Slide 1: Investor presentation 29 October 2020
Investor presentation 29 October 2020 1 © 2020 Nokia
Slide 2: Disclaimer
Disclaimer It should be noted that Nokia and its business are exposed to the U.S. Securities and Exchange Commission, including Nokia’s Therefore, change in financial measures at constant currency various risks and uncertainties and certain statements herein financial results reports. Other unknown
Slide 3: Agenda
Pekka Lundmark 4. Q3 performance and full year guidance President and CEO 15. Strategic update and operating model 26. 2021 financial expectations Marco Wirén 30. Cash and liquidity position CFO 32. Group Common and Other 33. Group level results 3 © 2020 Nokia
Slide 4: Q3 performance
NOKIA Q3 performance
Slide 5: Q3 2020 shows signs of progress
Q3 performance Q3 2020 shows signs of progress Net sales Nokia Group Operating profit Nokia Group Operating margin (non-IFRS) (non-IFRS) (non-IFRS) -7% reported -3% constant currency +2% +80bps € 7 000m € 1 200m 18% 16% € 6 000m € 1 000m 14% € 5 000m € 800m 12% € 4 000m 10% € 600m € 3 000m 8% € 400m
Slide 6: Fifth consecutive quarter of solid free cash flow
Q3 performance Fifth consecutive quarter of solid free cash flow Change compared to Change compared to Q3 2020 Q2 2020 Q4 2019 Total cash and current financial investments €7.6bn +0.1bn +1.6bn Net cash and current financial investments €1.9bn +0.3bn +0.1bn 6 © 2020 Nokia
Slide 7: Mobile Access
Q3 performance Mobile Access Mobile Access Net sales -13% reported -8% constant currency Mobile Networks update € 4 000m • Single-digit sales growth € 3 500m • 5G powered by ReefShark shipments at 37% • Expect stable 4G+5G market share at ~27%, € 3 000m excluding China, at end 2020 € 2 500m • 5G con
Slide 8: Nokia Enterprise
Q3 performance Nokia Enterprise Net sales +15% reported +19% constant currency € 600m • Double-digit sales growth € 500m • Demand remains robust € 400m • 83 new customers, primarily private wireless € 300m € 200m € 100m € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 8 © 2020 Nokia
Slide 9: Nokia Software
Q3 performance Nokia Software Net sales € 1 000m -14% reported -10% constant currency € 800m € 600m • Project delays and slower-than- € 400m expected CAPEX decisions € 200m • Orders remain strong € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 • Largest ever sector contract win Operating profit • Ranked #1 by An
Slide 10: IP Routing
Q3 performance IP Routing Net sales -3% reported +2% constant currency € 900m • One of the best third quarters € 800m € 700m • Gaining share with market-leading FP4 technology € 600m • Strong pipeline of new products in € 500m 2021 € 400m • Orders slightly soft, potential € 300m coronavirus impact €
Slide 11: Optical Networks
Q3 performance Optical Networks Net sales +19% reported +24% constant currency € 600m • Strong net sales € 500m • Profitability remains roughly break-even € 400m • Product cost reduction benefit in € 300m 2021 from Elenion acquisition € 200m € 100m € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 11 © 2020 Nokia
Slide 12: Fixed Access
Q3 performance Fixed Access Net sales -3% reported +2% constant currency € 600m • Constant currency net sales € 500m increased, healthy margins • Launched industry-leading € 400m 25G PON product € 300m • Fiber surpassing copper • Regional shift underway € 200m € 100m € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'
Slide 13: Nokia Technologies
Q3 performance Nokia Technologies Net sales € 500m -8% reported -8% constant currency € 400m € 300m • Lower brand licensing royalties € 200m given coronavirus € 100m • Renewed major patent license € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 agreement Operating profit • Demonstrates strength of patent -7% por
Slide 14: Adjusted 2020 outlook midpoints within the previously provided outlook ranges
Full Year guidance Adjusted 2020 outlook midpoints within the previously provided outlook ranges Full Year 2020 Non-IFRS diluted earnings per share EUR 0.23 plus or minus 3 cents (adjusted from EUR 0.25 plus or minus 5 cents) Non-IFRS operating margin 9.0% plus or minus 1.0 percentage point (adjuste
Slide 15: Strategic update
NOKIA Strategic update
Slide 16: Trends driving our strategic direction
Strategic update Trends driving our strategic direction 1. Need for operators to support massive 4. As-a-service offerings will keep capacity demands while facing CAPEX expanding in mission-critical networks constraints for enterprises and telco operators 2. Acceleration toward open architectures an
Slide 17: Strategic drivers
Strategic update Strategic drivers 1. 2. 3. 4. Technology Telco operator See a longer-term Shift away from leadership is our #1 and enterprise opportunity to “end-to-end” priority customer base lead in network- strategic idea to offers a solid as-a-service focused businesses platform for business mo
Slide 18: Goals of our new operating model
Strategic update Goals of our new operating model 1. 2. 3. 4. 5. Better Improve Increase Ensure a Improve alignment accountability simplicity consistent transparency to how and cost strategic customers efficiency logic buy 18 © 2020 Nokia
Slide 19: Mobile Networks
Operating model update Mobile Networks Portfolio Revenue Focus Leader • Mobile Network • Net sales in the last • Turnaround mindset products four quarters for • Full portfolio to • Network deployment this business group address mobile and technical support were approximately access customer services
Slide 20: IP and Fixed Networks
Operating model update IP and Fixed Networks Portfolio Revenue Focus Leader • IP Routing • Net sales in the last • Address customers’ • Optical Networks four quarters for needs with cost this business group effective solutions • Fixed Networks were approximately that provide higher • Alcatel Submari
Slide 21: Cloud and Network Services
Operating model update Cloud and Network Services Portfolio Revenue Focus Leader • Nokia Software • Net sales in the last • Cloud-based delivery • Enterprise solutions four quarters for • Network-as-a-service this business group • Voice and packet core were approximately • Software-led value • Manag
Slide 22: Nokia Technologies
Operating model update Nokia Technologies Portfolio Revenue Focus Leader • Licensing business • Net sales in the last • Generate royalties four quarters for from mobile devices this business group • 5G patents and were approximately renewal deals EUR 1.4 billion* • Expand patent licensing Jenni Luka
Slide 23: Customer Experience organization
Operating model update Customer Experience organization Responsibility Functions Leader • Common interface to • Customer teams customers • Region and country • Act as voice of our customers management company-wide • Marketing • Build strong relationships and business opportunities Ricky Corker 23 ©
Slide 24: Corporate functions
Operating model update Corporate functions Legal and Strategy and Finance People Compliance Technology 24 © 2020 Nokia
Slide 25: New operating model
Operating model update New operating model Mobile IP and Networks Fixed Networks Customer Cloud and Experience Nokia Network Services Technologies Legal and Strategy and Finance People Compliance Technology 25 © 2020 Nokia
Slide 26: Full year 2021 financial guidance
2021 financial guidance Full year 2021 financial guidance Full Year 2021 Non-IFRS operating margin 7 - 10% (new) 26 © 2020 Nokia
Slide 27: Looking forward
2021 financial guidance Looking forward Strategy update: December 16, 2020 Capital Markets Day: March 18, 2021 27 © 2020 Nokia
Slide 28: CFO remarks
NOKIA CFO remarks
Slide 29: CFO remarks
CFO remarks 30. Cash and liquidity position 32. Group Common and Other 33. Group level results Marco Wirén CFO 29 © 2020 Nokia
Slide 30: Change in net cash
CFO remarks Change in net cash Free cash flow of EUR 319 million (EUR billion) 30 © 2020 Nokia
Slide 31: Liquidity position
CFO remarks Liquidity position Total and net cash and current financial investments € 8 000m € 7 000m • Solid total cash position of EUR 7.6 billion € 6 000m • Net cash position of EUR 1.9 billion € 5 000m • EUR 1.5 billion revolving credit € 4 000m facility € 3 000m € 2 000m € 1 000m € 0m Q3 2019 Q
Slide 32: Group Common and Other
CFO remarks Group Common and Net sales +17% reported +16% constant currency Other € 300m € 200m • Growth driven by Alcatel Submarine € 100m Networks (ASN) • ASN order book continues to be € 0m Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 very strong Operating profit • Group Common and Other operating profit negati
Slide 33: Nokia Group cost savings program
CFO remarks Nokia Group Cost savings program • Remain on track to meet EUR 500 To be To be million target by end of 2020 In EUR million, Total Recorded as of Q3 recorded in Q4 recorded beyond approximately expected 2020 2020 2020 • Operating expenses also lower due Restructuring and to temporary ben
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34 © 2020 Nokia
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35 © 2020 Nokia