Slide 1: Q3 2021 Investor presentation
Q3 2021 Investor presentation 28 October 2021 1 © 2021 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. Strategic progress by Business Group 10. Enterprise 11. Supply chain Marco Wirén 13. Addressable market evolution CFO 14. Financial performance bridges 16. Business Group performance 18. Cash flow performance 3 © 2021 Nokia Public
Slide 4: New operating model continues to deliver strong financials
New operating model continues to deliver strong financials Q3 21 net sales • Supply chain constrained our growth +2% • Strong growth in North America (+9% constant currency) despite headwinds (year-over-year at • Comparable gross margin expanded constant currency) +340bps due to efficiency and impro
Slide 5: Nokia's 5th generation FP5 IP routing silicon
Nokia’s 5th generation FP5 IP routing silicon The industry’s most advanced network processor for Service Provider IP networks Network ANYsec line-rate encryption Security Flexible Fully programmable to Capability support future requirements Nokia FP5 Power 75% better power efficiency Efficiency Spee
Slide 6: Fixed Networks opportunity remains significant
Fixed Networks opportunity remains significant Despite growth already seen, fiber penetration opportunities remain substantial Fixed Networks products sales ex. services Opportunities for fiber coverage to grow in Europe 0 20 40 Millions Germany UK Italy Poland France Netherlands Belgium Greece Aust
Slide 7: Fixed Networks differentiation: in-house ASIC, GPON/XGS-PON, 25G PON
In-house ASIC 25G PON FWA / mmWave Lead GPON/XGS-PON differentiation innovation • #1 in GPON and XGS-PON • 18 months+ ahead of • #1 in 5G FWA • PON market shifting to XGS competition • Innovating to make • Quillion ASIC in 150 • 1st live network (Proximus) mmWave viable customers • 20+ trials • 25+
Slide 8: Mobile Networks – strong progress on strategy
Mobile Networks – strong progress on strategy Despite headwinds, cost competitiveness improving and ramping R&D investment 12-month trailing % gross margin 12-month trailing R&D expense (€m) 40% Increasing R&D investments 35% 30% 25% Q1'20 Q2'20 Q3'20 Q4'20 Q1'21 Q2'21 Q3'21 Q1'20 Q2'20 Q3'20 Q4'20
Slide 9: Emerging areas in Cloud and Network Services growing strongly
Emerging areas in Cloud and Network Services growing strongly 5G Core customers • +12% constant currency growth >150 • Driven by our emerging focus areas • Strong progress in refocusing R&D 5G CORE ANALYTICS PRIVATE DIGITAL MONETIZATION MANAGED Rebalance to & AI WIRELESS OPERATIONS SECURITY Target G
Slide 10: Enterprise: Strong private wireless growth
Enterprise: Strong private wireless growth Q3 21 net sales Jan-Sept net sales • Double-digit growth in private wireless -4% +3% • 2021 weakness from NI product areas • Engagements continue to be strong (year-over-year at constant currency) • 101 new enterprise customers in Q3 Private Wireless custom
Slide 11: Supply chain management maintains intense focus
Supply chain management maintains intense focus Lead times continue to increase Global Semiconductor Demand ($bn) • Supply chain increasingly challenging… 650 38% • …yet we remain on track to meet targets 600 550 • Monitoring situation actively and intense communication with suppliers/customers 500
Slide 12: CFO remarks
CFO remarks Marco Wirén 13. Addressable market evolution CFO 14. Financial performance bridges 16. Business Group performance 18. Cash flow performance 12 © 2021 Nokia Public
Slide 13: Outlook for 2021 addressable market stable
Outlook for 2021 addressable market stable Supply constraining strong end market demand 2021 YoY YoY Estimated, in € (as of Q3 2021) (at const. ccy) (prior estimate) Mobile Networks1 46bn +5% +6% Network Infrastructure2 43bn +5% +4% Cloud and Network Services 26bn +4% +4% Total addressable market 11
Slide 14: Notable strength in North America and Asia Pacific
Notable strength in North America and Asia Pacific Year-over-year at constant currency +2% constant currency growth +2% reported growth +18% +7% -7% -8% -8% +9% -5% €5.4bn €5.3bn Q3 2020 North Asia Pacific Latin India Greater Middle East Europe FX impact Q3 2021 America America China & Africa 14 © 2
Slide 15: Regional mix a strong tailwind in Q3
Regional mix a strong tailwind in Q3 Group comparable operating margin • Regional mix strongly positive • Investments in R&D and 11.7% higher incentive accruals • Venture fund investments provide further tailwind in Q3 9.2% of approx. €40m • Loss provisions in Q3’20 also drive y-o-y comparison Q3 20
Slide 16: MN driving cost competitiveness and NI still growing strongly
MN driving cost competitiveness and NI still growing strongly Figures shown based on comparable reporting with revenues in EUR million Mobile • MN revenue constrained by headwinds Networks Q3 2021 Q3 2020 YoY at CC we faced in North America Net Sales 2,315 2,448 -5% • Continued progress on our cost
Slide 17: Strong growth in CNS and Tech
Strong growth in CNS and Tech Figures shown based on comparable reporting with revenues in EUR million Cloud and Network • CNS delivering strong growth in the Services Q3 2021 Q3 2020 YoY at CC areas we are driving our investments Net Sales 748 663 12% into, particularly 5G Core Gross margin 37.6% 1
Slide 18: Very strong FCF conversion again in Q3 2021
Very strong FCF conversion again in Q3 2021 Generated positive free cash flow for the sixth quarter in a row € billion Operating Investing Financing +0.8 +0.1 +0.1 4.3 -0.1 -0.1 -0.1 -0.1 3.7 Q2 2021 Adjusted Restructuring NWC Income taxes Capital Other Lease Other Q3 2021 profit and (excluding and
Slide 19: Now delivering consistent FCF generation
Now delivering consistent FCF generation 12-month trailing FCF (€m) • Consistent track record of FCF 3 000 generation 2 500 • Headwinds to FCF in restructuring 2 000 and reducing sale of receivables 1 500 balance 1 000 500 • Very strong liquidity position 0 -500 -1 000 -1 500 Q1'19 Q3'19 Q1'20 Q3'20
Slide 20: Full Year 2021 Outlook reiterated
Full Year 2021 Outlook reiterated Full year 2021 Full year 2023 Net sales €21.7 billion to €22.7 billion Grow faster than the market Comparable operating margin 10 to 12% 10 to 13% Free cash flow Clearly positive Clearly positive Comparable ROIC 17 to 21% 15 to 20% Please see our Q3 2021 earnings re
Slide 21: Q&A
Q&A 21 © 2021 Nokia Public
Slide 22: NOKIA
NOKIA