Nokia Oyj · OMXHEX:NOKIA
Nokia Oyj — Q1 2023 Earnings Presentation
21 slides from Nokia Oyj's earnings presentation, Apr 20, 2023
Slide 1: Q1 2023 Investor Presentation
Q1 2023 Investor Presentation 20 April 2023
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: Agenda
Agenda Pekka Lundmark 4. Corporate strategy President and CEO 5. Financial highlights 6. Business Group performance Marco Wirén 13. Financial performance bridges CFO 16. Cash flow performance 17. 2023 TAM and outlook 19. Capital Management Policy 3 © 2023 Nokia Public
Slide 4: Our Corporate Strategy
Our Corporate Strategy Our pillars 1 2 3 4 5 6 Grow CSP Expand the share Actively manage Secure business Build new Develop ESG into business faster of enterprise our portfolio longevity in Nokia business models a competitive than market Technologies advantage Our enablers 1 2 3 4 Talent Long-term re
Slide 5: Strong net sales growth, outlook unchanged
Strong net sales growth, outlook unchanged Net sales growth (constant currency) 15% Q1 23 net sales +9% 10% (year-on-year 5% constant currency) 0% -5% -10% Q1 23 gross margin Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322 Q4 22 Q1 23 37.7% (comparable) -300 bps year-on-year 4Q rolling comparable gross mar
Slide 6: Network Infrastructure – growth in Optical and IP
Net sales +13% Network Infrastructure – Op. margin 15.3% growth in Optical and IP NI growth y-o-y by business line • Continued strong growth 30% • Optical Networks +45% -20% • IP Networks +13% IP Networks Optical Networks Fixed Networks Submarine Networks • Slight decline in Fixed Networks Q1 22 Q2
Slide 7: Unleashing the next frontier in optical networks
Unleashing the next frontier in optical networks Nokia’s PSE-6s super-coherent photonic service engine • 1.2Tb/s per wavelength with pairs in a single linecard supporting an unmatched 2.4Tb/s • New benchmark in performance to enable reach of over 2,000km for 800G wavelengths • Sustainable network ev
Slide 8: Mobile Networks – Strong 5G ramp in India
Net sales +13% Mobile Networks – Op. margin 5.3% Strong 5G ramp in India Mobile Networks net sales growth y-o-y 20% • Strong growth in India and Europe 10% • North America declined as 0% spending normalizes combined with -10% customer inventory depletion -20% Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322
Slide 9: Mobile Networks - Habrok
Mobile Networks - Habrok New generation of AirScale radios driving future-ready performance • 30% lower power consumption lower total cost of ownership • High performance radios increased capacity and coverage • High radio frequency bandwidth spectrum flexibility • 30% lighter* rapid deployment AirS
Slide 10: CNS growth driven by Core Networks and Enterprise
Net sales +3% CNS growth driven by Core Op. margin -2.6% Networks and Enterprise CNS net sales growth y-o-y 15% • Growth in 5G Core and 10% Enterprise Solutions 5% 0% • Margin decline due to product -5% mix towards hardware -10% Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322 Q4 22 Q1 23 • Continue to re-b
Slide 11: Nokia Technologies – path to returning to EUR 1.4-1.5bn run rate
Nokia Technologies – path to returning to EUR 1.4-1.5bn run rate €1.4-1.5bn €1.4-1.5bn €1.0bn Q2 2021 Legacy Smartphone Smartphone New Brand Current Smartphone New Long term run-rate 10-year market share expired growth licensing run-rate agreement growth expectation agreement changes agreements area
Slide 12: Strong acceleration in Enterprise net sales
Strong acceleration in Enterprise net sales Net sales to Enterprise customers 10% 2500 • Q1 net sales grew 62% 8% 2000 6% 1500 • Webscale more than doubled 4% 1000 2% 500 year-on-year 0% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 • >595 PW customers 2021 2021 2021 2021 2022 2022 2022 2022 2023 Net sales (rolling
Slide 13: India and Europe strength more than offset North America
India and Europe strength more than offset North America Year-on-year at constant currency +10% reported growth +9% constant currency growth +5% +7% +1% +325% -7% -12% €5.9bn +11% -12% Europe ex. Tech +13% Nokia Technologies -22% €5.3bn Q1 2022 India Europe Middle East Latin Asia Pacific Greater Nor
Slide 14: Regional and product mix offset leverage from growth
Regional and product mix offset leverage from growth Group comparable operating margin • Operating leverage partly offsetting regional and product mix impact • Venture funds impacted other operating income / expense • Minimal impact from FX 10.9% 8.2% Q1 2022 Regional and Operating Nokia Other incom
Slide 15: Network Infrastructure expansion offset by other BGs
Network Infrastructure expansion offset by other BGs Group comparable operating profit • Network Infrastructure showed strong expansion from mix • Cloud and Network Services decline related to product mix €583m Venture fund • Mobile Networks impacted by impact regional shift €479m • Lower net sales
Slide 16: Free cash flow impacted by working capital investment
Free cash flow impacted by working capital investment Change in net cash € billion • Free cash flow negative +0.7 EUR 0.1bn -0.1 • Net working capital mainly 4.8 -0.4 driven by accounts payable -0.1 • Returned EUR 190 million to -0.2 4.3 shareholders through -0.2 -0.2 dividend and share buyback Q4 2
Slide 17: Market growth in 2023 across BGs, led by 5G deployments in India
Market growth in 2023 across BGs, led by 5G deployments in India YoY YoY prior est. Estimated, in EUR1 2023 (at const. ccy) (at const. ccy) Network Infrastructure2 47bn +4% +4% Mobile Networks3 51bn +4% +5% Cloud and Network Services 28bn +3% +4% 1 Total addressable market forecasts assume the curre
Slide 18: 2023 outlook
2023 outlook Full year 2023 Net sales1 €24.6 billion to €26.2 billion (2 to 8% growth in constant currency) Comparable operating margin2 11.5 to 14.0% Free cash flow2 20 to 50% conversion from comparable operating profit 1 Assuming the rate 1 EUR = 1.09 USD as of 31 March 2023 continues for the rema
Slide 19: Refined capital management policy
Refined capital management policy • Ensure investments in R&D, fund working capital and maintain flexibility for bolt-on M&A Target net cash • Investment grade with two credit rating agencies 10 -15% • Not imminently taking action in 2023 but expect significant improvement in cash generation in 2024
Slide 20: Q&A
Q&A 20 © 2023 Nokia Public
Slide 21: Slide 21