Nokia Oyj · OMXHEX:NOKIA

Nokia Oyj — Q3 2019 Earnings Presentation

34 slides from Nokia Oyj's earnings presentation, Oct 24, 2019

  1. Slide 1: Conference call Q3 2019

    Conference call October 24, 2019 Q3 2019 15:00 / Helsinki 08:00 1 / New York © Nokia 2016

  2. Slide 2: Disclaimer

    Disclaimer It should be noted that Nokia and its business are Factors“, and in our other filings or documents Constant currency reporting provides additional exposed to various risks and uncertainties and certain furnished with the U.S. Securities and Exchange information on change in financial meas

  3. Slide 3: Presented by

    Presented by Rajeev Suri President and CEO Kristian Pullola CFO 3 © 2019 Nokia

  4. Slide 4: Contents

    Contents Summary 5–7 Outlook 8 – 10 Nokia in Q3 2019 11 – 20 Reportable Segments in Q3 2019 21 – 29 Financial Statements 30 – 33 4 © 2019 Nokia

  5. Slide 5: Solid Q3 and expected strong Q4; lowering outlook

    Solid Q3 and expected strong Q4; Lowering full year 2019 and full year 2020 outlook due to margin pressure and additional investment needs • Strong performance in Nokia Software, Nokia Enterprise and IP routing • 5G momentum continues; 48 deals and 15 live networks launched • Dividend payments pause

  6. Slide 6: Rajeev Suri, President and CEO, on Q3 2019 results

    Rajeev Suri, President and CEO, on Q3 2019 results Nokia delivered a solid third quarter, with positive free cash flow; widespread sales growth; solid operating margin; strong performances in Nokia Enterprise, Nokia Software and IP Routing; and good progress towards meeting our 2019 cost reduction g

  7. Slide 7: Dividend

    Dividend Beginning with the distribution for the financial year 2018, Nokia started paying dividends in quarterly instalments. Under the authorization by the Annual General Meeting held on May 21, 2019, the Board of Directors may resolve an aggregate maximum annual distribution of EUR 0.20 per share

  8. Slide 8: Outlook

    Outlook 8 © 2019 Nokia NOKIA

  9. Slide 9: Outlook metrics

    Outlook metrics 9 © 2019 Nokia

  10. Slide 10: Key drivers of Nokia's outlook

    Key drivers of Nokia’s outlook Net sales and operating margin for Networks and Nokia Software are expected to be influenced by factors including: • Our expectation that we will perform approximately in-line with our primary addressable market in full year 2019 and full year 2020, as we further prior

  11. Slide 11: Nokia in Q3 2019

    Nokia in Q3 2019 11 © 2019 Nokia

  12. Slide 12: Nokia financial results

    Nokia financial results Net sales Operating margin Components of operating profit EPS €8 000M 40% €1500M €0.15 €6 000M 30% €1000M €0.10 €4 000M 20% €500M €0.05 €2 000M 10% 0M 0 0M 0% € (500)M €(0.05) Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 € (1000)M €(0.10) (10)% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 (20)% Networks O

  13. Slide 13: Nokia financial results, Q3 2019 compared to Q3 2018

    Nokia financial results, Q3 2019 compared to Q3 2018 Constant Nokia non-IFRS net sales grew 4% as our customers continued to invest in their networks in YoY currency preparation for the rise in broadband traffic driven by 5G. On a constant currency basis, EUR million (except for EPS in EUR) Q3'19 Q3

  14. Slide 14: Nokia financial results, Jan-Sept 2019 compared to Jan-Sept 2018

    Nokia financial results, Jan-Sept 2019 compared to Jan-Sept 2018 Constant currency Nokia net sales grew 5% in the first nine months of 2019 as our customers continued to YoY YoYinvest in their networks in preparation for the rise in broadband traffic driven by 5G. On a EUR million (except for EPS in

  15. Slide 15: Net sales by region

    Net sales by region Q3 2019 Q3/2018-Q3/2019 21% €2 200M 30% €2 000M €1 800M €1 600M €1 400M 7% 28% €1 200M 6% €1 000M 8% € 800M Asia-Pacific Europe € 600M Greater China Latin America € 400M Middle East & Africa North America € 200M 0M Asia- Europe Greater Latin Middle North Pacific China America Eas

  16. Slide 16: Net sales by customer type

    Net sales by customer type Constant Constant currency currency EUR million Q3'19 Q3'18 YoY change YoY change Q1-Q3'19 Q1-Q3'18 YoY change YoY change Communication service providers 4 780 4 632 3% 0% 13 742 13 111 5% 1% Enterprise 333 256 30% 27% 910 796 14% 12% Licensees 358 351 2% 2% 1 112 1 052 6%

  17. Slide 17: Licensing and Nokia Bell Labs allocated 85% to Networks, 15% to Software

    Amounts related to licensing and Nokia Bell Labs allocated 85% to Networks and 15% to Nokia Software Nokia is providing additional adjusted financial disclosure for its Networks and Nokia Software reportable segments, with amounts related to licensing and Nokia Bell Labs allocated 85% to Networks an

  18. Slide 18: Change in net cash and current financial investments

    Change in net cash and current financial investments (EUR billion) 18 © 2019 Nokia

  19. Slide 19: Cost savings program

    Cost savings program We expect our most recent cost savings program to result in a net EUR 500 million reduction of non-IFRS operating expenses and production overheads (“fixed costs”) in full year 2020 compared to full year 2018, of which EUR 350 million is expected to come from operating expenses

  20. Slide 20: Cost savings program

    Cost savings program The table below includes future expectations related to our most recent cost savings program, as well as the remaining cash outflows related to our previous programs and network equipment swaps. Please note that we exclude the impact of lower incentive accruals from our definiti

  21. Slide 21: Reportable Segments in Q3 2019

    Reportable Segments in Q3 2019 21 © 2019 Nokia

  22. Slide 22: Networks

    Networks Net sales and margins €6 000M 50% €5 000M Optical Networks 40% €4 000M IP Routing 30% €3 000M Fixed Access 20% €2 000M Mobile Access 10% €1 000M Gross margin % 0M 0% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Operating margin % (10)% 22 © 2019 Nokia

  23. Slide 23: Networks

    Networks net sales grew 4%. On a constant currency basis, Networks net sales grew 1%. Networks The growth in Networks net sales was primarily due to Mobile Access and IP Routing, partially offset by Fixed Access and Optical Networks. Constant currency YoY The growth in Mobile Access was primarily du

  24. Slide 24: Nokia Software

    Nokia Software Net sales and margins €1 000M 60% 50% € 800M 40% € 600M Net sales 30% € 400M Gross margin % 20% € 200M Operating margin % 10% 0M 0% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 (10)% 24 © 2019 Nokia

  25. Slide 25: Nokia Software

    Nokia Software net sales grew 9%. On a constant currency basis, Nokia Nokia Software Software net sales grew 5%. The strong growth in Nokia Software net sales was primarily due to the Constant timing of completions and acceptances of certain projects, as well as currency YoY improved product and go-

  26. Slide 26: Nokia Technologies

    Nokia Technologies Net sales and margins € 450M 100% € 400M 80% € 350M € 300M 60% Net Sales € 250M Gross margin % € 200M 40% € 150M Operating margin % € 100M 20% € 50M 0M 0% Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 26 © 2019 Nokia

  27. Slide 27: Nokia Technologies

    Nokia Technologies Nokia Technologies net sales grew 2% on both a reported and constant currency basis. Constant The EUR 358 million of net sales in the third quarter 2019 and the EUR currency YoY 351 million of net sales in the third quarter 2018 both related entirely to EUR million Q3'19 Q3'18 YoY

  28. Slide 28: Group Common and Other

    Group Common and Other Net sales and margins € 300M 50% € 200M 25% € 100M Net Sales 0M 0% Gross margin % Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Operating margin % (25)% (50)% 28 © 2019 Nokia

  29. Slide 29: Group Common and Other

    Group Common and Other Group Common and Other net sales were flat on both a reported and constant currency basis. The net sales in Group Common and Other were flat, with growth in Constant Alcatel Submarine Networks offset by a decrease in Radio Frequency currency YoY EUR million Q3'19 Q3'18 YoY cha

  30. Slide 30: Financial Statements

    Financial Statements 30 © 2019 Nokia

  31. Slide 31: Consolidated income statement (condensed, unaudited)

    Consolidated income statement (condensed, unaudited) 7 Reported Reported Reported Reported = NOMFRS = NOMFRS~—Non-IFRS—Non-IFRS EUR milion Q3'19 Q3'18__Q1-Q3'19_Q1-Q3"18. 319 Q318__Q1-Q319__Q1-93"18 Net sales (notes 2, 3, 4) 5 686 5458 16412 ~——«15.695 5 688 5461 16441 15708 Cost of sales 717) (3439

  32. Slide 32: Consolidated statement of financial position

    Consolidated statement of financial position (condensed, unaudited) EUR milion September September December September September December 30,2019 30,2018 31,2018 30, 2019 30,2018 31, 2018 ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES Goodwill 5651 5410 5452 Share capital 266 246 246 Other intangible as

  33. Slide 33: Consolidated statement of cash flows

    Consolidated statement of cash flows (condensed, unaudited) EUR million Q3'19 Q3'18 Q1-Q3'19 Q1-Q3'18 ‘Cash flow from operating activities Profit/lloss) for the period 85 (79) (553) (541) Adjustments 684 433 1882 1319 Depreciation and amortization 414 356 1235 1088 Impairment charges a 2 89 53 Restr

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