Nokia Q1 Profit Rises, Comparable Results Down, Confirms View; Stock Dips

RTTNews | 457 days ago
Nokia Q1 Profit Rises, Comparable Results Down, Confirms View; Stock Dips

(RTTNews) - Finnish critical networks and communications company Nokia Corp. reported Thursday higher profit and net revenues in its first quarter with improved performance in most of its segments. Comparable earnings and margin, meanwhile, declined from last year. Further, the firm maintained its fiscal 2023 and long term targets.

Nokia shares were losing around 5 percent in the morning trading in Finland as well as in pre-market activity on the NYSE.

Pekka Lundmark, President And CEO, said, "Looking forward, we are starting to see some signs of the economic environment impacting customer spending. Given the ongoing need to invest in 5G and fiber, we see this primarily as a question of timing; nevertheless we will maintain our cost discipline to ensure we can successfully navigate this uncertainty. We remain on track to deliver another year of growth in 2023 so our outlook is unchanged with the expectation that profitability in the second half of the year will be stronger than the first half."

For fiscal 2023, the company continues to expect net sales growth of 2 percent to 8 percent in constant currency to reach 24.6 billion euros to 26.2 billion euros.

Comparable operating margin guidance remains at 11.5 percent to 14.0 percent.

Nokia's long-term targets, for 2024-2026, includes net sales growth faster than the market and comparable operating margin in line or above 14 percent.

Further, the Board resolved to distribute a dividend of 0.03 euro per share. The dividend record date is on April 25 and the dividend will be paid on May 4. Following this announced distribution, the Board's remaining distribution authorization is a maximum of 0.09 euro per share.

For the first quarter, profit climbed 32 percent to 289 million euros from last year's 219 million euros. Earnings per share were 0.05 euro, up 25 percent from 0.04 euro a year ago.

Comparable profit was 342 million euros or 0.06 euro per share, compared to 416 million euros or 0.07 euro a year ago.

Operating margin increased 70 basis points from last year to 7.3 percent. Comparable operating margin declined 270 basis points to 8.2 percent, primarily due to expected greater seasonality in Mobile Networks' profitability, and a lower contribution from Nokia Technologies.

Gross margin declined 310 basis points to 37.5 percent and comparable gross margin declined 300 basis points to 37.7 percent.

Net sales increased 10 percent to 5.86 billion euros from last year's 5.35 billion euros. Net sales growth was 9 percent year-over-year in constant currency.

On a constant currency basis, Network Infrastructure sales growth was 13 percent. Mobile Networks net sales grew 13 percent as 5G deployments in India ramped up, more than offsetting a slowdown in North America spending.

Cloud and Network Services net sales grew 3 percent, but profitability was impacted by product mix. Enterprise net sales climbed 62 percent.

Meanwhile, Nokia Technologies net sales declined 22 percent in the quarter, which was largely due to a long-term license which is no longer contributing after an option was exercised in the preceding fourth quarter.

In Finland, Nokia shares were trading at 4.05 euros, down 5.1 percent. In pre-market activity on the NYSE, Nokia shares were losing around 4.6 percent to trade at $4.41.

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