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Nokia Corporation financial report for Q1 2021

Sales growth in Q1 driving margin increase and strong cash generation

  • Strong start to the year with constant currency net sales up 9% year-on-year, driven by strong growth in Network Infrastructure and solid growth in Mobile Networks; reported net sales increased 3%
  • Enterprise constant currency net sales up 18% year-on-year, as we gained 63 new customers, more than doubling the number we added in Q1 2020; reported net sales increased 14%
  • Comparable gross margin of 38.2% (reported 37.9%), reflecting improvements in Mobile Networks, mainly driven by 5G growth and favorable product and regional mix, and broad improvements across Network Infrastructure
  • Comparable operating margin of 10.9% (reported 8.5%), with improvements in comparable operating profit across all business groups
  • Comparable diluted EPS of EUR 0.07; reported diluted EPS of EUR 0.05
  • Strong cash flow performance, driven by operating profit and good collection of receivables
  • Solid liquidity position, with net cash of EUR 3.7bn and total cash of EUR 8.8bn
  • Executing well on three-phased approach to achieve sustainable, profitable growth and technology leadership set out at Capital Markets Day
  • Full year 2021 and 2023 outlook maintained

This is a summary of the Nokia Corporation financial report for Q1 2021 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group’s financial information as well as on Nokia’s outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at Investors should not solely rely on summaries of Nokia’s financial reports but should also review the complete reports with tables.

Pekka Lundmark, President and CEO, on Q1 2021 results: We have delivered a robust start to the year with strong net sales, operating margin and cash flow. Today’s results demonstrate that we are on track to deliver on our three-phased plan to achieve sustainable, profitable growth and technology leadership as announced at our recent Capital Markets Day.

I was particularly pleased by strong sales growth across our Network Infrastructure business group driven by increasing demand for next generation connectivity; good progress in Mobile Networks in securing full portfolio competitiveness; continued double-digit sales growth with our Enterprise customers; double-digit sales growth in North America; and good net sales development for Nokia Technologies.

At this point we are maintaining our Outlook for the full year, as we want to see how 2021 continues to develop. The solid first quarter provides a good foundation for achieving the higher end of the 7 to 10% comparable operating margin range. We expect our typical quarterly earnings seasonality to be less pronounced in 2021, and we continue to monitor overall market developments including visibility for semiconductor availability. I am proud of how we have continued to successfully deliver to our customers during the global semiconductor shortage.

I want to recognize all the hard work that the Nokia team has put in and thank them for delivering such a strong first quarter.

Reconciliation of reported operating profit/(loss) to comparable operating profit
EUR million Q1’21 Q1’20 YoY change
Reported operating profit/(loss) 431 (76)
Amortization of acquired intangible assets 97 101
Restructuring and associated charges 36 87
Gain on sale of fixed assets (15) 0
Other 2 4
Comparable operating profit 551 116 375%


Full year 2021 Full year 2023
Net sales, adjusted for currency fluctuations EUR 20.6 billion to EUR 21.8 billion Grow faster than the market
Comparable operating margin 7 to 10% 10 to 13%
Free cash flow Positive Clearly positive
Comparable ROIC 10 to 15% 15 to 20%


  • Nokia’s outlook assumptions for the comparable operating margin of its four business groups in 2021 and 2023 are provided below:
Full year 2021 Full year 2023
Mobile Networks -1% to +2% 5 to 8%
Network Infrastructure 7 to 10% 9 to 12%
Cloud and Network Services 3 to 6% 8 to 11%
Nokia Technologies >75% >75%
  • We continue to maintain our expectation for Nokia Technologies to deliver a slight improvement in comparable operating profit in full year 2021, relative to full year 2020, and stable performance over the longer-term;
  • Group Common and Other primarily consists of support function costs. Where possible, we have now embedded support function costs directly into our business groups. Therefore, we expect the net negative impact of Group Common and Other to decrease, relative to previous levels, to approximately EUR 200 million in 2021 and 2023;
  • In full year 2021, Nokia expects the free cash flow performance of Nokia


EUR million (except for EPS in EUR) Q1’21 Q1’20 YoY change Constant currency YoY change
Reported results    
Net sales 5 076 4 913 3% 9%
Gross margin % 37.9% 35.3% 260bps  
Research and development expenses (996) (1 007) (1)%  
Selling, general and administrative expenses (649) (780) (17)%  
Operating profit/(loss) 431 (76)
Operating margin % 8.5% (1.5)%  
Profit/(loss) for the period 263 (115)  
EPS, diluted 0.05 (0.02)  
Net cash and current financial investments 3 689 1 320 179%
Comparable results    
Net sales 5 076 4 914 3% 9%
Gross margin % 38.2% 36.4% 180bps
Research and development expenses (973) (974)
Selling, general and administrative expenses (552) (672) (18)%
Operating profit 551 116 375%
Operating margin % 10.9% 2.4% 850bps
Profit for the period 375 33 1 036%  
EPS, diluted 0.07 0.01 600%
ROIC2 15.3% 11.5% 380bps
  • Technologies to be approximately EUR 600 million lower than its operating profit, primarily due to prepayments we received from certain licensees;
  • Comparable financial income and expenses are expected to be an expense of approximately EUR 250 million in full year 2021 and over the longer-term;
  • Comparable income tax expenses are expected to be approximately EUR 450 million in full year 2021 and over the longer-term, subject to regional profit mix, net sales subject to withholding tax and the timing of patent licensing cash flow;
  • Cash outflows related to income taxes are expected to be approximately EUR 350 million in full year 2021 and over the longer-term until our US or Finnish deferred tax assets are fully utilized;
  • Capital expenditures are expected to be approximately EUR 700 million in full year 2021 and EUR 600 million over the longer-term; and
  • Rule of thumb related to currency fluctuations: Assuming our current mix of net sales and total costs (refer to Note 1, Basis of Preparation, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details), we expect that a 10% increase in the EUR/USD exchange rate would have an impact of approximately negative 4 to 5% on net sales and an approximately neutral impact on operating profit.


Nokia and its business are exposed to a number of risks and uncertainties which include but are not limited to:

  • Competitive intensity, which is particularly impacting Mobile Networks and is expected to continue at a high level in full year 2021, as some competitors seek to take share in the early stages of 5G;
  • Our ability to accelerate our product roadmaps and cost competitiveness through additional 5G investments in full year 2021, thereby enabling us to drive product cost reductions and maintain the necessary scale to be competitive;
  • Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits;
  • Developments in North America following the conclusion of the C-band auction, including the potential for temporary capital expenditure constraints or the acceleration of 5G deployments;
  • The scope and duration of the COVID-19 impact, particularly in certain countries, including India, where the pandemic has worsened, and the pace and shape of the economic recovery following the pandemic;
  • Our ability to procure certain standard components, such as semiconductors;
  • The timing of completions and acceptances of certain projects;
  • Our product and regional mix;
  • Macroeconomic, industry and competitive dynamics;
  • The timing and value of new and existing patent licensing agreements with smartphone vendors, automotive companies and consumer electronics companies;
  • Results in brand and technology licensing; costs to protect and enforce our intellectual property rights; and the regulatory landscape for patent licensing;

as well as the risk factors specified under Forward-looking Statements of this release, and our 2020 annual report on Form 20-F published on March 4, 2021 under Operating and financial review and prospects-Risk factors.
CT Bureau

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