Slide 1: Q3 2023 Financial results
Q3 2023 Financial results 19 October 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 President and CEO 4 Strategy announcement 6 Financial highlights 7 Business Group performance 13 Financial performance bridges 15 Cash flow performance Marco Wirén CFO 16 2023 TAM and outlook 17 2023 Outlook 3 © 2023 Nokia Public
Slide 4: Accelerate strategy execution through operational autonomy
Accelerate strategy execution through operational autonomy Streamlining operating model to create dedicated sales teams Complex matrix organization Clearly accountable business Empowering BGs with dedicated sales group organization and bringing customers closer to BG Customers Customers Customers Bu
Slide 5: Nokia will reduce its cost base to secure long-term profitable growth
Nokia will reduce its cost base to secure long-term profitable growth in the face of a more challenging market environment EUR 800- 1,200m EUR 400m 72-77k gross cost savings In-year savings in 2024 headcount by end by 2026 of 2026 Approx. 70% in Executing quickly on the cost Compared to current Oper
Slide 6: Outlook maintained despite weak operator spending weighing on Q3
Outlook maintained despite weak operator spending weighing on Q3 net sales growth (constant currency) Q3 23 net sales (EUR) 15% 5.0bn 10% -15% year-on-year in 5% constant currency 0% -5% -10% Q3 23 gross margin -15% 39.2% -20% -120 bps Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 year-on-ye
Slide 7: Network Infrastructure
Network Infrastructure 50% NI growth y-o-y by business line 25% • Net sales impacted by 0% macroeconomic pressures and inventory digestion -25% IP Networks Optical Networks Fixed Networks Submarine Networks • IP Networks and Fixed Q3 22 Q422 Q1 23 Q2 23 Q3 23 Networks particularly impacted NI 4Q rol
Slide 8: Mobile Networks
Mobile Networks Mobile Networks net sales growth y-o-y 20% 10% • Net sales impacted by North America continued inventory digestion 0% • Strong India growth y-o-y but -10% volumes moderated q-o-q -20% • Gross margin negatively impacted by -30% regional mix while showing Q3 21 Q4 21 Q1 22 Q2 22 Q3 22
Slide 9: Cloud and Network Services
Cloud and Network 15% CNS net sales growth y -o-y Services 10% • Overall stable performance 5% • Enterprise Solutions continues 0% to grow -5% • Operating margin expanded Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 290bps y-o-y • Launched organically developed 44% CNS 4Q rolling gross marg
Slide 10: Opportunity for value capture beyond connectivity
Opportunity for value capture beyond connectivity Metaverse Web 3.0 Industry 4.0 FWA Developers 6 S Enterprises Consumers a a Marketplace 2 3 Web 2.0 S 1 4 Hyperscalers Network as Code CSPs 5 Edge clouds 1 4G/5G Core 2 Autonomous operations 3 Security 4 Analytics & AI 5 Private wireless & industrial
Slide 11: Nokia Technologies
Nokia Technologies Nokia Technologies run-rate evolution • Q3 run rate EUR 1.0bn, stable EUR 1.4-1.5bn EUR 1.4-1.5bn compared to prior quarter • Continued progress in IoT and EUR 1.0bn multimedia in Q3 • Confident in ability to return to EUR 1.4-1.5bn run rate • Now have 6 000 patents declared essen
Slide 12: Enterprise momentum continues
Enterprise momentum continues Net sales to Enterprise customers 12% 2 500 10% 2 000 • Net sales increased 5% in Q3 8% 1 500 6% 1 000 • Reached ~10% of group net 4% 500 2% sales on a 4Q rolling basis 0% 0 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 • Added 85 Enterprise 20 21 21 21 21 22 22 22 22 23 23 23 Ne
Slide 13: Growth in India not enough to offset declines elsewhere
Growth in India not enough to offset declines elsewhere Year-on-year at constant currency -20% reported -15% constant currency +121% +8% -17% €6.2bn -13% -24% Europe ex. Tech -11% €5.0bn -40% -5% Nokia Technologies -14% Q3 2022 India Middle East Latin Asia Pacific Greater Europe North Submarine FX i
Slide 14: Operating profit by Business Group
Operating profit by Business Group Group comparable operating profit • Mobile Networks continued to be impacted by regional EUR 658m shift • Network Infrastructure EUR 424m somewhat resilient despite top-line decline 10.5% 8.5% • Cloud and Network Services progress continues • Venture fund impact fl
Slide 15: Free cash flow impacted by working capital
Free cash flow impacted by working capital Change in Net Cash (EUR billion) • Free cash flow negative 5 EUR 0.4bn +0.6 -0.1 • Net working capital 4 continued to negatively 3.7 impact cash 4 -0.6 • Returned EUR 0.3bn to -0.2 -0.1 shareholders through 3 3.0 dividend and share buyback -0.3 3 2 Q2 2023
Slide 16: Macro uncertainty continues to weigh on 2023 TAM
Macro uncertainty continues to weigh on 2023 TAM YoY YoY prior est. Estimated, in EUR1 2023 (at const. ccy) (at const. ccy) Network Infrastructure2 43bn -1% +1% Mobile Networks3 44bn -9% -2% Cloud and Network Services 27bn +2% +3% 1Total addressable market forecasts assume the currency rate of 1 EUR
Slide 17: 2023 outlook maintained
2023 outlook maintained Assuming closure of outstanding deals in Nokia Technologies Full year 2023 EUR 23.2 billion to EUR 24.6 billion Net sales1 (-4 to +2% growth in constant currency) Comparable operating margin2 11.5 to 13.0% Free cash flow2 20 to 50% conversion from comparable operating profit
Slide 18: Q&A
Q&A 18 © 2023 Nokia Public
Slide 19: oN
oN