Nokia reports Q3 2010 net sales of EUR 10.3 billion, with non-IFRS EPS of EUR 0.14
- Mobile device ASP up EUR 4 from Q2 2010
- Mobile device volumes and margins constrained by component availability
Nokia Corporation
Interim report
October 21, 2010 at 13.00 (CET +1)
The complete press release with tables is available at:
http://www.nokia.com/results/Nokia_results2010Q3e.pdf+------------------------+------------------------
| | Non-IFRS third quarter 2010 results1,2 |
+------------------------+-------+-------+--------
|(EUR million) |Q3/2010|Q3/2009|YoY Change|Q2/2010|QoQ Change|
+------------------------+-------+-------+--------
|Net sales | 10 271| 9 810| 5%| 10 005| 3%|
+------------------------+-------+-------+--------
| Devices & Services | 7 174| 6 915| 4%| 6 800| 6%|
+------------------------+-------+-------+--------
| NAVTEQ | 252| 166| 52%| 253| 0%|
+------------------------+-------+-------+--------
| Nokia Siemens Networks| 2 943| 2 760| 7%| 3 039| -3%|
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|Operating profit | 634| 741| -14%| 660| -4%|
+------------------------+-------+-------+--------
| Devices & Services | 750| 787| -5%| 647| 16%|
+------------------------+-------+-------+--------
| NAVTEQ | 74| 43| 72%| 50| 48%|
+------------------------+-------+-------+--------
| Nokia Siemens Networks| -116| -53| | 51| |
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|Operating margin | 6.2%| 7.6%| | 6.6%| |
+------------------------+-------+-------+--------
| Devices & Services | 10.5%| 11.4%| | 9.5%| |
+------------------------+-------+-------+--------
| NAVTEQ | 29.4%| 25.9%| | 19.8%| |
+------------------------+-------+-------+--------
| Nokia Siemens Networks| -3.9%| -1.9%| | 1.7%| |
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|EPS, EUR Diluted | 0.14| 0.17| -18%| 0.11| 27%|
+------------------------+-------+-------+--------
| | Reported third quarter 2010 results2 |
+------------------------+-------+-------+--------
|(EUR million) |Q3/2010|Q3/2009|YoY Change|Q2/2010|QoQ Change|
+------------------------+-------+-------+--------
|Net sales | 10 270| 9 810| 5%| 10 003| 3%|
+------------------------+-------+-------+--------
| Devices & Services | 7 173| 6 915| 4%| 6 799| 6%|
+------------------------+-------+-------+--------
| NAVTEQ | 252| 166| 52%| 252| 0%|
+------------------------+-------+-------+--------
| Nokia Siemens Networks| 2 943| 2 760| 7%| 3 039| -3%|
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|Operating profit | 403| -426| | 295| 37%|
+------------------------+-------+-------+--------
| Devices & Services | 807| 785| 3%| 643| 26%|
+------------------------+-------+-------+--------
| NAVTEQ | -48| -68| | -81| |
+------------------------+-------+-------+--------
| Nokia Siemens Networks| -282| -1 107| | -179| |
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|Operating margin | 3.9%| -4.3%| | 2.9%| |
+------------------------+-------+-------+--------
| Devices & Services | 11.3%| 11.4%| | 9.5%| |
+------------------------+-------+-------+--------
| NAVTEQ | -19.0%| -41.0%| | -32.1%| |
+------------------------+-------+-------+--------
| Nokia Siemens Networks| -9.6%| -40.1%| | -5.9%| |
+------------------------+-------+-------+--------
| | | | | | |
+------------------------+-------+-------+--------
|EPS, EUR Diluted | 0.14| -0.15| | 0.06| 133%|
+------------------------+-------+-------+--------
Note 1 relating to non-IFRS results: Non-IFRS results exclude special items for
all periods. In addition, non-IFRS results exclude intangible asset
amortization, other purchase price accounting related items and inventory value
adjustments arising from i) the formation of Nokia Siemens Networks and ii) all
business acquisitions completed after June 30, 2008. More specific information
about the exclusions from the non-IFRS results may be found in this press
release on pages 3, 15-17 and 19.
Nokia believes that these non-IFRS financial measures provide meaningful
supplemental information to both management and investors regarding Nokia's
performance by excluding the above-described items that may not be indicative of
Nokia's business operating results. These non-IFRS financial measures should not
be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but
should be used in conjunction with the most directly comparable IFRS measure(s)
in the reported results. A reconciliation of the non-IFRS results to our
reported results for Q3 2010 and Q3 2009 can be found in the tables on pages
12-13 and 15-19 of this press release. A reconciliation of our Q2 2010 non-IFRS
results can be found on pages 11-12 and 14-18 of our Q2 2010 Interim Report of
July 22, 2010.
Note 2: Nokia reported net sales were EUR 29 795 million and earnings per share
(diluted) were EUR 0.30 for the period from January 1 to September 30, 2010.
Further information about the results for the period from January 1 to September
30, 2010 can be found in this press release on pages 11, 13 and 20-23.
THIRD QUARTER 2010 HIGHLIGHTS
- Nokia net sales of EUR 10.3 billion, up 5% year-on-year and 3% sequentially
(down 2% and up 1% at constant currency).
- Devices & Services net sales of EUR 7.2 billion, up 4% year-on-year and 6%
sequentially (down 5% and up 2% at constant currency).
- Services net sales of EUR 159 million, up 7% year-on-year and 1% sequentially;
billings of EUR 325 million, up 89% year-on-year and 10% sequentially.
- Nokia total mobile device volumes of 110.4 million units, up 2% year-on-year
and down 1% sequentially.
- Nokia converged mobile device (smartphone and mobile computer) volumes of
26.5 million units, up 61% year-on-year and 10% sequentially.
- Nokia mobile device ASP (including services revenue) of EUR 65, up from EUR
64 in Q3 2009 and EUR 61 in Q2 2010.
- Devices & Services gross margin of 29.0%, down from 30.9% in Q3 2009 and
30.2% in Q2 2010.
- Devices & Services non-IFRS operating margin of 10.5%, down from 11.4% in Q3
2009 and up from 9.5% in Q2 2010.
- NAVTEQ non-IFRS net sales of EUR 252 million, up 52% year-on-year and flat
sequentially (up 47% and down 2% at constant currency).
- Nokia Siemens Networks net sales of EUR 2.9 billion, up 7% year-on-year and
down 3% sequentially (flat and down 4% at constant currency).
- Nokia Siemens Networks non-IFRS operating margin of -3.9%, down from -1.9% in
Q3 2009 and 1.7% in Q2 2010.
- Nokia operating cash flow of EUR 439 million, and cash generated from
operations EUR 1 206 million.
- Total cash and other liquid assets of EUR 10.2 billion and net cash and other
liquid assets of EUR 4.4 billion, at the end of Q3 2010.
- Nokia taxes continued to be unfavorably impacted by Nokia Siemens Networks
taxes as no tax benefits are recognized for certain Nokia Siemens Networks
deferred tax items. In Q3 2010, this was more than offset by lower Devices &
Services taxes due to dividend withholding tax legislation changes in certain
jurisdictions with a one-quarter impact. If Nokia's estimated long-term tax rate
of 26% had been applied, non-IFRS Nokia EPS would have been approximately 1.5
Euro cents lower.
STEPHEN ELOP, NOKIA CEO:
"In the five weeks since joining Nokia, I have found a company with many great
strengths and a history of achievement that are second to none in the industry.
And yet our company faces a remarkably disruptive time in the industry, with
recent results demonstrating that we must reassess our role in and our approach
to this industry.
Some of our most recent product launches illustrate that we have the talent, the
capacity to innovate, and the resources necessary to lead through this period of
disruption. We will make both the strategic and operational improvements
necessary to ensure that we continue to delight our customers and deliver
superior financial results to our shareholders."
INDUSTRY AND NOKIA OUTLOOK
- Nokia expects Devices & Services net sales to be between EUR 8.2 billion and
EUR 8.7 billion in the fourth quarter 2010.
- Nokia expects its non-IFRS operating margin in Devices & Services to be
between 10% and 12% in the fourth quarter 2010.
- Nokia and Nokia Siemens Networks expect Nokia Siemens Networks' net sales to
be between EUR 3.4 billion and EUR 3.8 billion in the fourth quarter 2010.
- Nokia and Nokia Siemens Networks expect the non-IFRS operating margin in Nokia
Siemens Networks to be between 2% and 5% in the fourth quarter 2010.
- Nokia now expects industry mobile device volumes to be up more than 10% in
2010, compared to 2009 (based on its revised definition of the industry mobile
device market applicable beginning in 2010). Nokia previously expected industry
mobile device volumes to be up approximately 10% in 2010, compared to 2009.
- Nokia now expects its mobile device volume market share to be slightly down in
2010, compared to 2009. Nokia earlier targeted its mobile device volume market
share to be flat in 2010, compared to 2009.
- Nokia continues to expect its mobile device value market share to be slightly
lower in 2010, compared to 2009.
- Nokia continues to expect non-IFRS operating expenses in Devices & Services of
approximately EUR 5.7 billion in 2010.
- Nokia continues to expect Devices & Services non-IFRS operating margin of 10%
to 11% in 2010.
- Nokia and Nokia Siemens Networks continue to expect a flat market in Euro
terms for the mobile and fixed infrastructure and related services market in
2010, compared to 2009.
- Nokia and Nokia Siemens Networks continue to expect Nokia Siemens Networks to
maintain its market share in 2010.
- Nokia and Nokia Siemens Networks continue to target Nokia Siemens Networks to
reduce its non-IFRS annualized operating expenses and production overheads by
EUR 500 million by the end of 2011, compared to the end of 2009.
- Nokia and Nokia Siemens Networks continue to expect Nokia Siemens Networks
non-IFRS operating margin of breakeven to 2% in 2010.
THIRD QUARTER 2010 FINANCIAL HIGHLIGHTS
(Comparisons are given to the third quarter 2009 results, unless otherwise
indicated.)
The non-IFRS results exclusions
Q3 2010 - EUR 231 million (net) consisting of:
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