Slide 1: Investor presentation 3 February 2022
Investor presentation 3 February 2022 1 © 2022 Nokia Public
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 10. Reset complete, now onto accelerate 12. Long-term targets Marco Wirén 14. Financial performance bridges CFO 16. Cash flow performance 19. 2022 outlook 3 © 2022 Nokia Public
Slide 4: 2021 was a transformational year for Nokia
2021 was a transformational year for Nokia Q4 21 net sales (EUR) Q4 21 operating margin Revenue and comparable operating margin trend 6.4bn 14.2% Net Sales OM 15% 14% -5% (year-over-year (comparable) -190bps 10% 13% at constant currency) year-over-year 5% 12% FY 21 net sales (EUR) FY 21 operating ma
Slide 5: Mobile Networks delivered on its reset in 2021
Mobile Networks delivered on its reset in 2021 Market share loss as expected but compensated across regions, competitive gap closed FY21 net sales MN 2021 Reset Rising ReefShark shipments 9.7bn 76 68 Competitiveness Cost base 54 52 44 Stabilise share ReefShark ramp up EUR Q1 Q2 Q3 Q4 Dec % y
Slide 6: Outperforming the market in Network Infrastructure
Outperforming the market in Network Infrastructure Continuing to gain share across businesses FY21 IP Networks FY21 Optical Networks FY21 Fixed Networks FY21 Submarine Networks +5% +2% +35% +33% % y-o-y constant currency % y-o-y constant currency % y-o-y constant currency % y-o-y constant currency S
Slide 7: Cloud and Network Services portfolio re-balancing is taking shape
Cloud and Network Services portfolio re-balancing is taking shape Net sales % split by investment area Rebalance to Target Growth YoY growth 5G CORE ANALYTICS PRIVATE & AI WIRELESS Emerging 38% +13% 43% 62% DIGITAL MONETIZATION SECURITY Existing -8% 57% OPERATIONS € 2020 2021 Disrupting and Technolo
Slide 8: Nokia Technologies delivered another strong year
Nokia Technologies delivered another strong year FY21 net sales FY21 net sales FY21 operating profit 1.5bn +8% 1.2bn EUR % y-o-y constant currency EUR Strong execution in 2021 including Continued industry leadership with +4,000 new engagements in automotive and consumer electronics as we grow into n
Slide 9: Enterprise: Boosting investment in campus wireless
Enterprise: Boosting investment in campus wireless Private Wireless customers • Private wireless engagements continue to 420 380 be strong 340 260 • Increasing investment in campus wireless 180 to extend our market leadership Q2 2020 Q4 2020 Q2 2021 Q4 2021 • Strong Q4 order book lays foundation for
Slide 10: We have completed our Reset phase in 2021
We have completed our Reset phase in 2021 2021 focus Strategy Reinvested in R&D to deliver product leadership in all areas Product Mobile Networks secured full portfolio competitiveness Profitability Improved product cost and streamlined SG&A to fund R&D Leadership New operating model and Gr
Slide 11: Now we move onto Accelerate and Scale
Now we move onto 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
Slide 12: Introducing new long-term targets
Introducing new long-term targets We aim to deliver continuous improvement each year Long term targets (3-5 years) Revenue growth Grow faster than the market Comparable ≥14% operating margin 55-85% conversion from Free cash flow comparable operating profit 12 © 2022 Nokia Public
Slide 13: CFO remarks
CFO remarks Marco Wirén 14. Financial performance bridges CFO 16. Cash flow performance 19. 2022 outlook 13 © 2022 Nokia Public
Slide 14: Strength in Europe while headwinds impacted North America
Strength in Europe while headwinds impacted North America Year-over-year at constant currency for regional growth rate -5% constant currency growth -2% reported growth +3% +3% -19% +7% -18% €6.6bn -13% -12% €6.4bn Q4 2020 Europe Middle East Latin India Greater Asia Pacific North FX impact Q4 2021 &
Slide 15: Operating profit bridge shows underlying improvements
Operating profit bridge shows underlying improvements Both MN and NI performed much better than expected 12.5% Expected market share loss and price erosion played out as expected… 10% 9.5% …offset by strong underlying market demand, product cost improvements and clear accountability 7% FY 2020 MN NI
Slide 16: Strong full year net cash performance capped by robust Q4
Strong full year net cash performance capped by robust Q4 € billion -0.1 -0.3 4.6 -0.2 4.3 -0.2 +0.1 -0.1 +1.0 Q3 2021 Adjusted Restructuring NWC Income taxes Capital Other Lease Other Q4 2021 profit and (excluding and net Expenditures investing payments associated restructuring) interest activities
Slide 17: Strong cash position provides flexibility for investments
Strong cash position provides flexibility for investments Uses of cash Net working capital Working Capital Days • Continued R&D investments 100 • Investments in business 90 model incubation 80 (e.g. NGP Capital Fund V) 70 • Build smarter inventory 60 buffers as components 50 Q1'20 Q2'20 Q3'20 Q4'20
Slide 18: Strong liquidity position allows shareholder distributions
Strong liquidity position allows shareholder distributions 2021 Dividend proposal Share buyback EUR 0.08 per share EUR 600mnOver two years 18 © 2022 Nokia Public
Slide 19: 2022 outlook
2022 outlook Full year 2022 Net sales1 €22.6 billion to €23.8 billion Comparable operating margin 11 to 13.5% Free cash flow 25–55% conversion from comparable operating profit 1Assuming the rate 1 EUR = 1.13 USD as of 31 Dec 2021 continues throughout 2022. Please see our Report for Q4 and full year
Slide 20: Market growth in 2022 despite supply constrained environment
Market growth in 2022 despite supply constrained environment YoY Estimated, in € 2021 2022 (at const. ccy) Mobile Networks1 46bn 49bn +3% Network Infrastructure2 42bn 45bn +3% Cloud and Network Services 26bn 28bn +5% Total addressable market1,2 114bn 121bn +3% 1Excluding China 2Excluding Submarine N
Slide 21: 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 21 © 2022 Nokia Public
Slide 22: Expecting working capital increase in 2022
Expecting working capital increase in 2022 But long-term we expect high FCF conversion 100% 85% 55% 55% 25% Comparable D&A vs capex Net working Nokia Interest Taxes Restructuring 2022 FCF Long-term Operating capital Technologies conversion FCF Profit conversion 22 © 2022 Nokia Public
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23 © 2022 Nokia Public
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24 © 2022 Nokia Public
Slide 25: 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 26: Introducing new long-term targets for the business
Introducing new 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 contin
Slide 27: NOKIA
NOKIA