as not all 4G customers are expected to be converted to 5G in North America and price erosion also is starting in North America. This will be offset by sales growth at the Network Infrastructure and Nokia Technologies divisions.
In terms of profitability, Mobile Networks showed some improvement in 2020 but is expected to remain around breakeven in 2021 at the adjusted operating level. The margins at Network Infrastructure and Cloud & Network Services are expected similar in 2021 to last year's levels, with improvement over the longer term, and Nokia Technologies should show a slightly higher profit this year. Capex is estimated at EUR 700 million this year and EUR 600 million per year in the longer term.
Nokia will give a more detailed presentation of its strategic plans and update its long-term outlook at an investors meeting planned for March.
