Nokia financial results
Q1 2015
Conference call
April 30, 2015
15:00 / Helsinki
08:00 / New York
1
© Nokia 2015
Disclaimer
It should be noted that Nokia and its business are
exposed to various risks and uncertainties, and certain
statements herein that are not historical facts are
forward-looking statements, including, without
limitation, those regarding future business and the
financial performance of Nokia and its industry and
statements preceded by “believe,” “expect,”
“anticipate,” “foresee,” “sees,” “target,” “estimate,”
“designed,” “aim,” “plans,” “intends,” “focus,”
“continue,” “will” or similar expressions. These
statements are based on management's best
assumptions and beliefs in light of the information
currently available to it. Because they involve risks and
uncertainties, actual results may differ materially from
the results that we currently expect. Factors, including
risks and uncertainties that could cause such
differences can be both external, such as general,
economic and industry conditions, as well as internal
operating factors. We have identified these in more
detail on pages 74 to 89 of Nokia’s annual report on
Form 20-F for the year ended December 31, 2014
under “Operating and Financial Review and Prospects—
2
© Nokia 2015
Risk Factors" and in our interim report issued on April
30, 2015. Other unknown or unpredictable factors or
underlying assumptions subsequently proven to be
incorrect could cause actual results to differ materially
from those in the forward-looking statements. Nokia
does not undertake any obligation to publicly update or
revise forward-looking statements, whether as a result
of new information, future events or otherwise, except
to the extent legally required.
In addition to information on our reported IFRS results,
we provide certain information on a non-IFRS, or
underlying business performance, basis. Non-IFRS
results exclude all material special items for all periods.
In addition, non-IFRS results exclude intangible asset
amortization and other purchase price accounting
related items arising from business acquisitions. We
believe that our non-IFRS financial measures provide
meaningful supplemental information to both
management and investors regarding Nokia’s
underlying business performance by excluding the
aforementioned items that may not be indicative of
Nokia’s business operating results. These non-IFRS
financial measures should not be viewed in isolation or
as substitutes to the equivalent IFRS measure(s), but
should be used in conjunction with the most directly
comparable IFRS measure(s) in the reported results. A
detailed explanation of the content of the non-IFRS
information and a reconciliation between the non-IFRS
and the reported information for historical periods can
be found in Nokia’s respective results reports. Please
see our issued interim reports for more information on
our results and financial performance for the indicated
periods as well as our operating and reporting
structure.
Nokia is a registered trademark of Nokia Corporation.
Other product and company names mentioned herein
may be trademarks or trade names of their respective
owners.
© Nokia 2015
Contents
Introduction
Quarterly business results
Nokia Group
Nokia Networks
HERE
Nokia Technologies
Nokia Group cash and cash flow
Capital structure optimization program
3
© Nokia 2015
Slides
1-4
Slide
Slides
Slides
Slide
Slide
Slide
5
6-8
9-10
11
12
13
Presented by
Rajeev Suri
President and CEO
Timo Ihamuotila
EVP and Group CFO
4
© Nokia 2015
Nokia’s operations
EUR million
Net sales
(EUR million)
EUR
4 000
0.10
2 000
0.05
Net sales – constant currency
Net sales
Nokia Networks
HERE
Nokia Technologies
Gross margin % (non-IFRS)
Operating profit (non-IFRS)
Nokia Networks
HERE
Nokia Technologies
Group Common Functions
Operating margin % (non-IFRS)
Profit (non-IFRS)
Profit
EPS, EUR diluted (non-IFRS)
EPS, EUR diluted
YoY
change
Q4'14
QoQ
change
Q1'15
Q1'14
3 196
2 673
261
266
2 664
2 328
209
131
20%
15%
25%
103%
3 802
3 365
292
149
(16)%
(21)%
(11)%
79%
42.5%
45.6%
(310)bps
43.5%
(100)bps
265
85
19
193
(32)
305
216
10
86
(8)
(13)%
(61)%
90%
124%
524
470
20
77
(43)
(49)%
(82)%
(5)%
151%
8.3%
11.4%
(310)bps
13.8%
(550)bps
200
181
0.05
0.05
172
110
0.04
0.03
16%
65%
25%
67%
356
327
0.09
0.08
(44)%
(45)%
(44)%
(38)%
11%
(21)%
Q1 2015 Highlights
0
0.00
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
5
Nokia Networks
Nokia Technologies
HERE
EPS diluted (non-IFRS)
© Nokia 2015
• Net sales in Q1 2015 of EUR 3.2 billion (EUR 2.7 billion in Q1
2014), up 20% year-on-year
• Non-IFRS diluted EPS in Q1 2015 of EUR 0.05 (EUR 0.04 in
Q1 2014), an increase of 25% year-on-year
• Reported diluted EPS in Q1 2015 of EUR 0.05 (EUR 0.03 in
Q1 2014), up 67% year-on-year
EUR million
Nokia Networks
Net sales and margins
EUR million
4 000
39.6%
38.1%
39.1%
40%
38.2%
33.7%
1 579
1 268
2 000
1 069
20%
13.5%
9.3%
1 291
1 189
Net sales - constant currency
Net sales
Mobile Broadband
Global Services
Gross profit
Gross margin % (non-IFRS)
R&D (non-IFRS)
SG&A (non-IFRS)
Other income and expenses
(non-IFRS)
Operating profit (non-IFRS)
Mobile Broadband
Global Services
Operating margin % (non-IFRS)
Mobile Broadband
Global Services
0
1 357
•
1 672
1 760
1 381
•
0%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
•
Mobile Broadband
Global Services
6
© Nokia 2015
Other
Q4'14
QoQ
change
Q1'14
2 673
1 381
1 291
901
2 328
1 250
1 069
922
15%
10%
21%
(2)%
3 365
1 760
1 579
1 287
(21)%
(22)%
(18)%
(30)%
33.7%
39.6%
(590)bps
38.2%
(450)bps
(497)
(306)
(421)
(283)
18%
8%
(487)
(336)
2%
(9)%
(14)
(2)
85
(3)
94
216
103
115
(61)%
(103)%
(18)%
470
220
230
(82)%
(101)%
(59)%
3.2%
(0.2)%
7.3%
9.3%
8.2%
10.8%
(610)bps
(840)bps
(350)bps
14.0%
12.5%
14.6%
(1 080)bps
(1 270)bps
(730)bps
5%
(25)%
6
Q1 2015 Highlights
14.0%
11.0%
3.2%
1 250
YoY
change
Q1'15
Non-IFRS GM%
Non-IFRS OM%
15% year-on-year net sales growth driven by growth in four out of our
six regions, with non-IFRS operating margin declining to 3.2% from
9.3%
21% year-on-year growth in Global Services net sales, primarily driven
by strong growth in the network implementation business line. 10%
year-on-year growth in Mobile Broadband net sales, primarily driven
by overall radio technologies, particularly LTE
61% year-on-year decline in non-IFRS operating profit primarily driven
by lower software sales, lower non-IFRS gross profit in the systems
integration business line, the short-term impact of strategic entry
deals, higher non-IFRS operating expenses due to foreign exchange
impacts and increased investments in LTE, 5G and cloud core, and
more challenging market conditions
Nokia Networks – Segments
Mobile Broadband
Net sales
(EUR million)
Operating margin
non-IFRS
2 000
1 672
1 250
Global Services
20%
1 760
1 069
12.5%
© Nokia 2015
10.8%
1 189
13.9%
1 291
1 268
14.6%
10%
11.3%
7.3%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
7
1 000
7.7%
-0.2%
0
20%
1 579
15.2%
10%
Operating margin
non-IFRS
2 000
1 381
1 357
1 000
8.2%
Net sales
(EUR million)
0%
0
0%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Nokia Networks – Net sales by geographic area
Q1 2015
Q1/2014-Q1/2015
EUR million
1 000
900
7%
14%
800
23%
700
600
9%
33%
14%
500
400
300
200
8
Europe
Middle East & Africa
Greater China
Asia-Pacific
North America
Latin America
© Nokia 2015
100
0
Europe
Middle East
& Africa
Greater
China
Asia-Pacific
North
America
Latin
America
HERE
EUR million
Net sales and margins
EUR million
400
100%
77.5%
74.7%
75.1%
76.0%
292
200
232
209
236
74.3%
261
Net sales - constant currency
Net sales
Sales of new vehicle licenses (million)
Gross profit (non-IFRS)
Gross margin % (non-IFRS)
R&D (non-IFRS)
SG&A (non-IFRS)
Other income and expenses
(non-IFRS)
Operating profit (non-IFRS)
Operating margin % (non-IFRS)
Q1'15
Q1'14
YoY
change
Q4'14
17%
QoQ
change
(14)%
261
3.6
194
209
2.8
162
25%
29%
20%
292
3.9
222
(11)%
(8)%
(13)%
74.3%
77.5%
(320)bps
76.0%
(170)bps
(128)
(48)
(117)
(37)
9%
30%
(148)
(53)
(14)%
(9)%
0
1
0
19
10
90%
20
(5)%
7.3%
4.8%
250bps
6.8%
50bps
50%
Q1 2015 Highlights
4.8%
0.0%
0.0%
6.8%
7.3%
0
0%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Net sales
Non-IFRS GM%
Non-IFRS OM%
9
© Nokia 2015
• 25% year-on-year growth in net sales, with 29% year-on-year
increase in sales of new vehicle licenses for embedded
navigation systems.
• 90% year-on-year growth in non-IFRS operating profit, with
non-IFRS operating margin expanding to 7.3% from 4.8%.
HERE – Sales of new vehicle licenses
Sales of new vehicle licenses (million units)
5.0
3.9
2.5
3.3
3.2
Q2 2014
Q3 2014
2.8
3.6
0.0
Q1 2014
10
© Nokia 2015
Q4 2014
Q1 2015
Nokia Technologies
EUR million
Net sales and margins
EUR million
300
98.5%
98.6%
98.7%
65.6%
65.3%
64.5%
98.7%
99.2%
100%
72.6%
51.7%
150
266
147
131
152
149
0
0%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Net sales
Non-IFRS GM%
Non-IFRS OM%
11
50%
© Nokia 2015
Net sales - constant currency
Net sales
Gross profit (non-IFRS)
Gross margin % (non-IFRS)
R&D (non-IFRS)
SG&A (non-IFRS)
Other income and expenses
(non-IFRS)
Operating profit (non-IFRS)
Operating margin % (non-IFRS)
Q1'15
Q1'14
YoY
change
Q4'14
96%
QoQ
change
75%
266
264
131
129
103%
105%
149
147
79%
80%
99.2%
98.5%
70bps
98.7%
50bps
(50)
(21)
(32)
(8)
56%
163%
(45)
(24)
11%
(13)%
1
(2)
(1)
193
86
124%
77
151%
72.6%
65.6%
700bps
51.7%
2 090bps
Q1 2015 Highlights
• 103% year-on-year growth in net sales and 124% growth in
non-IFRS operating profit, primarily due to non-recurring
adjustments to accrued net sales from existing agreements,
revenue share related to previously divested intellectual
property rights, and intellectual property rights divested in the
first quarter 2015. In addition, net sales and non-IFRS operating
profit benefitted from higher intellectual property licensing
income from existing licensees.
Nokia Group change in net cash and other liquid assets
-
12
© Nokia 2015
Nokia Group EUR 5 billion Capital Structure Optimization Program – suspended*
all figures approx., in EUR billion
EUR billion
5.00
1.00
4.00
3.00
~
0.40
0.40
3.43
>
~
0.97
1.25
0.51
2.00
1.00
0.41
0.95
0.00
Total Program
as announced
on
April 29, 2014
Debt reduction
13
© Nokia 2015
0.59
0.97
2.00
Q2 2014
0.95
0.41
0.22
0.21
0.16
0.51
Q3 2014
Q4 2014
Q1 2015
Dividend for
2014**
Share buy back
* As
**
2013 Dividend
2014 Dividend
Completed
through Q1
2015
Special dividend
announced on April 15, 2015, the program is suspended due to the planned transaction with Alcatel-Lucent
Proposed, EUR 0.14 per share
Q&A