Slide 1: Q2 2023 Investor Presentation
Q2 2023 Investor Presentation 20 July 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 Financial highlights 5 Business Group performance 11 Financial performance bridges 14 Cash flow performance 16 2023 TAM and outlook Marco Wirén CFO 3 © 2023 Nokia Public
Slide 4: Resilient performance amidst macro uncertainty
Resilient performance amidst macro uncertainty Net Sales growth (constant currency) Q2 23 net sales (EUR) 5.7bn 15% flat year-on-year in 10% constant currency 5% 0% Q2 23 gross margin -5% 38.8% -10% -180 bps Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322 Q4 22 Q1 23 Q2 23 year-on-year (comparable) 4Q rolling co
Slide 5: Network Infrastructure
Network Infrastructure 50% NI growth y-o-y by business line 40% 30% • Short-term challenges impacting 20% top-line 10% 0% • IP Networks -11% reflected -10% weakness with North America -20% IP Networks Optical Networks Fixed Networks Submarine CSPs Networks Q2 22 Q3 22 Q422 Q1 23 Q2 23 • Fixed Networ
Slide 6: Network Infrastructure – Fixed Networks and IP Networks
Network Infrastructure – Fixed Networks and IP Networks Contribution to Fixed Networks y-o-y growth (reported) by IP Networks by customer type product area 100 % 60% 50% 80 % 40% 30% 60 % 20% 10% 40 % 0% -10% 20 % -20% -30% 0% Q1 21 Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 H1 21 H2 21 H
Slide 7: Mobile Networks
Mobile Networks 20% Mobile Networks net sales growth y-o-y • India continued rapid pace of 10% deployment 0% • NAM weakness continued in Q2 -10% • Gross margin declined as a -20% result of regional mix Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322 Q4 22 Q1 23 Q2 23 • Operating margin improved sequentially MN 4
Slide 8: Cloud and Network Services
Cloud and Network CNS net sales growth y-o-y 14% Services 12% 10% 8% • Growth in Core Networks and 6% 4% Enterprise solutions 2% 0% • Operating margin benefited -2% from other operating income -4% Q2 21 Q3 21 Q4 21 Q1 22 Q2 22 Q322 Q4 22 Q1 23 Q2 23 items and lower opex • Red Hat strategic partnersh
Slide 9: Nokia Technologies
Nokia Technologies Nokia Technologies run-rate evolution EUR 1.4-1.5bn EUR 1.4-1.5bn • Long term agreement signed with Apple EUR 1.1bn • Net sales benefited from EUR 1.0bn EUR 80m of catch-up net sales • Excluding catch-up, continue to be at EUR 1.0bn run rate in Q2 • 5 500 patent families declared
Slide 10: Enterprise momentum continues
Enterprise momentum continues Net sales to Enterprise customers 10% 2 500 8% 2 000 • Q2 net sales grew 27% 6% 1 500 4% 1 000 • Continued strong growth 2% 500 with both enterprise and 0% 0 webscale customers Q1 2021 Q2 Q3 Q4 2021 2021 2021 2022 Q1 Q2 Q3 Q4 Q1 2022 2022 2022 2023 2023 Q2 Net sales (ro
Slide 11: India and Europe strength continue to offset North America
India and Europe strength continue to offset North America Year-on-year at constant currency -3% reported Flat at constant currency +11% +3% +355% -3% -15% -12% €5.9bn Europe ex. Tech +11% €5.7bn Nokia Technologies +10% -40% -5% Q2 2022 India Europe Middle East Asia Pacific Latin Greater North Subma
Slide 12: Regional mix weighs on operating margin
Regional mix weighs on operating margin Group comparable operating margin • Cost discipline partly offsetting regional and product mix impact • Venture funds impacted other operating income / expense 12.2% 11.0% • Positive fluctuation in other operating income and expense Q2 2022 Regional and Cost d
Slide 13: Operating profit by Business Group
Operating profit by Business Group Group comparable operating profit • Network Infrastructure resilient despite top-line decline EUR 714m • Cloud and Network Services showed progress EUR 626m • Nokia Technologies benefited from EUR 80m of catch-up net sales Venture Fund • Mobile Networks impacted by
Slide 14: Free cash flow impacted by working capital
Free cash flow impacted by working capital Change in Net Cash (EUR billion) • Free cash flow negative EUR 0.4bn +0.8 • Net working capital mainly -0.1 2022 employee variable pay driven by employee variable pay within liabilities 4.3 • Returned EUR 250m to -0.9 -0.2 +0.1 3.7 shareholders through -0.1
Slide 15: 2023 cash conversion impacted by net working capital change
2023 cash conversion impacted by net working capital change 85% 85% 65% 50% 50% 55% 27% 20% 20% 2023 D&A vs capex Nokia Interest Taxes Restructuring Net working 2023 FCF 2020 FCF 2021 FCF 2022 FCF 2023 FCF Longer term Comparable Technologies / Other capital Conversion Conversion Conversion Conversio
Slide 16: Macro uncertainty impacting market in 2023…
Macro uncertainty impacting market in 2023… YoY YoY prior est. Estimated, in EUR1 2023 (at const. ccy) (at const. ccy) Network Infrastructure2 44bn +1% +4% Mobile Networks3 47bn -2% +4% Cloud and Network Services 27bn +3% +3% 1Total addressable market forecasts assume the currency rate of 1 EUR = 1.
Slide 17: …but the structural need to invest remains
…but the structural need to invest remains Global Total Traffic (ZB/yr) 5G mid-band penetration (ex. FTTH Penetration Status (2022) China) 60 100% North America 54 90% 50 ~20-30% 80% CAGR through Asia Pacific 40 2030 39 70% 60% India 30 30 50% 22 Europe 40% 20 30% ~25% of 5G 10 Middle East & Africa
Slide 18: 2023 outlook
2023 outlook 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 1Assuming the rate 1 EUR = 1.09 USD as of 30 June 2023 continues for th
Slide 19: Q&A
Q&A 19 © 2023 Nokia Public
Slide 20: oN
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