Nokia has announced overall sales growth in the second quarter of 2022 thanks to strong growth in Mobile Networks. Nokia reported 16% growth Year-on-Year (6% in constant currency).
Nokia also announced double-digit growth in Mobile Networks. Here are the earning highlights provided by Nokia for Q3 2022.
- Q3 net sales growth accelerated to 6% y-o-y in constant currency (+16% reported). By business group:
- Mobile Networks grew 12%, due to continued strong demand and supply constraints easing.
- Network Infrastructure continued its strong performance with 5% growth and robust demand.
- Cloud and Network Services declined 3% as we continued to rebalance our portfolio.
- Nokia Technologies declined 19%, still impacted by expired licenses that are in litigation/pending renewal.
- Enterprise net sales grew 22% y-o-y in constant currency (+32% reported) with notable strength in private wireless.
- Reported gross margin declined 60bps y-o-y to 40.1% and operating margin declined 100bps y-o-y to 8.3% mainly due to the decline in Nokia Technologies.
- Comparable operating margin of 10.5% compressed 120bps y-o-y mainly due to the decline in Nokia Technologies. Operating margins in both Mobile Networks (+250bps) and Network Infrastructure (+50bps) improved.
- Comparable diluted EPS of EUR 0.10; reported diluted EPS of EUR 0.08.
- Free cash flow positive EUR 0.3bn, net cash balance of EUR 4.7bn.
- Full year 2022 net sales outlook is unchanged in constant currency. Full year net sales outlook applying 30 Sept 2022 exchange rates is EUR 23.9bn to EUR 25.1bn. Comparable operating margin guidance remains 11% to 13.5%.
This is what Nokia CEO has to say about the financial performance of the company.
Our third quarter performance demonstrates we are delivering on our ambition to accelerate growth. Net sales grew 6% in constant currency as supply constraints started to ease and we maintained good profitability with comparable operating margin of 10.5%. This was slightly down year-on-year, as improving profitability in Mobile Networks and Network Infrastructure was offset by timing effects of contract renewals in Nokia Technologies.
I was pleased to see a strong quarter in Mobile Networks, which grew 12% in constant currency as we benefited from our improved competitiveness and improving supply situation. Net sales growth remained robust also in Network Infrastructure at 5% driven by continued strong underlying demand trends. Cloud and Networks Services declined 3% as we work to rebalance the portfolio but with improving gross margin. Nokia Technologies continued to deliver good progress in its patent licensing growth areas such as automotive and consumer electronics. These areas, which were negligible in 2018, now contribute over EUR 100 million in net sales in the past 12 months.
Our Enterprise net sales growth accelerated to 22% in constant currency. We have strong momentum in Enterprise including adding 30 new private wireless customers in the quarter and a further new IP Routing customer in webscale. With this momentum, we expect Enterprise to remain our fastest growing customer segment.
While risks around timing of outstanding deals in Nokia Technologies remain, assuming these close we continue tracking towards the high-end of our net sales guidance for 2022 and towards the mid-point of our operating margin guidance.
As we start to look beyond 2022, we recognize the increasing macro and geopolitical uncertainty within which we operate. While it could have an impact on some of our customers’ capex spending, we currently expect growth on a constant currency basis in our addressable markets in 2023. Considering our recent success in new 5G deals in regions like India which are expected to ramp up strongly in 2023, we believe we are firmly on a path to outperform the market and to make progress towards achieving our long-term margin targets.