Nokia has today made its Q2 2017 Earnings report public. Highlights are Nokia Technologies registering big boost in both sales and profitability, very strong margin of 39.1% in Networks business, overall gross margin of 41.7%.
Nokia Technologies has seen 90% year-on-year net sales increase and 158% year-on-year operating profit increase in Q2 2017, primarily due to higher patent and brand licensing income. Nokia Networks has 5% year-on-year net sales decrease in Q1 2017, but the strong margin of 39.1% steals the show.
Here are the Nokia Q2 2017 results highlights,
FINANCIAL HIGHLIGHTS
- Non-IFRS net sales in Q2 2017 of EUR 5.6bn (EUR 5.7bn in Q2 2016). Reported net sales in Q2 2017 of EUR 5.6bn (EUR 5.6bn in Q2 2016).
- Non-IFRS diluted EPS in Q2 2017 of EUR 0.08 (EUR 0.03 in Q2 2016). Reported diluted EPS in Q2 2017 of negative EUR 0.07 (negative EUR 0.12 in Q2 2016).
Nokia’s Networks business
- 5% year-on-year net sales decrease in Q2 2017, primarily due to Ultra Broadband Networks. Within Ultra Broadband Networks, Mobile Networks declined in Q2 following a strong Q1, while Fixed Networks declined at a lower rate in Q2 compared to Q1. Within IP Networks and Applications, IP/Optical Networks declined at a lower rate in Q2 compared to Q1, and Applications & Analytics grew. Global Services net sales were approximately flat.
- Strong Q2 2017 gross margin of 39.1% and operating margin of 8.2%, with solid performance across Ultra Broadband Networks, Global Services and IP Networks and Applications.
Nokia Technologies
- 90% year-on-year net sales increase in Q2 2017, primarily due to a new license agreement in Q2 2017 and a license agreement that was expanded in Q3 2016. Approximately 40% of the EUR 175 million year-on-year increase was non-recurring in nature and related to catch-up net sales for Q1 2017.
- 158% year-on-year operating profit increase in Q2 2017, primarily related to higher net sales, partially offset by increased licensing-related litigation costs and the ramp-up of our digital health business unit.
Q2 2017 Earnings Table:
EUR million | Q2’17 | Q2’16 | YoY | Q1’17 | QoQ change | Q1- | Q1- | YoY |
Net sales – | (2)% | 7% | (4)% | |||||
Net sales (non-IFRS) | 5 629 | 5 670 | (1)% | 5 388 | 4% | 11 017 | 11 285 | (2)% |
Nokia’s Networks business | 4 971 | 5 222 | (5)% | 4 902 | 1% | 9 873 | 10 415 | (5)% |
Ultra Broadband Networks | 2 165 | 2 356 | (8)% | 2 236 | (3)% | 4 401 | 4 653 | (5)% |
Global Services | 1 448 | 1 444 | 0% | 1 361 | 6% | 2 809 | 2 888 | (3)% |
IP Networks and Applications | 1 358 | 1 421 | (4)% | 1 304 | 4% | 2 663 | 2 874 | (7)% |
Nokia Technologies | 369 | 194 | 90% | 247 | 49% | 616 | 391 | 58% |
Group Common and Other | 307 | 270 | 14% | 254 | 21% | 562 | 506 | 11% |
Gross profit (non-IFRS) | 2 350 | 2 205 | 7% | 2 196 | 7% | 4 546 | 4 433 | 3% |
Gross margin % (non-IFRS) | 41.7% | 38.9% | 280bps | 40.8% | 90bps | 41.3% | 39.3% | 200bps |
Operating profit (non-IFRS) | 574 | 332 | 73% | 341 | 68% | 915 | 677 | 35% |
Nokia’s Networks business | 406 | 313 | 30% | 324 | 25% | 730 | 650 | 12% |
Ultra Broadband Networks | 191 | 184 | 4% | 245 | (22)% | 437 | 311 | 41% |
Global Services | 123 | 34 | 262% | 55 | 124% | 179 | 137 | 31% |
IP Networks and Applications | 91 | 95 | (4)% | 23 | 296% | 114 | 202 | (44)% |
Nokia Technologies | 230 | 89 | 158% | 116 | 98% | 346 | 195 | 77% |
Group Common and Other | (62) | (70) | (99) | (161) | (169) | |||
Operating margin % (non-IFRS) | 10.2% | 5.9% | 430bps | 6.3% | 390bps | 8.3% | 6.0% | 230bps |
Financial income and expenses (non-IFRS) | (63) | (29) | 117% | (81) | (22)% | (144) | (96) | 50% |
Taxes (non-IFRS) | (74) | (135) | (45)% | (48) | 54% | (122) | (275) | (56)% |
Profit (non-IFRS) | 441 | 171 | 158% | 203 | 117% | 644 | 310 | 108% |
Profit attributable to the equity holders of the parent (non-IFRS) | 449 | 194 | 131% | 196 | 129% | 646 | 346 | 87% |
Non-controlling interests (non-IFRS) | (9) | (24) | (63)% | 6 | (2) | (37) | (95)% | |
EPS, EUR diluted (non-IFRS) | 0.08 | 0.03 | 167% | 0.03 | 167% | 0.11 | 0.06 | 83% |
