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Nokia Q4 2016 Results: EUR 940 Mi Profit, EUR 6.7bn Net Sales, CEO’s statement

Nokia has posted its Q4 2016 Financial results and the two continuing businesses Nokia Networks and Nokia Technologies have raked in EUR 940 Million operating profit. Net sales is EUR 6.7 billion in Q4 2016. Nokia Networks registered solid gross 40.6% and operating margin of 14.1%.

Read the report highlights, check the Earnings table and read the CEO Rajeev Suri’s statement below,

Overall Highlights:

FINANCIAL HIGHLIGHTS

  • Non-IFRS net sales in Q4 2016 of EUR 6.7bn (reported: EUR 6.6bn). In the year-ago quarter, non-IFRS net sales would have been EUR 7.7bn on a comparable combined company basis (reported: EUR 3.6bn on a Nokia stand-alone basis).
  • Non-IFRS diluted EPS in Q4 2016 of EUR 0.12 (reported: EUR 0.11) benefited by approximately EUR 0.02-0.03 due to the Q4 2016 non-IFRS tax rate coming in at 23% compared to our guidance.
  • Non-IFRS diluted EPS in full year 2016 of EUR 0.22 (reported: negative EUR 0.13).
  • Nokia’s Board of Directors will propose a dividend of EUR 0.17 per share for 2016 (EUR 0.16 per share for 2015).

Nokia’s Networks business

  • 14% year-on-year net sales decrease in Q4 2016, reflecting challenging market conditions in Q4 2016 and the difficult comparison against the strong performance by Alcatel-Lucent in Q4 2015.
  • Strong Q4 2016 gross margin of 40.6% and operating margin of 14.1%, supported by continued focus on operational excellence and cost controls.
  • Operating margin of 8.9% in full year 2016, at the high end of our guidance range of 7-9%.

Nokia Technologies

  • 25% year-on-year net sales decrease and 49% operating profit decrease in Q4 2016, primarily due to the absence of the Samsung arbitration award, which benefited Q4 2015. The declines were partially offset by the expanded intellectual property rights (“IPR”) license agreement with Samsung announced in Q3 2016 and divested IPR. In addition, the acquisition of Withings helped to offset the decline in net sales.

Group Common and Other

  • 34% year-on-year net sales increase in Q4 2016, with particularly strong growth in Alcatel Submarine Networks.

Earnings Table:

Q4 and January-December 2016 non-IFRS results. Refer to note 1 in the Financial statement information for further details 1,2

 

 

Combined
company histori-
cals2

 

 

 

 

Combined
company histori-
cals2

 

EUR million

Q4’16

Q4’15

YoY change

Q3’16

QoQ change

Q1-Q4’16

Q1-
Q4’15

YoY change

Net sales –
constant currency
(non-IFRS)

 

 

(13)%

 

11%

 

 

(10)%

Net sales
(non-IFRS)

6 715

7 719

(13)%

5 950

13%

23 945

26 606

(10)%

  Nokia’s Networks
business

6 069

7 057

(14)%

5 322

14%

21 799

24 634

(12)%

Ultra Broadband
Networks

4 332

5 081

(15)%

3 903

11%

15 770

18 079

(13)%

IP Networks and
Applications

1 737

1 976

(12)%

1 419

22%

6 029

6 555

(8)%

  Nokia Technologies

309

413

(25)%

353

(12)%

1 053

1 074

(2)%

  Group Common
and Other

341

254

34%

298

14%

1 145

921

24%

Gross profit
(non-IFRS)

2 818

3 272

(14)%

2 365

19%

9 589

10 441

(8)%

Gross margin %
(non-IFRS)

42.0%

42.4%

(40)bps

39.7%

230bps

40.0%

39.2%

80bps

Operating profit
(non-IFRS)

940

1 279

(27)%

556

69%

2 172

2 887

(25)%

  Nokia’s Networks
business

854

1 097

(22)%

432

98%

1 935

2 496

(22)%

Ultra Broadband
Networks

574

702

(18)%

326

76%

1 362

1 656

(18)%

IP Networks and
Applications

280

396

(29)%

106

164%

573

840

(32)%

  Nokia Technologies

158

311

(49)%

225

(30)%

579

692

(16)%

  Group Common
and Other

(73)

(129)

 

(101)

 

(341)

(301)

 

Operating margin %
(non-IFRS)

14.0%

16.6%

(260)bps

9.3%

470bps

9.1%

10.9%

(180)bps

CEO’s Statement:

2016 was a time of transition for Nokia, a year in which we moved forward deliberately and successfully to execute our strategy and broaden our scope.

At the start of the year, Nokia was focused primarily on mobile networks. We ended the year as a company with a complete portfolio spanning mobile, fixed, routing, optical, stand-alone software and more; with solid opportunities to drive higher returns through expansion into new customer segments; with emerging businesses in digital health and digital media; and with greatly expanded patent and brand licensing activities.

Pleasingly, we saw growing customer support for Nokia’s strategy. Our sales pipeline with customers beyond our traditional communication service provider base accelerated over the course of the year, we saw an increasing share of our Networks pipeline coming from opportunities covering products and services from two or more of our business groups, and the potential of cross-selling started to become a reality.

We also ended the year having successfully concluded the integration of Alcatel-Lucent faster than anticipated, allowing us to shift our full focus to cost savings, continuous improvement programs and the execution of our strategy. In terms of financial performance, we were able to deliver solid results for the full year, with profitability in our Networks business coming in at the high end of our guidance range. Our ongoing intense focus on execution, cost management and pricing discipline was critical to offset the impact of challenging market conditions over the course of the year. While I remain disappointed with our topline development in 2016, we continue to expect our performance to improve in 2017 and see the potential for margin expansion in 2017 and beyond, as market conditions improve and our sales transformation programs gain further traction.

In short, we ended 2016 positioned well for the future, with well-integrated operations, a powerful end-to-end portfolio and our disciplined operating model still delivering robust results. In addition, we remain in a position of financial strength, with a strong balance sheet and the flexibility to invest in opportunities that we believe will create shareholder value.

Rajeev Suri

President and CEO

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Nayan

Nayan has more than 10 years of experience of covering Technology and innovations. He is a big Nokia fan and Tech disruptions aficionado. He loves to review new cool gadgets and writing about Android, iOS, Gadgets and general Technology stuff. He has been associated with other well-known Tech sites WinCentral and GadgetOx since long.

He currently sports a Lumia 950 XL and Nexus 5X. Other interests include listening to Nu-Metal Hits and Kick-Boxing.
Write to him at Email: [email protected]

http://www.nokiapoweruser.com
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