Nokia today posted its Q4 2016 earnings results. Nokia’s Q4 earnings results beat the market expectations with solid profit margin in Network business. Nokia Shares were up by 5.7% at the time of reporting.
Nokia has posted a mostly positive outlook for 2017 with expectation of a 8-10% margin guidnace for Network business. It also expects net sales growth in Digital Health and Digital Media businesses.
OUTLOOK
| Metric | Guidance | Commentary | |
| Nokia | Annual cost savings for Nokia, excluding Nokia Technologies | Approximately EUR 1.2 billion of total annual cost savings to be achieved in full year 20181 | Compared to the combined non-IFRS operating costs of Nokia and Alcatel-Lucent for full year 2015, excluding Nokia Technologies. Nokia expects approximately EUR 800 million of the cost savings to come from operating expenses and approximately EUR 400 million from cost of sales.
Restructuring and associated charges are expected to total approximately EUR 1.7 billion. Restructuring and associated cash outflows are expected to total approximately EUR 2.15 billion. |
| Network equipment swaps | Approximately EUR 900 million in total1 | The charges related to network equipment swaps are being recorded as non-IFRS exclusions, and therefore do not affect Nokia’s non-IFRS operating profit. | |
| Non-IFRS financial income and expenses | Expense of approximately EUR 300 million in full year 2017 | Primarily includes net interest expenses related to interest-bearing liabilities, interest costs related to the defined benefit pension and other post-employment benefit plans, as well as the impact of foreign exchange rate fluctuations on certain balance sheet items.
Nokia expects cash outflows related to financial income and expenses to be approximately EUR 200 million in full year 2017. |
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| Non-IFRS tax rate | Between 30% and 35% for full year 20172 | Nokia expects its non-IFRS tax rate for full year 2017 to be around the midpoint of the guidance range, with the non-IFRS tax rate for Q1 2017 between 35% and 40%.
(This is an update to earlier commentary for the non-IFRS tax rate for full year 2017 to be at the high end of the guidance range.) Nokia expects cash outflows related to taxes to be approximately EUR 600 million for full year 2017. (This is an update to earlier commentary for cash outflows related to taxes to be approximately EUR 400 million for full year 2017.) |
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| Capital expenditures | Approximately EUR 500 million in full year 2017 | Primarily attributable to Nokia’s Networks business. | |
| Nokia’s Networks business | Net sales | Decline in line with the primary addressable market in full year 2017 | Nokia’s outlook for net sales and operating margin for Nokia’s Networks business in full year 2017 are expected to be influenced by factors including:
The 2017 outlook for Nokia’s Networks business was provided on November 15, 2016 assuming constant foreign exchange rates. |
| Operating margin | 8-10% in full year 2017 | ||
| Nokia Technologies | Net sales | Not provided | Due to risks and uncertainties in determining the timing and value of significant licensing agreements, Nokia believes it is not appropriate to provide an annual outlook for full year 2017. If no new licensing agreements are signed, the annualized net sales run rate for patent and brand licensing would be approximately EUR 800 million in 2017, representing approximately 30% of the global smartphone market, by value, under license.
Nokia expects total net sales from Digital Health and Digital Media to grow year-on-year in full year 2017, primarily influenced by increased consumer adoption of our Digital Health and Digital Media products. |
