Nokia exceeds previous Q4 2012 outlook for Devices & Services and Nokia Siemens Networks
Nokia provides preliminary financial information for Q4 2012 and preliminary
outlook for Q1 2013
Nokia Corporation
Stock exchange release
January 10, 2013 at 15:00 (CET+1)
Espoo, Finland - Nokia today provided preliminary information on certain aspects
of its fourth quarter 2012 financial performance and also provided preliminary
information on its outlook for the first quarter 2013.
Nokia now estimates that Devices & Services has exceeded expectations and
achieved underlying profitability in the fourth quarter 2012.
- Mobile Phones business unit and Lumia portfolio delivered better than expected
results; and
- Operating expenses were lower than expected.
- Devices & Services non-IFRS operating margin for the fourth quarter 2012 now
expected to be between break even and positive 2 percent.
Seasonality and competitive environment are expected to have a negative impact
on the first quarter 2013 underlying profitability for Devices & Services,
compared to the fourth quarter 2012.
Nokia also estimates that Nokia Siemens Networks has exceeded expectations for
the fourth quarter 2012, delivering record underlying profits and a third
consecutive quarter of underlying profitability.
- Strong performance in higher margin product categories and geographic regions;
and
- Better than expected cost management.
- Nokia Siemens Networks non-IFRS operating margin for the fourth quarter 2012
now expected to be between 13 and 15 percent.
Seasonality is expected to have a negative impact on the first quarter 2013
underlying profitability for Nokia Siemens Networks, compared to the fourth
quarter 2012.
Commenting on the preliminary Q4 financial information, Stephen Elop, Nokia CEO,
said:
"We are pleased that Q4 2012 was a solid quarter where we exceeded expectations
and delivered underlying profitability in Devices & Services and record
underlying profitability in Nokia Siemens Networks. We focused on our priorities
and as a result we sold a total of 14 million Asha smartphones and Lumia
smartphones while managing our costs efficiently, and Nokia Siemens Networks
delivered yet another very good quarter."
Preliminary financial information for the fourth quarter 2012:
Nokia currently estimates that Devices & Services net sales in the fourth
quarter 2012 were approximately EUR 3.9 billion, with total device volumes of
86.3 million units.
- Mobile Phones net sales of approximately EUR 2.5 billion, with total volumes
of 79.6 million units of which 9.3 million units were Asha full touch
smartphones.
- Smart Devices net sales of approximately EUR 1.2 billion, with total volumes
of 6.6 million units of which 4.4 million units were Nokia Lumia smartphones.
- Total smartphone volumes of 15.9 million units composed of 9.3 million Asha
full touch smartphones, 4.4 million Lumia smartphones and 2.2 million Symbian
smartphones.
- Devices & Services Other net sales of approximately EUR 0.2 billion, including
a positive impact from non-recurring IPR income of approximately EUR 50 million.
Nokia currently estimates that Devices & Services non-IFRS operating margin for
the fourth quarter 2012 was between break even and positive 2 percent, which
compares to the previous outlook of approximately negative 6 percent, plus or
minus four percentage points. Devices & Services non-IFRS operating margin
includes a positive impact from non-recurring IPR income of approximately EUR
50 million.
During the fourth quarter 2012, multiple factors positively affected Nokia's
Devices & Services businesses to a greater extent than previously expected.
Preliminary information indicates that the main factors include:
-Â Within the Devices & Services business, better than expected financial
performance in the Mobile Phones business unit and Lumia smartphones. In
addition, Devices & Services recognized non-recurring IPR income of
approximately EUR 50 million; and
- Lower than expected Devices & Services' operating expenses, partially due to
greater than expected cost reductions under the restructuring program.
Nokia currently estimates that Location & Commerce net sales in the fourth
quarter 2012 were approximately EUR 0.3 billion and the non-IFRS operating
margin was between 13 and 15 percent.
Nokia and Nokia Siemens Networks currently estimates that Nokia Siemens Networks
net sales in the fourth quarter 2012 were approximately EUR 4.0 billion and the
non-IFRS operating margin was between 13 and 15 percent, which compares to the
previous outlook of approximately positive 8 percent, plus or minus four
percentage points. Nokia Siemens Networks non-IFRS operating margin includes a
positive impact from non-recurring IPR income of approximately EUR 30 million.
During the fourth quarter 2012, multiple factors positively affected Nokia
Siemens Networks' businesses to a greater extent than previously expected.
Preliminary information indicates that the main factors include:
-Â More favorable product and regional mix in Nokia Siemens Networks. In
addition, Nokia Siemens Networks recognized non-recurring IPR income of
approximately EUR 30 million; and
- Better than expected improvement under Nokia Siemens Networks' restructuring
program to reduce operating expenses and production overheads.
Preliminary outlook for the first quarter 2013:
Nokia expects its non-IFRS Devices & Services operating margin in the first
quarter 2013 to be approximately negative 2 percent, plus or minus four
percentage points. This outlook is based on Nokia's expectations regarding a
number of factors, including:
- competitive industry dynamics continuing to negatively affect the Smart
Devices and Mobile Phones business units;
-Â the first quarter being a seasonally weak quarter;
- consumer demand, particularly for our Lumia and Asha smartphones;
- continued ramp up for our new Lumia smartphones;
- expected cost reductions under Devices & Services' restructuring program; and
- the macroeconomic environment.
Nokia expects Location & Commerce non-IFRS operating margin in the first quarter
2013 to be negative due to lower recognized revenue from internal sales, which
carry higher gross margin, and to a lesser extent by a negative mix shift within
external sales.
Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS
operating margin in the first quarter 2013 to be approximately positive 3
percent, plus or minus four percentage points. This outlook is based on Nokia
Siemens Networks' expectations regarding a number of factors, including:
- competitive industry dynamics;
- the first quarter being a seasonally weak quarter;
- product and regional mix;
- expected continued improvement under Nokia Siemens Networks' restructuring
program; and
- the macroeconomic environment.
Nokia will provide more details when it reports fourth quarter and full year
2012 results on January 24, 2013.
Nokia will be hosting a conference call today at 13:30 UK time (8:30 EST).
The dial-in number for media (listen only - the question and answer session will
be limited to financial analysts and investors only) is +1 706 634 5012.
Conference ID: 86914019.
The dial-in number for financial analysts and investors is US: +1 888 636 1561.
Conference ID: 86914019. UK: +44 1452 560 299. Conference ID: 87088764.
A replay of the call will be available soon after the call completion. The
replay number is US: +1 800 585 8367. Conference ID: 86914019. UK:
+44 1452 55 0000. Conference ID: 87088764.
FORWARD-LOOKING STATEMENTS
It should be noted that certain statements herein that are not historical facts
are forward-looking statements, including, without limitation, those regarding:
A) the expected plans and benefits of our partnership with Microsoft to bring
together complementary assets and expertise to form a global mobile ecosystem
for smartphones; B) the timing and expected benefits of our new strategies,
including expected operational and financial benefits and targets as well as
changes in leadership and operational structure; C) the timing of the deliveries
of our products and services; D) our ability to innovate, develop, execute and
commercialize new technologies, products and services; E) expectations regarding
market developments and structural changes; F) expectations and targets
regarding our industry volumes, market share, prices, net sales and margins of
our products and services; G) expectations and targets regarding our operational
priorities and results of operations; H) expectations and targets regarding
collaboration and partnering arrangements; I) the outcome of pending and
threatened litigation; J) expectations regarding the successful completion of
restructurings, investments, acquisitions and divestments on a timely basis and
our ability to achieve the financial and operational targets set in connection
with any such restructurings, investments, acquisitions and divestments; and K)
statements preceded by "believe," "expect," "anticipate," "foresee," "target,"
"estimate," "designed," "aim", "plans," "intends," "will" or similar
expressions. These statements are based on management's best assumptions and
beliefs in light of the information currently available to it. Because they
involve risks and uncertainties, actual results may differ materially from the
results that we currently expect. Factors that could cause these differences
include, but are not limited to:Â 1) our success in the smartphone market,
including our ability to introduce and bring to market quantities of attractive,
competitively priced Nokia products that operate on the Windows Phone operating
system that are positively differentiated from our competitors' products, both
outside and within the Windows Phone ecosystem; 2) our ability to make Nokia
products that operate on the Windows Phone operating system a competitive choice
for consumers, and together with Microsoft, our success in encouraging and
supporting a competitive and profitable global ecosystem for Windows Phone
products that achieves sufficient scale, value and attractiveness to all market
participants; 3) reduced demand for, and net sales of, Nokia products that
operate on the Windows Phone 7 operating system in anticipation and availability
of Nokia products with the new Windows Phone 8 operating system; 4) the
difficulties we experience in having a competitive offering of Symbian devices
and maintaining the economic viability of the Symbian smartphone platform during
the transition to Windows Phone as our primary smartphone platform; 5) our
ability to effectively and timely implement planned changes to our operational
structure, including the planned restructuring measures, and to successfully
complete the planned investments, acquisitions and divestments in order to
improve our operating model and achieve targeted efficiencies and reductions in
operating expenses as well as our ability to accurately estimate the related
restructuring charges and restructuring related cash outflows; 6) our future
sales performance, among other factors, may require us to recognize allowances
related to excess component inventory, future purchase commitments and inventory
write-offs in our Devices & Services business; 7) our ability to realize a
return on our investment in next generation devices, platforms and user
experiences; 8) our ability to produce attractive and competitive devices in our
Mobile Phones business unit including feature phones and devices with more
smartphone-like features such as full touch devices, in a timely and cost
efficient manner with differentiated hardware, software, localized services and
applications; 9) the intensity of competition in the various markets where we do
business and our ability to maintain or improve our market position or respond
successfully to changes in the competitive environment; 10) our ability to
retain, motivate, develop and recruit appropriately skilled employees; 11) the
success of our Location & Commerce strategy, including our ability to establish
a successful location-based platform, extend our location-based services across
devices and operating systems, provide support for our Devices & Services
business and create new sources of revenue from our location-based services and
commerce assets; 12) our actual performance in the short-term and long-term
could be materially different from our forecasts, which could impact future
estimates of recoverable value of our reporting units and may result in
impairment charges; 13) our success in collaboration and partnering arrangements
with third parties, including Microsoft; 14) our ability to increase our speed
of innovation, product development and execution to bring new innovative and
competitive mobile products and location-based or other services to the market
in a timely manner; 15) our dependence on the development of the mobile and
communications industry, including location-based and other services industries,
in numerous diverse markets, as well as on general economic conditions globally
and regionally; 16) our ability to protect numerous patented standardized or
proprietary technologies from third-party infringement or actions to invalidate
the intellectual property rights of these technologies; 17) our ability to
maintain and leverage our traditional strengths in the mobile product market if
we are unable to retain the loyalty of our mobile operator and distributor
customers and consumers as a result of the implementation of our strategies or
other factors; 18) the success, financial condition and performance of our
suppliers, collaboration partners and customers; 19) our ability to manage
efficiently our manufacturing and logistics, as well as to ensure the quality,
safety, security and timely delivery of our products and services; 20) our
ability to source sufficient amounts of fully functional quality components,
sub-assemblies, software and services on a timely basis without interruption and
on favorable terms; 21) our ability to manage our inventory and timely adapt our
supply to meet changing demands for our products; 22) any actual or even alleged
defects or other quality, safety and security issues in our products; 23) the
impact of a cybersecurity breach or other factors leading to any actual or
alleged loss, improper disclosure or leakage of any personal or consumer data
collected by us or our partners or subcontractors, made available to us or
stored in or through our products; 24) our ability to successfully manage the
pricing of our products and costs related to our products and operations; 25)
exchange rate fluctuations, including, in particular, fluctuations between the
euro, which is our reporting currency, and the US dollar, the Japanese yen and
the Chinese yuan, as well as certain other currencies; 26) our ability to
protect the technologies, which we or others develop or that we license, from
claims that we have infringed third parties' intellectual property rights, as
well as our unrestricted use on commercially acceptable terms of certain
technologies in our products and services; 27) the impact of economic,
political, regulatory or other developments on our sales, manufacturing
facilities and assets located in emerging market countries; 28) the impact of
changes in government policies, trade policies, laws or regulations where our
assets are located and where we do business; 29) the potential complex tax
issues and obligations we may incur to pay additional taxes in the various
jurisdictions in which we do business and our actual or anticipated performance,
among other factors, could result in allowances related to deferred tax assets;
30) any disruption to information technology systems and networks that our
operations rely on; 31) unfavorable outcome of litigations;Â 32) allegations of
possible health risks from electromagnetic fields generated by base stations and
mobile products and lawsuits related to them, regardless of merit; 33) Nokia
Siemens Networks ability to implement its new strategy and restructuring plan
effectively and in a timely manner to improve its overall competitiveness and
profitability; 34) Nokia Siemens Networks' success in the telecommunications
infrastructure services market and Nokia Siemens Networks' ability to
effectively and profitably adapt its business and operations in a timely manner
to the increasingly diverse service needs of its customers; 35) Nokia Siemens
Networks' ability to maintain or improve its market position or respond
successfully to changes in the competitive environment; 36) Nokia Siemens
Networks' liquidity and its ability to meet its working capital requirements;
37) Nokia Siemens Networks' ability to timely introduce new competitive
products, services, upgrades and technologies; 38) Nokia Siemens Networks'
ability to execute successfully its strategy for the acquired Motorola Solutions
wireless network infrastructure assets; 39) developments under large, multi-year
contracts or in relation to major customers in the networks infrastructure and
related services business; 40) the management of our customer financing
exposure, particularly in the networks infrastructure and related services
business; 41) whether ongoing or any additional governmental investigations into
alleged violations of law by some former employees of Siemens may involve and
affect the carrier-related assets and employees transferred by Siemens to Nokia
Siemens Networks; and 42) any impairment of Nokia Siemens Networks customer
relationships resulting from ongoing or any additional governmental
investigations involving the Siemens carrier-related operations transferred to
Nokia Siemens Networks, as well as the risk factors specified on pages 13-47 of
Nokia's annual report on Form 20-F for the year ended December 31, 2011 under
Item 3D. "Risk Factors." Other unknown or unpredictable factors or underlying
assumptions subsequently proving to be incorrect could cause actual results to
differ materially from those in the forward-looking statements. Nokia does not
undertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or otherwise,
except to the extent legally required.
 Media and Investor Contacts:
Corporate Communications, tel. +358 7180 34900
email: press.services@nokia.com
Investor Relations Europe, tel. +358 7180 34927
Investor Relations US, tel. +1 914 368 0555
www.nokia.com
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Source: NOKIA via Thomson Reuters ONE
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