Slide 1: Q4 2023 Financial results
Q4 2023 Financial results 25 January 2024
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 Update on operating model evolution 5 Financial highlights 6 Business Group performance 11 Financial performance bridges 13 Cash flow performance Marco Wirén CFO 15 Shareholder distributions 16 2024 Planning assumptions and Outlook 3 © 2024 Nokia Public
Slide 4: Executing quickly on our operating model evolution
Executing quickly on our operating model evolution 2024 started with structural changes implemented Nokia Nokia Sales model transition 2021 – 2023 2024 onwards ✓ Sales embedded into BGs Customers Customers ✓ Customer Account Executives appointed ✓ Country Managers role reinforced Business Customer E
Slide 5: Improving order intake and cash flow at the end of a challenging year
Improving order intake and cash flow at the end of a challenging year Net Sales growth (constant currency) Q4 23 net sales FY 23 net sales 15% -21% -8% 5% -5% -15% -25% Q4 23 operating margin FY 23 operating margin Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 14.8% -70bps y-o-y 10.7% -180bp
Slide 6: Network Infrastructure
Network Infrastructure Network Infrastructure y-o-y growth by business line 45% 30% Tough y-o-y compare and macro 15% impact net sales 0% Improvement in gross margin -15% across several businesses -30% Strong Q4 orders give confidence in IP Networks Optical Networks Fixed Networks Submarine Networks
Slide 7: Mobile Networks
Mobile Networks 20% Mobile Networks net sales growth y-o-y Net sales impacted by India 10% normalization and continued weakness in North America 0% Gross margin benefit from regional -10% and product mix -20% Cost saving plans in place to Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 counter
Slide 8: Cloud and Network Services
Cloud and Network 6% Cloud and Network Services net sales growth y -o-y Services 4% 2% Net Sales decline of 5% 0% Strong Q4 profitability as -2% expected -4% Recent divestment of Device -6% Management and Services Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Management Platforms CNS 4Q roll
Slide 9: Deal renewals secure Nokia Technologies outlook
Deal renewals secure Nokia Technologies outlook Patent business net sales and key deals Apple Lenovo Honor Xiaomi Mercedes Samsung Proven assets Vivo Huawei Apple Strong IP assets with their value proven through the legal system LG Blackberry Samsung Huawei Expert team Major Strong patent creation,
Slide 10: Continued momentum in Enterprise, now >10% of net sales
Continued momentum in Enterprise, now >10% of net sales Net sales to Enterprise customers (EUR bn) Approximate breakdown of 2023 Enterprise net sales Other 12% Webscale 2.4 2.0 +12% CAGR 10% 1.6 8% 1.2 6% 0.8 4% Private 0.4 2% wireless NI Enterprise 0.0 0% verticals 2017 2018 2019 2020 2021 2022 202
Slide 11: Broad-based declines amidst macroeconomic uncertainty
Broad-based declines amidst macroeconomic uncertainty Year-on-year at constant currency -23% reported -21% constant currency €7.4bn +13% 0% -14% -10% -30% -23% €5.7bn -10% Europe ex. Tech -23% Nokia Technologies -63% Q4 2022 Middle East Greater Latin Asia Pacific India North Europe Submarine FX impa
Slide 12: Q4 operating profit by Business Group
Q4 operating profit by Business Group • Lower net sales from Nokia Group comparable operating profit Technologies drove majority of decline EUR 1 154m • Mobile Networks benefited from favorable mix EUR 846m • Network Infrastructure reflected top-line decline 15.5% 14.8% • Cloud and Network Services
Slide 13: Strong cash performance benefitting from working capital inflows
Strong cash performance benefitting from working capital inflows Change in Net Cash (EUR billion) • Net working capital 6 improvement driven by +1.0 partial prepayment from 5 licensing agreement and inventory decline -0.2 5 -0.1 4.3 -0.1 -0.1 +1.1 • Returned EUR 0.2bn to 4 -0.2 shareholders through
Slide 14: 2024 free cash flow conversion to progress towards long term targets
2024 free cash flow conversion to progress towards long term targets 2024 FCF conversion Annual FCF Conversion 85% 85% 60% 65% 60% 55% 34% 27% 30% 30% 2024 D&A vs capex Net working Interest Taxes Restructuring Nokia 2024 FCF Comparable capital / Other Technologies Conversion 2020 2021 2022 2023 2024
Slide 15: Strong cash position enables increased shareholder returns
Strong cash position enables increased shareholder returns 2023 Dividend proposal Share buyback program EUR 0.13 EUR 600m per share Over 2 years 15 © 2024 Nokia Public
Slide 16: Planning Assumptions by Business Group
Planning Assumptions by Business Group 2024 2026 Net Sales growth Operating margin Operating margin (constant currency) Network Infrastructure +2 to +8% 11.5 to 14.5% 12.0 to 15.0% Mobile Networks -15 to -10% 1.0 to 4.0% 6.0 to 9.0% Cloud and Network -2 to +3% 6.0 to 9.0% 7.0 to 10.0% Services Opera
Slide 17: 2024 Outlook
2024 Outlook Challenging environment in first half, but green shoots on horizon Full year 2024 Comparable operating profit EUR 2.3 billion to EUR 2.9 billion Free cash flow 30 to 60% conversion from comparable operating profit 1Please refer to the Performance measure section of our Report for Q4 and
Slide 18: Key Takeaways
Key Takeaways 2023 showed resilient First half of 2024 to profitability and solid Operational model be challenging with cash generation progressing and cost green shoots in amidst challenging actions underway second half market 18 © 2024 Nokia Public
Slide 19: Q&A
Q&A 19 © 2024 Nokia Public
Slide 20: oN
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