Nokia Corporation published its interim report for Q1 2020 published which showed “broad year-on-year profitability improvements as our transformation and product cost reduction efforts started to take hold”, according to CEO and president Rajeev Suri.
On a year-on-year basis, group-level non-IFRS operating margin was up by 3.6 percentage points and Networks gross margin increased by 3.5 percentage points. Nokia Software had an excellent quarter with sharp margin improvements and strong momentum with customers in North America; and, Nokia Enterprise delivered double-digit sales growth.
These improvements are, of course, coming at a time of unprecedented change, given the impact of COVID-19. “Our top focus areas are protecting our employees, maintaining critical network infrastructure for customers, and ensuring we have a strong cash position. In Q1, we saw a top line impact from COVID-19 issues of approximately €200 million, largely the result of supply issues associated with disruptions in China”, Suri said.
In the report, Nokia notes that it is adjusting the mid-points within its previously disclosed outlook ranges for full-year 2020 to reflect the increased risks and uncertainty presented by the ongoing COVID-19 situation. The CEO expects the majority of this COVID-19 impact to be in Q2.
NOKIA FINANCIAL RESULTS
| EUR million (except for EPS in EUR) |
Q1'20 |
Q1'19 |
YoY |
Constant currency YoY change |
|
Net sales |
4 913 |
5 032 |
(2)% |
(3)% |
|
Networks |
3 757 |
3 944 |
(5)% |
(6)% |
|
Nokia Software |
613 |
543 |
13% |
12% |
|
Nokia Technologies |
347 |
370 |
(6)% |
(7)% |
|
Group Common and Other |
205 |
220 |
(7)% |
(8)% |
|
Non-IFRS exclusions |
(1) |
(25) |
|
|
|
Eliminations |
(9) |
(20) |
|
|
|
Gross profit |
1 778 |
1 580 |
13% |
|
|
Operating (loss)/profit |
(76) |
(524) |
|
|
|
Networks |
(81) |
(254) |
|
|
|
Nokia Software |
70 |
(7) |
|
|
|
Nokia Technologies |
290 |
302 |
(4)% |
|
|
Group Common and Other |
(164) |
(100) |
|
|
|
Non-IFRS exclusions |
(192) |
(464) |
|
|
|
Operating margin % |
(1.5)% |
(10.4)% |
890bps |
|
|
Net sales (non-IFRS) |
4 914 |
5 057 |
(3)% |
(4)% |
|
Gross profit (non-IFRS) |
1 787 |
1 641 |
9% |
|
|
Operating profit/(loss) (non-IFRS) |
116 |
(59) |
|
|
|
Operating margin % (non-IFRS) |
2.4% |
(1.2)% |
360bps |
|
|
Financial income and expenses |
(50) |
(55) |
(9)% |
|
|
Income taxes |
30 |
142 |
|
|
|
Profit/(loss) for the period |
(100) |
(442) |
|
|
|
EPS, diluted |
(0.02) |
(0.08) |
|
|
|
Financial income and expenses (non-IFRS) |
(66) |
(93) |
(29)% |
|
|
Income taxes (non-IFRS) |
(12) |
41 |
|
|
|
Profit/(loss) for the period (non-IFRS) |
33 |
(116) |
|
|
|
EPS, diluted (non-IFRS) |
0.01 |
(0.02) |
|
|