Slide 1: Q2 2022 Investor presentation
Q2 2022 Investor presentation 21 July 2022 1 © 2022 Nokia
Slide 2: Disclaimer
Disclaimer It should be noted that Nokia and its business are exposed to proven to be incorrect could cause actual results to differ companies, including those in the same industry. The primary various risks and uncertainties and certain statements herein that materially from those in the forward-lo
Slide 3: Welcome
Welcome Pekka Lundmark 4. Financial highlights President and CEO 5. Business Group performance 8. Supply chain Marco Wirén 10. Financial performance bridges CFO 12. Cash flow performance 13. 2022 TAM and outlook 3 © 2022 Nokia Public
Slide 4: Good profitability supports full year outlook
Good profitability supports full year outlook 45% 15% Q2 22 net sales 43% 13% +3% 41% 11% (year-on-year at constant currency) 39% 9% 37% 7% 35% 5% Q1 20 Q2 20 Q3 20 Q4 20 Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q2 22 gross margin GM Comparable gross margin Comparable operating margin OM 40.6% All data o
Slide 5: Mobile Networks and Network Infrastructure
Mobile Net sales +1% Network Net sales +12% Networks Op. margin 11.2% Infrastructure Op. margin 11.5% Returned to growth despite COVID-19 Strong end-market demand related lockdowns and wider component constraints Growth in all four businesses with Submarine Networks and Fixed Networks showing Contin
Slide 6: Cloud & Network Services and Nokia Technologies
Cloud & Network Net sales +0% Nokia Net sales -25% Services Op. margin (0.7)% Technologies Op. margin 71.1% Net sales flat with offsetting performance Timing effect from contract renewals within businesses Prioritizing protecting value of IP over Gross margin improvement by 150bps achieving timeline
Slide 7: Enterprise returned to net sales growth
Enterprise returned to net sales growth Private Wireless customers • Growth despite some supply chain headwinds 485 380 420 450 260 290 340 • Continue to see strong order intake 180 • Confident in delivering accelerating Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 growth in H2 2020 2020 2020 2021 2021 2021 2021 2022
Slide 8: Resilience in an uncertain macroeconomic environment
Resilience in an uncertain macroeconomic environment Macroeconomic uncertainty Fiber penetration rates globally (ex. China) 100% • Industry benefiting from structural technology 80% investments 60% 40% • No major changes to demand outlook 20% 0% • Currency fluctuations in emerging markets could MEA
Slide 9: CFO remarks
CFO remarks Marco Wirén 10. Financial performance bridges CFO 12. Cash flow performance 13. 2022 TAM and outlook 9 © 2022 Nokia Public
Slide 10: North America growth, Europe impacted by Nokia Technologies
North America growth, Europe impacted by Nokia Technologies Year-on-year at constant currency (regions excluding Submarine Networks) +11% reported growth +3% constant currency growth €5.8bn +15% +5% +5% -3% -25% +19% -14% +27% €5.3bn Q2 2021 North Middle Greater Latin Asia Pacific India Europe Subma
Slide 11: Continued progress in MN and NI offset by Technologies
Continued progress in MN and NI offset by Technologies Group comparable operating profit Margin expansion in both NI and MN €714mn Timing of Nokia Technologies €682mn renewals impacting mix Venture fund benefited Group Primarily venture fund 12.2% Common 12.8% currency revaluation Q2 2021 Mobile Net
Slide 12: Cash flow impacted by employee variable pay and inventories
Cash flow impacted by employee variable pay and inventories Change in net cash Change in NWC (ex rest.) EUR -0.7bn € billion +0.9 Free cash flow negative EUR -0.1 0.1bn -0.2 +0.4 Net working capital impacted by 4.9 outflows related to employee -0.9 variable pay, within liabilities, 4.5 and increased
Slide 13: Market growth in 2022 updated
Market growth in 2022 updated YoY YoY prior est. Estimated, in € 2022 (at const. ccy) (at const. ccy) Mobile Networks1 51bn +5% +4% Network Infrastructure2 47bn +5% +3% Cloud and Network Services 27bn +3% +4% Total addressable market1,2 125bn +4% +4% 1Excluding China for Mobile Networks 2Excluding S
Slide 14: 2022 net sales outlook unchanged in constant currency
2022 net sales outlook unchanged in constant currency Full year 2022 Net sales1 €23.5 billion to €24.7 billion (constant currency unchanged) Comparable operating margin 11 to 13.5% Free cash flow 25–55% conversion from comparable operating profit 1Assuming the rate 1 EUR = 1.04 USD as of 30 June 202
Slide 15: High level of natural hedging inherent in the business
High level of natural hedging inherent in the business Rule of thumb Currency exposure (Q2'22) Change in EUR/USD: 10% stronger USD 20% EUR 25% 55% USD 50% Net sales impact: Operating margin +5% impact before hedging: 5% CNY 5% Slight positive 20% Operating profit Operating margin Other 20% after hed
Slide 16: Strong underlying improvements somewhat offset by inflation
Strong underlying improvements somewhat offset by inflation Comparable operating margin drivers in 2022 13.5% 12.5% 1.5% 11.0% 11.0% 2021 one-offs 2021 ex. one-offs Cost inflation / Sales growth Operational 2022 investments improvements 16 © 2022 Nokia Public
Slide 17: Q&A
17 ©2022 Nokia Public NOKIA
Slide 18: Appendix
Appendix 18 © 2022 Nokia Public
Slide 19: Strategic priorities by business group in 2022
Strategic priorities by business group in 2022 Driving the business towards technology leadership Business Group Strategic Priorities for 2022 Defend and build scale – Capitalise on renewed product competitiveness to gain share Mobile Networks Increase product development capacity and competitivenes
Slide 20: Long-term targets for the business
Long-term targets for the business We aim to deliver continuous improvement each year Target model Factors to deliver the model MN – Renewed competitiveness and market dynamics provide share gain opportunities Grow faster than NI – Strengthening technology leadership to enable continued outperforman
Slide 21: Accelerate and Scale
Accelerate and Scale 2022 and mid term Grow Invest Optimize Innovate Capitalize on renewed Prioritise R&D towards Improve R&D efficiency New business models, MN portfolio to gain technology leadership and digitize processes strategic partnerships, share enterprise expansion Benefit from technology D
Slide 22: NOKIA
NOKIA