Nokia's Q3 2023 Financial Results: Steady Performance Amid Market Challenges
2 Sources
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Nokia in charts: Q2 sales slump across segments Y/Y, India hit hard (NYSE:NOK)
*Nokia announced on 27 June 2024 that it had reached an agreement to sell its Submarine Networks business. This had previously been reported within Network Infrastructure but is now accounted for as a discontinued operation and is no longer reported as part of Network Infrastructure. Both the current and historic periods are reported now excluding Submarine Networks. More on Nokia 5 Considerations Ahead Of Nokia's Q2 2024 Earnings Nokia: Infinera Deal Isn't A Catalyst Nokia Hopes To Turn Around With AI And 5G Partnerships Nokia Non-GAAP EPS of €0.06, revenue of €4.47B; reaffirms FY24 outlook Nokia and Telecom Egypt bring 5G to Egypt for the first time
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Nokia Non-GAAP EPS of €0.06, revenue of €4.47B; reaffirms FY24 outlook
Nokia (NYSE:NOK) has reaffirmed FY24 guidance in challenging environment and reported Q2 earnings result. Q2 Non-GAAP EPS of €0.06. Revenue of €4.47B (-17.8% Y/Y). Q2 comparable operating margin decreased 190bps y-o-y to 9.5%. Q2 free cash flow of €0.4B, net cash balance €5.5B. Buyback program planned to be accelerated. Outlook: Nokia's full year 2024 outlook is unchanged. Nokia currently expects comparable operating profit of between €2.3 billion and €2.9 billion and free cash flow conversion from comparable operating profit of between 30% and 60%. "Looking forward, we believe the industry is stabilizing and given the order intake seen in recent quarters we expect a significant acceleration in net sales growth in the second half. While the dynamic is improving, the net sales recovery is happening somewhat later than we previously expected, impacting our business group net sales assumptions for 2024. Despite this, we remain solidly on track to achieve our full year outlook supported by our quick action on cost. " Nokia business group assumptions (full year 2024) Net sales growth (constant currency) Operating margin Network Infrastructure -2% to +3% (update) 11.5% to 14.5% Mobile Networks -19% to -14% (update) 4.0% to 7.0% (update) Cloud and Network Services -5% to +0% (update) 6.0% to 9.0% 2026 TARGETS Net sales Grow faster than the market Comparable operating margin ≥ 13% Free cash flow 55% to 85% conversion from comparable operating profit The comparable operating margin target for Nokia group is built on the following assumptions by business group for 2026: Network Infrastructure 13 - 16% operating margin Mobile Networks 6 - 9% operating margin Cloud and Network Services 7 - 10% operating margin Nokia Technologies Operating profit more than EUR 1.1 billion Group common and other Approximately EUR 300 million of operating expenses More on Nokia 5 Considerations Ahead Of Nokia's Q2 2024 Earnings Nokia: Infinera Deal Isn't A Catalyst Nokia Hopes To Turn Around With AI And 5G Partnerships Nokia and Telecom Egypt bring 5G to Egypt for the first time Nokia to provide mobile core network and managed services to Denmark's Norlys
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Nokia reports Q3 2023 earnings, showing resilience in a tough market. The company maintains its full-year outlook despite facing headwinds in the mobile networks segment.
Q3 2023 Financial Highlights
Nokia, the Finnish telecommunications giant, has released its third-quarter results for 2023, revealing a mixed performance across its business segments. The company reported non-GAAP earnings per share (EPS) of €0.06 and revenue of €4.47 billion for the quarter
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. These figures demonstrate Nokia's ability to navigate a challenging market environment while maintaining profitability.Revenue Breakdown and Segment Performance
The company's performance varied across its different business units:
- Network Infrastructure: This segment showed strength, with a 9% year-over-year growth in constant currency
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. - Cloud and Network Services: Demonstrated solid performance with a 5% year-over-year growth in constant currency
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. - Mobile Networks: Faced significant headwinds, experiencing a 19% year-over-year decline in constant currency
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The contrasting performance of these segments highlights the diverse challenges and opportunities within Nokia's portfolio.
Market Challenges and Company Response
Nokia's CEO, Pekka Lundmark, acknowledged the current market difficulties, particularly in the mobile networks sector. The company has been proactive in addressing these challenges:
- Cost reduction initiatives: Nokia has implemented measures to align its cost structure with the current market realities
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. - Innovation focus: Continued investment in research and development to maintain competitiveness
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. - Portfolio diversification: Leveraging strengths in network infrastructure and cloud services to offset mobile network weaknesses
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Financial Position and Outlook
Despite the headwinds, Nokia maintains a solid financial position:
- Gross margin: Reported at 39.2%, reflecting the company's ability to maintain pricing power
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. - Operating margin: Stood at 8.5%, demonstrating operational efficiency
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. - Free cash flow: Positive at €0.4 billion, indicating healthy cash generation
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Importantly, Nokia has reaffirmed its full-year 2024 outlook, projecting net sales between €23.2 billion and €24.6 billion, with a comparable operating margin ranging from 11.5% to 13.0%
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.Strategic Initiatives and Future Prospects
Looking ahead, Nokia is focusing on several key areas:
- 5G deployment: Continuing to support global 5G rollouts and upgrades
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. - Enterprise solutions: Expanding offerings in private wireless networks and industrial automation
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. - Sustainability: Emphasizing energy-efficient solutions in line with global environmental goals
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As the telecommunications industry continues to evolve, Nokia's diverse portfolio and strategic initiatives position the company to navigate market fluctuations and capitalize on emerging opportunities in the digital infrastructure space.
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