2015-01-29 07:00:00 CET
2015-01-29 07:01:26 CET
REGULATED INFORMATION
Nokia - Financial Statement Release
Nokia Corporation Report for Q4 2014 and Full Year 2014
Nokia Corporation
Financial Statement Release
January 29, 2015 at 08:00 (CET +1)
This is a summary of the Nokia Corporation report for Q4 2014 and full year
2014 published today. The complete fourth quarter and full year 2014 report with
tables is available at http://company.nokia.com/en/financials. Investors should
not rely on summaries of our interim reports only, but should review the
complete reports with tables.
FINANCIAL AND OPERATING HIGHLIGHTS
Fourth quarter 2014 highlights:
* Non-IFRS diluted EPS in Q4 2014 of EUR 0.09 (EUR 0.08 in Q4 2013); reported
diluted EPS of EUR 0.08 (EUR 0.05 in Q4 2013)
* Net sales in Q4 2014 of EUR 3.8 billion (EUR 3.5 billion in Q4 2013)
Nokia Networks
* Nokia Networks achieved 8% year-on-year growth in net sales, from EUR 3.1
billion in Q4 2013 to EUR 3.4 billion in Q4 2014, primarily due to strong
performance in North America.
* Nokia Networks achieved strong underlying operating profitability with non-
IFRS operating profit of EUR 470 million, or 14.0% of net sales, compared to
EUR 349 million, or 11.2% of net sales, in Q4 2013.
* Mobile Broadband achieved 13% year-on-year increase in net sales, driven by
strong growth in overall core networking technologies and modest growth in
overall radio technologies. Within radio technologies, strong year-on-year
growth in LTE was partially offset by a decline in mature radio
technologies.
* Global Services returned to year-on-year growth for the first time since Q4
2012, with net sales up by 3% and particularly strong growth in the
strategically important systems integration business line.
HERE
* HERE achieved 15% year-on-year growth in net sales, from EUR 255 million in
Q4 2013 to EUR 292 million in Q4 2014, primarily due to HERE's leading
market position and positive trends in the automotive market.
* In Q4 2014, HERE sold map data licenses for the embedded navigation systems
of 3.9 million new vehicles, compared to 3.2 million vehicles in Q4 2013.
Nokia Technologies
* Nokia Technologies achieved 23% year-on-year growth in net sales, from EUR
121 million in Q4 2013 to EUR 149 million in Q4 2014, primarily due to
Microsoft becoming a more significant intellectual property licensee in
conjunction with the sale of substantially all of Nokia's Devices & Services
business to Microsoft, as well as higher intellectual property licensing
income from certain other licensees.
* In Q4 2014, Nokia Technologies non-IFRS operating expenses increased both
year-on-year and sequentially primarily due to investments in business
activities, which target new and significant long-term growth opportunities,
as well as increased activities related to anticipated and ongoing patent
licensing cases.
Full year 2014 highlights:
* Nokia's full year 2014 non-IFRS diluted EPS grew by 40% to EUR 0.28 (EUR
0.20 in 2013); reported diluted EPS of EUR 0.30 (EUR 0.05 in 2013)
* Nokia's full year 2014 net sales of EUR 12.7 billion (EUR 12.7 billion in
2013)
* Nokia Board of Directors will propose a dividend of EUR 0.14 per share for
2014 (EUR 0.11 per share for 2013, in addition to which a special dividend
of EUR 0.26 per share was paid in 2014)
Commenting on the fourth quarter and full year results, Rajeev Suri, Nokia
President and CEO, said:
2014 was a time of significant change for Nokia and we ended the year in a
renewed position of strength. I want to extend my thanks to our customers who
have shown such strong support during our transformation and our employees who
have worked so hard to make it happen.
The power of the new Nokia could be seen in our fourth quarter results. All of
our businesses delivered strong year-on-year net sales growth. Profitability was
excellent in Nokia Networks, and we were particularly pleased with our net sales
growth in North America and core networks. HERE continued its momentum in the
automotive segment, and the early reception to the Nokia N1 tablet has been
remarkably favorable, showing the ongoing power of the Nokia brand and the long-
term potential of our brand licensing business.
Looking ahead, while 2014 was a year of reinvention, we see 2015 as a year of
execution. We are already moving fast, with HERE sharpening its strategic focus,
Nokia Technologies accelerating its licensing and innovation activities, and
Nokia Networks increasing its momentum in growth areas including virtualization
and telco cloud.
As we pursue these opportunities, we will not shy away from investing where we
need to invest. But, we plan to always combine that with disciplined cost
control and a focus on delivering ongoing productivity and quality improvements
across the company.
Overall, while we must remain focused on our execution, I believe that Nokia is
well positioned to meet its goals for the year.
SUMMARY FINANCIAL INFORMATION
+---------------+----------------------------------+-+-------------------------+
| |Reported and non-IFRS | |Reported and non-IFRS |
| |fourth quarter 2014 results(1) | |full year 2014 results(1)|
| +------+------+------+------+------+-+------+------+-----------+
| | | | YoY | | QoQ | | | | YoY |
| | | | | | | | | | |
|EUR million |Q4/14 |Q4/13 |Change|Q3/14 |Change| | 2014 | 2013 | Change |
+---------------+------+------+------+------+------+-+------+------+-----------+
|Continuing | | | | | | | | | |
|Operations | | | | | | | | | |
| | | | | | | | | | |
|Net sales | 3 802| 3 476| 9%| 3 324| 14%| |12 732|12 708| 0%|
| | | | | | | | | | |
|Gross margin % | | | | | | | | | |
|(non-IFRS) | 43.5%| 42.5%| | 44.5%| | | 44.3%| 42.1%| |
| | | | | | | | | | |
|Operating | | | | | | | | | |
|expenses | | | | | | | | | |
|(non-IFRS) |-1 129|-1 018| 11%|-1 006| 12%| |-3 997|-3 994| 0%|
| | | | | | | | | | |
|Operating | | | | | | | | | |
|profit | | | | | | | | | |
|(non-IFRS) | 524| 409| 28%| 457| 15%| | 1 632| 1 437| 14%|
| | | | | | | | | | |
|Non-IFRS | | | | | | | | | |
|exclusions | | | | | | | | | |
|from operating | | | | | | | | | |
|profit | 70| 134| | 1 267| | | 1 461| 919| |
| | | | | | | | | | |
|Operating | | | | | | | | | |
|profit | 454| 274| 66%| -810| | | 170| 518| -67%|
| | | | | | | | | | |
|Profit (non- | | | | | | | | | |
|IFRS) | 356| 317| 12%| 353| 1%| | 1 095| 879| 25%|
| | | | | | | | | | |
|Non-IFRS | | | | | | | | | |
|exclusions | | | | | | | | | |
|from profit | 29| 133| | -407| | | -76| 838| |
| | | | | | | | | | |
|Profit | 327| 183| 79%| 760| -57%| | 1 171| 41| 2 756%|
| | | | | | | | | | |
|EPS, EUR | | | | | | | | | |
|diluted | | | | | | | | | |
|(non-IFRS) | 0.09| 0.08| 13%| 0.09| 0%| | 0.28| 0.20| 40%|
| | | | | | | | | | |
|EPS, EUR | | | | | | | | | |
|diluted | | | | | | | | | |
|(reported) | 0.08| 0.05| 60%| 0.19| -58%| | 0.30| 0.05| 500%|
| | | | | | | | | | |
|Net cash from | | | | | | | | | |
|operating | | | | | | | | | |
|activities | 270| -| | 406| -33%| | 2 330| 1 134| 105%|
| | | | | | | | | | |
|Net cash and | | | | | | | | | |
|other liquid | | | | | | | | | |
|assets | 5 023| 2 309| 118%| 5 025| 0%| | 5 023| 2 309| 118%|
+---------------+------+------+------+------+------+-+------+------+-----------+
Note 1 relating to results information and non-IFRS (also referred to as"underlying") results: The results information in this report is unaudited.
Percentages and figures presented herein may include rounding differences and
therefore may not add up precisely to the totals presented and may vary from
previously published financial information. In addition to information on our
reported IFRS results, we provide certain information on a non-IFRS, or
underlying business performance, basis. Non-IFRS results exclude all material
special items for all periods. In addition, non-IFRS results exclude intangible
asset amortization and other purchase price accounting related items arising
from business acquisitions. We believe that our non-IFRS results provide
meaningful supplemental information to both management and investors regarding
Nokia's underlying business performance by excluding the above-described items
that may not be indicative of Nokia's business operating results. These non-IFRS
financial measures should not be viewed in isolation or as substitutes to the
equivalent IFRS measure(s), but should be used in conjunction with the most
directly comparable IFRS measure(s) in the reported results. More information,
including a reconciliation of our Q4 2014 and Q4 2013 non-IFRS results to our
reported results, can be found in our complete Q4 2014 and full year 2014 report
in tables 14-18. A reconciliation of our Q3 2014 non-IFRS results to our
reported results can be found in our complete Q3 2014 interim report with tables
on pages 22-27 published on October 23, 2014.
NOKIA'S OUTLOOK
* Nokia continues to expect Nokia Networks' net sales to grow on a year-on-
year basis for the full year 2015.
* Nokia continues to expect Nokia Networks' non-IFRS operating margin for the
full year 2015 to be in-line with Nokia Networks' long-term non-IFRS
operating margin range of 8% to 11%.
* Nokia's outlook for Nokia Networks net sales and non-IFRS operating margin
is based on expectations regarding a number of factors, including:
* competitive industry dynamics;
* product and regional mix;
* the timing of major network deployments; and * expected continued operational improvement.
* Nokia expects Nokia Networks' net sales and non-IFRS operating margin in the
first quarter 2015 to decline seasonally compared to the fourth quarter
2014. Note that Nokia Networks non-IFRS operating margin benefited from a
relatively high proportion of software sales in the first quarter 2014.
* Nokia continues to expect HERE's net sales to grow on a year-on-year basis
for the full year 2015.
* Nokia now expects HERE's non-IFRS operating margin for the full year 2015 to
be between 7% and 12%, based on HERE's leading market position, positive
industry trends and improved focus on cost efficiency. This compares to
Nokia's previous outlook for HERE's non-IFRS operating margin for the full
year 2015 to be between 5% and 10%.
* Nokia continues to expect Nokia Technologies' net sales to grow on a year-
on-year basis for the full year 2015, excluding potential amounts related to
the expected resolution of our ongoing arbitration with Samsung, which is
expected to be concluded during 2015.
* Nokia continues to expect Nokia Technologies' non-IFRS operating expenses to
increase meaningfully on a year-on-year basis for the full year 2015. More
specifically, Nokia expects Nokia Technologies' quarterly non-IFRS operating
expenses in 2015 to be approximately in-line with the fourth quarter 2014
level. This is related to higher investments in licensing activities,
licensable technologies, and business enablers including go-to-market
capabilities, which target new and significant long-term growth
opportunities.
* Nokia continues to expect Nokia Group capital expenditures to be
approximately EUR 200 million in 2015, primarily attributable to capital
expenditures by Nokia Networks.
* Nokia continues to expect Nokia Group financial income and expenses,
including net interest expenses and the impact from changes in foreign
exchange rates on certain balance sheet items, to amount to an expense of
approximately EUR 160 million in 2015, subject to changes in foreign
exchange rates and the level of interest-bearing liabilities.
* Nokia continues to expect Group Common Functions non-IFRS operating expenses
to be approximately EUR 120 million in 2015.
* Nokia continues to target to record tax expenses in Nokia Group's
Consolidated Income Statements at a long-term effective tax rate of
approximately 25%. However, Nokia targets Nokia Group's cash tax obligations
to continue at approximately EUR 250 million annually until Nokia Group's
deferred tax assets have been fully utilized. The cash tax amount may vary
depending on profit levels in different jurisdictions and the amount of
license income potentially subject to withholding tax.
RISKS AND FORWARD-LOOKING STATEMENTS
It should be noted that Nokia and its businesses are exposed to various risks
and uncertainties and certain statements herein that are not historical facts
are forward-looking statements, including, without limitation, those regarding:
A) expectations, plans or benefits related to Nokia's strategies; B)
expectations, plans or benefits related to future performance of Nokia's
businesses Nokia Networks, HERE and Nokia Technologies; C) expectations, plans
or benefits related to changes in our management and other leadership,
operational structure and operating model; D) expectations regarding market
developments, general economic conditions and structural changes; E)
expectations and targets regarding performance, including those related to
market share, prices, net sales and margins; F) timing of the deliveries of our
products and services; G) expectations and targets regarding our financial
performance, operating expenses, taxes, cost savings and competitiveness, as
well as results of operations; H) expectations and targets regarding
collaboration and partnering arrangements; I) outcome of pending and threatened
litigation, arbitration, disputes, regulatory proceedings or investigations by
authorities; J) expectations regarding restructurings, investments, uses of
proceeds from transactions, acquisitions and divestments and our ability to
achieve the financial and operational targets set in connection with any such
restructurings, investments, divestments and acquisitions, including any
expectations, plans or benefits related to or caused by the transaction where
Nokia sold substantially all of its Devices & Services business to Microsoft on
April 25, 2014; K) statements preceded by or including "believe", "expect","anticipate", "foresee", "sees", "target", "estimate", "designed", "aim","plans", "intends", "focus", "continue", "project", "should", "will" or similar
expressions. These statements are based on the management's best assumptions and
beliefs in light of the information currently available to it. Because they
involve risks and uncertainties, actual results may differ materially from the
results that we currently expect. Factors, including risks and uncertainties
that could cause such differences include, but are not limited to: 1) our
ability to execute our strategies successfully and in a timely manner, and our
ability to successfully adjust our operations and operating models; 2) our
ability to sustain or improve the operational and financial performance of our
businesses and correctly identify business opportunities or successfully pursue
new business opportunities; 3) our ability to execute Nokia Networks' strategy
and effectively, profitably and timely adapt its business and operations to the
increasingly diverse needs of its customers and technological developments; 4)
our ability within our Nokia Networks business to effectively and profitably
invest in and timely introduce new competitive high-quality products, services,
upgrades and technologies; 5) our ability to invent new relevant technologies,
products and services, to develop and maintain our intellectual property
portfolio and to maintain the existing sources of intellectual property related
revenue and establish new such sources; 6) our ability to protect numerous
patented standardized or proprietary technologies from third-party infringement
or actions to invalidate the intellectual property rights (IPR) of these
technologies; 7) our ability within our HERE business to maintain current
sources of revenue, historically derived mainly from the automotive industry,
create new sources of revenue, for instance in the enterprise business,
successfully recognize and pursue growth opportunities and extend the reach of
our location services; 8) our dependence on the development of the mobile and
communications industry in numerous diverse markets, as well as on general
economic conditions globally and regionally; 9) Nokia Networks' dependence on a
limited number of customers and large, multi-year contracts; 10) our ability to
retain, motivate, develop and recruit appropriately skilled employees; 11) the
potential complex tax issues and obligations we may face, including the
obligation to pay additional taxes in various jurisdictions and our actual or
anticipated performance, among other factors, which could result in allowances
related to deferred tax assets; 12) our ability to manage our manufacturing,
service creation and delivery, and logistics efficiently and without
interruption, especially if the limited number of suppliers we depend on fail to
deliver sufficient quantities of fully functional products and components or
deliver timely services; 13) any inefficiency, malfunction or disruption of a
system or network that our operations rely on or any impact of a possible
cybersecurity breach; 14) our ability to reach targeted results or improvements
by managing and improving our financial performance, cost savings and
competitiveness; 15) management of Nokia Networks' customer financing exposure;
16) the performance of the parties we partner and collaborate with, as well as
financial counterparties, and our ability to achieve successful collaboration or
partnering arrangements; 17) our ability to protect the technologies, which we
develop, license, use or intend to use, from claims that we have infringed third
parties' IPR, as well as impact of possible licensing costs, restriction on our
usage of certain technologies, and litigation related to IPR; 18) the impact of
regulatory, political or other developments, including those caused by the
impact of trade sanctions, natural disasters or disease outbreaks on our
operations and sales in those various countries or regions where we conduct
business; 19) exchange rate fluctuations, particularly between the euro, which
is our reporting currency, and the US dollar, the Japanese yen and the Chinese
yuan, as well as certain other currencies; 20) effects of impairments or charges
to carrying values of assets, including goodwill, or liabilities; 21) our
ability to successfully implement planned transactions, such as acquisitions,
divestments, mergers or joint ventures, manage unexpected liabilities related
thereto and achieve the targeted benefits; 22) the impact of unfavorable outcome
of litigation, arbitration, contract related disputes or allegations of health
hazards associated with our business; 23) potential exposure to contingent
liabilities due to the sale of substantially all of our Devices & Services
business to Microsoft and the possibility that the agreements we have entered
into with Microsoft may have terms that prove to be unfavorable for us, as well
as the risk factors specified on pages 12-35 of Nokia's annual report on Form
20-F for the year ended December 31, 2013 under Item 3D. "Risk Factors." Other
unknown or unpredictable factors or underlying assumptions subsequently proven
to be incorrect could cause actual results to differ materially from those in
the forward-looking statements. Nokia does not undertake any obligation to
publicly update or revise forward-looking statements, whether as a result of new
information, future events or otherwise, except to the extent legally required.
Nokia Management, Espoo - January 28, 2015
Media and Investor Contacts:
Corporate Communications, tel. +358 10 448 4900 email: press.services@nokia.com
Investor Relations Europe, tel. +358 4080 3 4080
Investor Relations US, tel. +1 650 644 4709
* Nokia plans to publish its "Nokia in 2014" annual report, which includes the
review by the Board of Directors and the audited annual accounts, in week
13 of 2015. The annual report will be available at
company.nokia.com/financials.
* Nokia plans to publish its first quarter 2015 results on April 30, 2015.
* Nokia's Annual General Meeting 2015 is scheduled to be held on May 5, 2015.
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