RISK FACTORS
Investing in our securities involves risks. You should carefully consider the risks, uncertainties and assumptions discussed under the caption
"Operating and financial review and prospectsRisk Factors" included in our annual report on Form 20-F for the year ended December 31, 2016 which is incorporated by reference
in this prospectus, and which may be amended, supplemented or superseded from time to time by other reports we file with the SEC in the future. You should also carefully consider any additional risks
discussed or incorporated by reference in this prospectus and any applicable prospectus supplement, together with all the information contained or incorporated by reference in this prospectus or any
such prospectus supplement.
5
Table of Contents
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following is a discussion and analysis of our financial condition and results of operations based on the unaudited consolidated condensed
financial statements of the Group as of and for the three months ended March 31, 2017 prepared in accordance with IFRS and included in this registration statement.
The
financial information as of March 31, 2017 and 2016 and for each of the three months ended March 31, 2017 and 2016 should be read in conjunction with, and is qualified
in its entirety by reference to, our unaudited consolidated condensed financial information included in the this registration statement. For a discussion of risks and uncertainties facing us as a
result of various factors, see "Risk Factors."
The
discussion and analysis of our financial condition and results of operations as of December 31, 2016 and 2015 and for each of the three years ended December 31, 2016,
2015 and 2014 is included in our annual report on Form 20-F for the year ended December 31, 2016, filed with the SEC on March 23, 2017 and incorporated by reference herein.
Results of Operations
Three months ended March 31, 2017 (unaudited results)
|
|
|
|
|
|
|
|
|
|
|
EUR million (except for EPS in EUR)
|
|
Q1'17
|
|
Q1'16
|
|
YoY
change
|
|
Net sales
|
|
|
5,378
|
|
|
5,511
|
|
|
(2
|
)%
|
Nokia's Networks business
|
|
|
4,902
|
|
|
5,193
|
|
|
(6
|
)%
|
Ultra Broadband Networks
|
|
|
3,597
|
|
|
3,741
|
|
|
(4
|
)%
|
IP Networks and Applications
|
|
|
1,304
|
|
|
1,453
|
|
|
(10
|
)%
|
Nokia Technologies
|
|
|
247
|
|
|
198
|
|
|
25
|
%
|
Group Common and Other
|
|
|
254
|
|
|
235
|
|
|
8
|
%
|
Unallocated items
|
|
|
(11
|
)
|
|
(104
|
)
|
|
|
|
Gross profit
|
|
|
2,125
|
|
|
1,577
|
|
|
35
|
%
|
Gross margin %
|
|
|
39.5
|
%
|
|
28.6
|
%
|
|
1,090bps
|
|
Operating (loss)/profit
|
|
|
(127
|
)
|
|
(712
|
)
|
|
(82
|
)%
|
Nokia's Networks business
|
|
|
324
|
|
|
337
|
|
|
(4
|
)%
|
Ultra Broadband Networks
|
|
|
301
|
|
|
230
|
|
|
31
|
%
|
IP Networks and Applications
|
|
|
23
|
|
|
107
|
|
|
(79
|
)%
|
Nokia Technologies
|
|
|
116
|
|
|
106
|
|
|
9
|
%
|
Group Common and Other
|
|
|
(99
|
)
|
|
(99
|
)
|
|
0
|
%
|
Unallocated items
|
|
|
(468
|
)
|
|
(1,057
|
)
|
|
|
|
Operating margin %
|
|
|
(2.4
|
)%
|
|
(12.9
|
)%
|
|
1,050bps
|
|
Financial income and expenses
|
|
|
(146
|
)
|
|
(103
|
)
|
|
42
|
%
|
Taxes
(1)
|
|
|
(154
|
)
|
|
101
|
|
|
|
|
(Loss)/Profit
(1)
|
|
|
(435
|
)
|
|
(712
|
)
|
|
(39
|
)%
|
(Loss)/Profit attributable to the equity holders of the parent
(1)
|
|
|
(473
|
)
|
|
(623
|
)
|
|
(24
|
)%
|
Non-controlling interests
(1)
|
|
|
37
|
|
|
(88
|
)
|
|
|
|
EPS, EUR diluted
(1)
|
|
|
(0.08
|
)
|
|
(0.11
|
)
|
|
(27
|
)%
|
Net cash and other liquid assets
|
|
|
4,409
|
|
|
8,246
|
|
|
(47
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
Q1'16
result is not comparable to the previously published Q1'16 result due to an update to the Alcatel-Lucent purchase price allocation in Q3'16 which resulted in
an adjustment to the Q1'16 income tax benefit.
6
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR million
|
|
Ultra
Broadband
Networks
|
|
IP Networks
and
Application
|
|
Nokia's
Networks
business
|
|
Nokia
Technologies
|
|
Group
Common
and Other
|
|
Eliminations
|
|
Total
|
|
Unallocated
|
|
Nokia
Total
|
|
Q1 '17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
3,597
|
|
|
1,304
|
|
|
4,902
|
|
|
247
|
|
|
254
|
|
|
(15
|
)
|
|
5,388
|
|
|
(11
|
)
|
|
5,378
|
|
EBITDA
|
|
|
386
|
|
|
66
|
|
|
451
|
|
|
109
|
|
|
(88
|
)
|
|
0
|
|
|
472
|
|
|
(204
|
)
|
|
268
|
|
EBITDA %
|
|
|
10.7
|
%
|
|
5.1
|
%
|
|
9.2
|
%
|
|
44.1
|
%
|
|
(34.6
|
)%
|
|
|
|
|
8.8
|
%
|
|
|
|
|
5.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 '16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
3,741
|
|
|
1,453
|
|
|
5,193
|
|
|
198
|
|
|
235
|
|
|
(11
|
)
|
|
5,615
|
|
|
(104
|
)
|
|
5,511
|
|
EBITDA
|
|
|
316
|
|
|
147
|
|
|
463
|
|
|
108
|
|
|
(88
|
)
|
|
0
|
|
|
483
|
|
|
(787
|
)
|
|
(304
|
)
|
EBITDA %
|
|
|
8.4
|
%
|
|
10.1
|
%
|
|
8.9
|
%
|
|
54.5
|
%
|
|
(37.4
|
)%
|
|
|
|
|
8.6
|
%
|
|
|
|
|
(5.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We
present EBITDA as a supplemental measure of our performance. We define EBITDA as net income (loss) from continuing operations plus (i) income tax (expense) / benefit
(ii) financial income and expenses and (iii) depreciation and amortization. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute
for an analysis of our results as reported under IFRS.
Set
forth below is a reconciliation of EBITDA to Loss from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 '17 EUR million
|
|
Ultra
Broadband
Networks
|
|
IP Networks
and
Application
|
|
Nokia's
Networks
business
|
|
Nokia
Technologies
|
|
Group
Common
and Other
|
|
Eliminations
|
|
Total
|
|
Unallocated
|
|
Nokia
Total
|
|
EBITDA
|
|
|
386
|
|
|
66
|
|
|
451
|
|
|
109
|
|
|
(88
|
)
|
|
|
|
|
472
|
|
|
(204
|
)
|
|
268
|
|
Depreciation and amortization
|
|
|
(83
|
)
|
|
(43
|
)
|
|
(126
|
)
|
|
(4
|
)
|
|
(11
|
)
|
|
|
|
|
(141
|
)
|
|
(264
|
)
|
|
(404
|
)
|
Share of results of associated companies and joint ventures
|
|
|
(1
|
)
|
|
|
|
|
(1
|
)
|
|
10
|
|
|
|
|
|
|
|
|
9
|
|
|
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/profit
|
|
|
301
|
|
|
23
|
|
|
324
|
|
|
116
|
|
|
(99
|
)
|
|
|
|
|
341
|
|
|
(468
|
)
|
|
(127
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of results of associated companies and joint ventures
|
|
|
1
|
|
|
|
|
|
1
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
(9
|
)
|
Financial income and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(146
|
)
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(154
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(435
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 '16 EUR million
|
|
Ultra
Broadband
Networks
|
|
IP Networks
and
Application
|
|
Nokia's
Networks
business
|
|
Nokia
Technologies
|
|
Group
Common
and Other
|
|
Eliminations
|
|
Total
|
|
Unallocated
|
|
Nokia
Total
|
|
EBITDA
|
|
|
316
|
|
|
147
|
|
|
463
|
|
|
108
|
|
|
(88
|
)
|
|
|
|
|
483
|
|
|
(787
|
)
|
|
(304
|
)
|
Depreciation and amortization
|
|
|
(84
|
)
|
|
(39
|
)
|
|
(124
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|
|
|
|
(136
|
)
|
|
(270
|
)
|
|
(406
|
)
|
Share of results of associated companies and joint ventures
|
|
|
(2
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
(2
|
)
|
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss)/profit
|
|
|
230
|
|
|
107
|
|
|
337
|
|
|
106
|
|
|
(99
|
)
|
|
|
|
|
345
|
|
|
(1,057
|
)
|
|
(712
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share of results of associated companies and joint ventures
|
|
|
2
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
2
|
|
Financial income and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(103
|
)
|
Income tax (expense)/benefit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(712
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost Savings Progam
The following table summarizes the financial information related to our cost savings program, as of the end of the three months ended
March 31, 2017. Balances related to previous Nokia and Alcatel-Lucent restructuring and cost savings programs have been included as part of this overall cost savings program as of the second
quarter of 2016.
|
|
|
|
|
In EUR million, approximately
|
|
Q1'17
|
|
Opening balance of restructuring and associated liabilities
|
|
|
790
|
|
+ Charges in the quarter
|
|
|
80
|
|
Cash outflows in the quarter
|
|
|
150
|
|
= Ending balance of restructuring and associated liabilities
|
|
|
720
|
|
of which restructuring provisions
|
|
|
650
|
|
of which other associated liabilities
|
|
|
70
|
|
Total expected restructuring and associated charges
|
|
|
1,700
|
|
Cumulative recorded
|
|
|
830
|
|
= Charges remaining to be recorded
|
|
|
870
|
|
Total expected restructuring and associated cash outflows
|
|
|
2,150
|
|
Cumulative recorded
|
|
|
560
|
|
= Cash outflows remaining to be recorded
|
|
|
1,590
|
|
8
Table of Contents
The
following table summarizes our full year 2016 results and future expectations related to our cost savings program and network equipment swaps.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected amounts for
|
|
|
|
Actual
|
|
FY 2017 as of
the end of
|
|
FY 2018 as of
the end of
|
|
FY 2019 and
beyond as of
the end of
|
|
Total as of the
end of
|
|
In EUR million, approximately rounded to the
nearest EUR 50 million
|
|
2016
|
|
Q4 '16
|
|
Q1 '17
|
|
Q4 '16
|
|
Q1 '17
|
|
Q4 '16
|
|
Q1 '17
|
|
Q4 '16
|
|
Q1 '17
|
|
Total cost savings
|
|
|
550
|
|
|
250
|
|
|
250
|
|
|
400
|
|
|
400
|
|
|
0
|
|
|
0
|
|
|
1,200
|
|
|
1,200
|
|
operating expenses
|
|
|
350
|
|
|
100
|
|
|
100
|
|
|
350
|
|
|
350
|
|
|
0
|
|
|
0
|
|
|
800
|
|
|
800
|
|
cost of sales
|
|
|
200
|
|
|
150
|
|
|
150
|
|
|
50
|
|
|
50
|
|
|
0
|
|
|
0
|
|
|
400
|
|
|
400
|
|
Restructuring and associated charges
|
|
|
750
|
|
|
750
|
|
|
750
|
|
|
200
|
|
|
200
|
|
|
0
|
|
|
0
|
|
|
1,700
|
|
|
1,700
|
|
Restructuring and associated cash outflows
|
|
|
400
|
|
|
750
|
|
|
750
|
|
|
550
|
|
|
550
|
|
|
450
|
|
|
450
|
|
|
2,150
|
|
|
2,150
|
|
Charges and cash outflows related to network equipment swaps
|
|
|
150
|
|
|
450
|
|
|
450
|
|
|
300
|
|
|
300
|
|
|
0
|
|
|
0
|
|
|
900
|
|
|
900
|
|
In
the year ended December 31, 2016, the actual total cost savings benefitted from lower incentive accruals, related to the financial performance in year ended December 31,
2016. Lower incentive accruals drove more than half of the higher than previously expected decrease in total costs in 2016, and this is expected to reverse in 2017, assuming full year 2017 financial
performance in-line with our expectations. On a cumulative basis, Nokia continues to be well on track to achieve the targeted EUR 1.2 billion of total cost savings in full year 2018.
Other information
We seek to maintain total cash of approximately 30% of net sales over time and pay dividends (taking into account cash position and cash flow
generation) approximating 40-70% of profit attributable to equity holders of the parent excluding costs related to the Alcatel-Lucent transaction and related integration, goodwill impairment charges,
intangible asset amortization and purchase price related items, restructuring and associated charges, and certain other items.
As
of November 2016, our primary addressable market in 2016including mobile radio network, fixed access network, core network and IP routing, and
analyticsincreased to around EUR 113 billion, an almost 50% increase relative to the slower-growing addressable market we faced before the Alcatel Lucent addition. Our
primary addressable market was estimated to be EUR 110 billion in 2017 and EUR 120 billion in 2021. Nokia's adjacent addressable market size was approximately
EUR 18 billion in 2016, and estimated to grow to EUR 20 billion in 2017 and EUR 32 billion in 2021.
Financial discussion
Net sales
Year-on-year discussion
Nokia net sales decreased 2% in the three months ended March 31, 2017 compared to the three months ended March 31, 2016.
The
year-on-year decrease in net sales in the three months ended March 31, 2017 was primarily due to Nokia's Networks business, partially offset by higher net sales in Nokia
Technologies and Group Common and Other.
9
Table of Contents
Operating profit
Year-on-year discussion
In the three months ended March 31, 2017, the decrease in Nokia's operating loss compared to the three months ended March 31, 2016
was primarily due to higher gross profit and lower selling, general and administrative ("SG&A") expenses, partially offset by a net negative fluctuation in other income and expenses.
The
increase in gross profit compared to the three months ended March 31, 2016 was primarily due to the absence of a purchase price allocation cost related to the valuation of
inventory and, to a lesser extent, higher gross profit in Nokia Technologies. This was partially offset by lower gross profit in Nokia's Networks business.
Research
and development ("R&D") expenses were approximately flat compared to the three months ended March 31, 2016, primarily due to lower R&D expenses in Nokia's Networks
business, partially offset by higher product portfolio integration costs.
The
decrease in SG&A expenses compared to the three months ended March 31, 2016 was primarily due to lower transaction and integration costs, partially offset by higher SG&A
expenses in Nokia Technologies.
Nokia's
other income and expenses was an expense of EUR 69 million in the three months ended March 31, 2017, compared to an expense of EUR 52 million in the three
months ended March 31, 2016. The net negative fluctuation was primarily related to higher restructuring and associated charges, partially offset by Nokia's Networks business and Group Common
and Other.
(Loss)/Profit attributable to the equity holders of the parent
Year-on-year discussion
In the three months ended March 31, 2017, the decrease in Nokia's loss attributable to the equity holders of the parent compared to the
three months ended March 31, 2016 was primarily due to lower operating loss, partially offset by higher taxes, a net negative fluctuation in non-controlling interests and a net negative
fluctuation in financial income and expenses.
The
net negative fluctuation in financial income and expenses compared to the three months ended March 31, 2016 was primarily due to costs related to Nokia's tender offer to
repurchase the 6.75% notes due February 4, 2019, the 6.50% debentures due January 15, 2028 and the 6.45% debentures due March 15, 2029. The purpose of these transactions was to
optimize Nokia's debt maturity profile, to lower average interest expense run rate and to eliminate subsidiary level external debt. In addition, the three months ended March 31, 2017 was
negatively affected by foreign exchange fluctuations, partially offset by the absence of costs related to the early redemption of Alcatel-Lucent high yield bonds in the first quarter of 2016 and a net
positive fluctuation in other financial income and expenses.
The
higher taxes compared to the three months ended March 31, 2016 were primarily due to tax expenses of EUR 245 million related to the integration of the former
Alcatel-Lucent and Nokia operating models.
The
net negative fluctuation in non-controlling interests compared to the three months ended March 31, 2016 was primarily related to a non-recurring income in a partly-owned
subsidiary in the three months ended March 31, 2017.
10
Table of Contents
Acquisition of Comptel Corporation
On February 9, 2017 Nokia announced that it had entered into a transaction agreement with Comptel Corporation under which Nokia, through
its wholly owned indirect subsidiary Nokia Solutions and Networks Oy, undertook to make a voluntary public cash tender offer to purchase
all of the issued and outstanding shares and option rights in Comptel not owned by Comptel, in order to advance Nokia's software strategy and provide service providers with a comprehensive solution to
design, deliver, orchestrate and assure communications and digital services across physical, virtual and hybrid networks. The tender offer valued Comptel at approximately EUR 347 million, on a
fully diluted basis, and resulted in Nokia consolidating Comptel as of March 30, 2017. Together with open market purchases, Nokia Solutions and Networks Oy held approximately 96.95% of all
Comptel shares as of April 24, 2017.
The
acquisition of Comptel is part of Nokia's strategy to build a standalone software business at scale by expanding and strengthening Nokia's go-to-market capabilities with a
software-dedicated sales force and strong partner network. The acquisition of Comptel also supports Nokia's desire to build a software portfolio that allows customers to automate as much of their
network and business operations as possibleincluding customer services, self-optimization, management and orchestration.
Comptel
is a long-time Nokia partner. It is a listed Finnish company, founded in 1986, with approximately 800 employees in 32 countries. Comptel has completed over 1,400 customer
projects in more than 90 countries. It processes 20 percent of the world's mobile usage data every day, orchestrates communications and digital services for more than two billion end-users
daily and its largest customer has around 300 million subscribers. In 2016, Comptel's net sales were EUR 100 million with an 11% operating margin. The company's major sites are in
Finland, Bulgaria, Malaysia, India, the United Kingdom and Norway.
It
is Nokia's intention to acquire all the shares and option rights in Comptel. As the ownership in Comptel exceeds nine-tenths (9/10) of the shares and voting rights in Comptel, Nokia
has filed an application to initiate compulsory redemption proceedings for the remaining Comptel shares under the Finnish Limited Liability Companies Act and intends to redeem the remaining option
rights in accordance with their terms and conditions.
Changes in reporting structure, effective from April 1, 2017
On March 17, 2017, Nokia announced changes in its organizational structure designed to accelerate the execution of its strategy,
including strengthening Nokia's ability to deliver strong financial performance, drive growth in services, meet changing customer demands in mobile networks, achieve cost savings and ongoing
transformation goals, and enable strategic innovation across Nokia's Networks business, effective April 1, 2017.
These
organizational changes include the separation of Nokia's Mobile Networks business group into two distinct, but closely linked, organizations: one focused on products and solutions,
called Mobile
Networks, and the other on services, called Global Services. The new Global Services business group is comprised of the Global Services organization that resided within the Mobile Networks business
group, including company-wide managed services. In the three months ended March 31, 2017, Global Services represented approximately 70% of total services net sales within the Networks business,
with the remaining amounts reported within the net sales of the other Networks business groups.
Starting
from the second quarter 2017, Nokia will change its reporting structure to reflect the updated organizational structure and provide additional information on Global Services.
11
Table of Contents
Financial discussion
The financial discussion included in this financial report of Nokia's results comprises the results of Nokia's businessesNokia's
Networks business and Nokia Technologies, as well as Group Common and Other. For more information on our reportable segments, please refer to note 2, "Segment information and eliminations", in
the Financial statement information section in this report.
12
Table of Contents
Nokia's Networks business
Operational highlights
Ultra Broadband NetworksMobile Networks
Nokia announced changes in its organization to accelerate the execution of the company strategy, including the separation of Nokia's Mobile
Networks business group into two distinct, but closely linked, organizations: one focused on products and solutions, called Mobile Networks, and the other on services, called Global Services.
Effective from April 1, 2017, Marc Rouanne is President of the Mobile Networks business group.
Nokia
signed its largest-ever contract by revenue in Latin America with consortium ALTÁN Redes to build a major mobile broadband network in Mexico. Known as Red
Compartida, the mobile broadband network will use Nokia's 4.5G Pro radio access based on AirScale technology and IP and optical backhaul technology to deliver mobile broadband coverage for 92% of
Mexico's population over five regions.
Nokia
and Three UK, part of CK Hutchison, signed a deal to deploy the world's first fully integrated cloud native core network to enable massive scalability and give Three UK the ability
to respond quickly to customers' dynamic service needs.
Nokia
launched 5G FIRST, which incorporates AirScale and AirFrame technologies, including massive MIMO Adaptive Antenna, Cloud Packet Core and mobile transport, to bring new capabilities
to operators as they prepare for 5G-ready architectures. It will be commercially available in the second half of 2017.
Nokia
announced plans to introduce 4.9G by the end of 2017 with the introduction of the AirScale massive MIMO Adaptive Antenna, which increases cell capacity by up to eight times
compared to 4G LTE.
Nokia's
5G-ready AirScale platform saw a host of developments, with TIM in Brazil signing on to upgrade to 4.5G Pro; Ooredoo Qatar deploying 4.5G Pro; and T-Mobile in the US successfully
demonstrating 4.5G Pro features.
Nokia
and Intel announced 5G acceleration labs in the US and Finland to help operators deliver 5G innovation, from device to cloud.
Ultra Broadband NetworksFixed Networks
Nokia launched its 10G passive optical network and point-to-point fiber mobile transport solution, that enables operators to leverage existing
fiber networks to converge business, residential and mobile services on a single infrastructure, and provide the capacity and coverage that 5G demands. The solution is part of Nokia's end-to-end
mobile transport portfolio and our unique, global ability to build 5G-ready 'anyhaul' networks with them.
Nokia
and Energia Communications of Japan signed a nationwide distributor agreement for G.fast fixed ultra-broadband access technology, which delivers fiber-like speeds over copper over
short distances.
A
demonstration by Nokia and Austrian operator A1 of Nokia's XG-FAST technology realized data transmission rates in excess of 11 Gbps over copper.
IP Networks and ApplicationsIP/Optical Networks
Reliance Jio Infocomm Limited selected Nokia's optical core and metro solution to handle massive traffic growth on its pan-India 4G LTE network
as it builds broadband connectivity for all of India.
12
Table of Contents
Nokia
and Facebook broke subsea spectral efficiency records in transatlantic field tests.
Vodafone
selected the Nuage Virtualized Service Platform to transform and automate application delivery across both the datacenter and WAN.
Sky,
Europe's leading entertainment company, selected Nokia's video services offering, Velocix Content Delivery Network, to enhance its high-speed and data services for the company's
millions of UK customers.
Nokia
and Tata Power Delhi Distribution joined forces to modernize electrical grids with advanced communications networks.
Xiaomi,
a leading Chinese internet service provider and electronics manufacturer, selected Nokia's data center interconnect solution to connect its data centers and create a private
cloud network.
Nokia
completed the acquisition of U.S. company Deepfield, strengthening its network and service automation solutions with real-time, big data analytics.
Multiple
portfolio launches included: the 7705 SAR-Hm, an LTE/3G wireless router for utilities and other high growth vertical markets, like Smart Cities; and new Cloud Packet Core and IP
mobile transport solutions to support move to Internet of Things ("IoT"), 5G and cloud.
IP Networks and ApplicationsApplications & Analytics
Nokia continued to make the long-term structural changes in Applications & Analytics necessary to transform its organization and
operations. Changes include establishing a Transformation Office led by an experienced team with strong track records; investing in go-to-market capabilities by creating a new organizational structure
with strong leadership that includes 100 percent dedicated Applications & Analytics account managers; delivering key elements of a Common Software Foundation that will reduce middleware
costs by 60% while improving customer experience; and strengthening its services/delivery practices with more standardized operations and refined portfolios.
Nokia
acquired Comptel, a specialist in orchestration, data processing, intelligent customer engagement applications and service monetization. The move bolsters Nokia's software
portfolio and go-to-market capabilities.
Nokia
had particularly strong performance in Business Support Systems due to a strong installed base and demand from customers related to their focus on improving charging models. The
company also performed well in its emerging businesses which consist of Self-Organizing Networks ("SON"), IoT,
security, analytics and cloud solutions. During Q1, Nokia established itself as the leader in the SON market with 98 cumulative Eden-NET customers; it won several new IoT deals including the first one
using the long range, low power wireless protocol; added 20 new analytics contracts; and captured three new identity management/core security deals.
Nokia
announced updates to its Intelligent Management Platform for All Connected Things (IMPACT). New features include pre-integrated applications for public sector/smart city and
transportation/automotive verticals and machine learning-powered video analytics, making it easier for customers to deploy new IoT services and business models.
Nokia
launched updates to its software portfolio to help service providers automate operations, derive intelligence from their data and monetize services. The updates include the Nokia
evolved Service Operations Center, Nokia NetAct Archive Cloud, and Nokia session border controller for cloud.
Nokia's
end-to-end IoT solution was named the "Best IoT Innovation for Mobile Networks" at the annual Global Mobile Awards (GLOMO) presented at Mobile World Congress 2017.
13
Table of Contents
Total Services
Nokia announced changes in its organization to accelerate the execution of the company strategy, including the separation of Nokia's Mobile
Networks business group into two distinct, but closely linked, organizations: one focused on products and solutions, called Mobile Networks, and the other on services, called Global Services.
Effective from April 1, 2017, Igor Leprince is President of the Global Services business group.
The
highlights below are for the totality of all services within Nokia's Networks business.
Nokia
announced a major five-year managed services deal with VimpelCom of Russia to oversee its fixed, mobile and transport networks.
Nokia
launched a global IoT network grid as a managed service that provides a one stop shop for making global IoT connectivity a reality. Also complemented its IoT portfolio with IoT
Readiness Services.
Nokia
introduced the industry's first telco digital assistant Nokia MIKA, customized for telecommunications operators, powered by Nokia AVA. Also complemented Nokia AVA with Predictive
Repair.
Nokia
extended its 5G Acceleration Services portfolio with 5G transformation consulting, 5G phase one network design and 5G cross-domain architecture services.
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
Nokia's Networks business
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Net sales
|
|
|
4,902
|
|
|
5,193
|
|
|
(6
|
)%
|
Gross profit
|
|
|
1,935
|
|
|
2,005
|
|
|
(3
|
)%
|
Gross margin %
|
|
|
39.5
|
%
|
|
38.6
|
%
|
|
90bps
|
|
R&D
|
|
|
(944
|
)
|
|
(977
|
)
|
|
(3
|
)%
|
SG&A
|
|
|
(667
|
)
|
|
(669
|
)
|
|
0
|
%
|
Other income and expenses
|
|
|
0
|
|
|
(22
|
)
|
|
(100
|
)%
|
Operating profit
|
|
|
324
|
|
|
337
|
|
|
(4
|
)%
|
Operating margin %
|
|
|
6.6
|
%
|
|
6.5
|
%
|
|
10bps
|
|
Net sales by region
|
|
|
|
|
|
|
|
|
|
|
Nokia's Networks business
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Asia-Pacific
|
|
|
1,046
|
|
|
1,096
|
|
|
(5
|
)%
|
Europe
|
|
|
976
|
|
|
1,205
|
|
|
(19
|
)%
|
Greater China
|
|
|
556
|
|
|
572
|
|
|
(3
|
)%
|
Latin America
|
|
|
227
|
|
|
341
|
|
|
(33
|
)%
|
Middle East & Africa
|
|
|
403
|
|
|
394
|
|
|
2
|
%
|
North America
|
|
|
1,694
|
|
|
1,585
|
|
|
7
|
%
|
Total
|
|
|
4,902
|
|
|
5,193
|
|
|
(6
|
)%
|
Financial discussion
Net sales and operating profit
In the three months ended March 31, 2017, Nokia's Networks business net sales decreased 6% compared to the three months ended
March 31, 2016.
14
Table of Contents
A
discussion of our results within Ultra Broadband Networks and IP Networks and Applications is included in the sections "Ultra Broadband Networks" and "IP Networks and Applications"
below.
Three months ended March 31, 2017 compared to the three months ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR million
|
|
Net
Sales
|
|
%
change
|
|
Gross
profit
|
|
(R&D)
|
|
(SG&A)
|
|
Other
income
and
(expenses)
|
|
Operating
profit
|
|
Change in
operating
margin %
|
|
Ultra Broadband Networks
|
|
|
(144
|
)
|
|
(4
|
)%
|
|
23
|
|
|
31
|
|
|
7
|
|
|
9
|
|
|
71
|
|
|
230bps
|
|
IP Networks and Applications
|
|
|
(149
|
)
|
|
(10
|
)%
|
|
(93
|
)
|
|
2
|
|
|
(5
|
)
|
|
12
|
|
|
(84
|
)
|
|
(560)bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Networks business
|
|
|
(291
|
)
|
|
(6
|
)%
|
|
(70
|
)
|
|
33
|
|
|
2
|
|
|
22
|
|
|
(13
|
)
|
|
10bps
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
year-on year net positive fluctuation in other income and expenses was primarily due to lower doubtful account allowances and a settlement with a component supplier.
Ultra Broadband Networks
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
Ultra Broadband Networks
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Net sales
|
|
|
3,597
|
|
|
3,741
|
|
|
(4
|
)%
|
Mobile Networks
|
|
|
3,096
|
|
|
3,122
|
|
|
(1
|
)%
|
Fixed Networks
|
|
|
501
|
|
|
619
|
|
|
(19
|
)%
|
Gross profit
|
|
|
1,375
|
|
|
1,352
|
|
|
2
|
%
|
Gross margin %
|
|
|
38.2
|
%
|
|
36.1
|
%
|
|
210bps
|
|
R&D
|
|
|
(606
|
)
|
|
(637
|
)
|
|
(5
|
)%
|
SG&A
|
|
|
(464
|
)
|
|
(471
|
)
|
|
(1
|
)%
|
Other income and expenses
|
|
|
(5
|
)
|
|
(14
|
)
|
|
|
|
Operating profit
|
|
|
301
|
|
|
230
|
|
|
31
|
%
|
Operating margin %
|
|
|
8.4
|
%
|
|
6.1
|
%
|
|
230bps
|
|
Net sales by region
|
|
|
|
|
|
|
|
|
|
|
Ultra Broadband Networks
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Asia-Pacific
|
|
|
783
|
|
|
859
|
|
|
(9
|
)%
|
Europe
|
|
|
630
|
|
|
779
|
|
|
(19
|
)%
|
Greater China
|
|
|
448
|
|
|
483
|
|
|
(7
|
)%
|
Latin America
|
|
|
151
|
|
|
217
|
|
|
(30
|
)%
|
Middle East & Africa
|
|
|
301
|
|
|
293
|
|
|
3
|
%
|
North America
|
|
|
1,284
|
|
|
1,110
|
|
|
16
|
%
|
Total
|
|
|
3,597
|
|
|
3,741
|
|
|
(4
|
)%
|
Financial discussion
Net sales
In the three months ended March 31, 2017, Ultra Broadband Networks net sales decreased 4% compared to the three months ended
March 31, 2016.
The
year-on-year decrease in Ultra Broadband Networks net sales in the three months ended March 31, 2017 was due to Fixed Networks and, to a lesser extent, Mobile Networks.
15
Table of Contents
The
net sales performance in Fixed Networks was in comparison to a particularly strong three months ended March 31, 2016, which was driven by high order intake in the fourth
quarter 2015. The decrease in Fixed Networks net sales was primarily due to broadband access and, to a lesser extent, services and digital home. The year-on-year decrease was primarily related to two
specific customers, with one customer completing a large project in Asia-Pacific and another customer reducing its level of spending in Latin America. For broadband access, the decrease was primarily
related to Asia-Pacific. For services, the decrease was primarily related to Europe. For digital home, the decrease was primarily related to Asia-Pacific and Latin America.
The
slight decrease in Mobile Networks net sales was primarily due to services, partially offset by advanced mobile networks solutions and radio networks. From a growth perspective,
small cells continued to deliver strong performance on a year-on-year basis. For services, the decrease was primarily related to Europe, Latin America and North America. For advanced mobile networks
solutions, the increase was primarily related to North America. For radio networks, the increase was primarily related to North America, partially offset by Europe, Greater China, Asia-Pacific and
Latin America.
Operating profit
In the three months ended March 31, 2017, Ultra Broadband Networks operating profit increased compared to the three months ended
March 31, 2016 primarily due to lower R&D expenses, higher gross profit and a net positive fluctuation in other income and expenses.
The
increase in Ultra Broadband Networks gross profit compared to the three months ended March 31, 2016 was primarily due to Mobile Networks, partially offset by Fixed Networks.
The increase in gross profit in Mobile Networks compared to the three months ended March 31, 2016 was primarily due to higher gross margin related to regional mix, with a higher proportion of
net sales in North America, and business mix, with a lower proportion of services in the overall sales mix. The decrease in gross profit in Fixed Networks compared to the three months ended
March 31, 2016 was primarily due to lower net sales, with gross margin remaining solid on a year-on-year basis.
The
decrease in Ultra Broadband Networks R&D expenses compared to the three months ended March 31, 2016 was primarily due to Mobile Networks, partially offset by Fixed Networks.
The decrease in Mobile Networks R&D expenses compared to the three months ended March 31, 2016 was primarily due to lower personnel expenses, primarily reflecting progress related to Nokia's
cost savings program. The increase in Fixed Networks compared to the three months ended March 31, 2016 was primarily due to higher spending related to the cable access market, including the
acquisition of Gainspeed in the third quarter 2016. To drive growth and higher returns, expanding to the cable access adjacency is a key priority for Fixed Networks.
Ultra
Broadband Networks other income and expenses was an expense of EUR 5 million in the three months ended March 31, 2017, compared to an expense of EUR 14 million
in the three months ended March 31, 2016. On a year-on-year basis, the change was primarily related to doubtful account allowances in Mobile Networks.
16
Table of Contents
IP Networks and Applications
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
IP Networks and Applications
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Net sales
|
|
|
1,304
|
|
|
1,453
|
|
|
(10
|
)%
|
IP/Optical Networks
|
|
|
945
|
|
|
1,094
|
|
|
(14
|
)%
|
IP Routing
|
|
|
621
|
|
|
717
|
|
|
(13
|
)%
|
Optical Networks
|
|
|
324
|
|
|
377
|
|
|
(14
|
)%
|
Applications & Analytics
|
|
|
359
|
|
|
359
|
|
|
0
|
%
|
Gross profit
|
|
|
560
|
|
|
653
|
|
|
(14
|
)%
|
Gross margin %
|
|
|
42.9
|
%
|
|
44.9
|
%
|
|
(200)bps
|
|
R&D
|
|
|
(338
|
)
|
|
(340
|
)
|
|
(1
|
)%
|
SG&A
|
|
|
(203
|
)
|
|
(198
|
)
|
|
3
|
%
|
Other income and expenses
|
|
|
4
|
|
|
(8
|
)
|
|
|
|
Operating profit
|
|
|
23
|
|
|
107
|
|
|
(79
|
)%
|
Operating margin %
|
|
|
1.8
|
%
|
|
7.4
|
%
|
|
(560)bps
|
|
Net sales by region
|
|
|
|
|
|
|
|
|
|
|
IP Networks and Applications
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Asia-Pacific
|
|
|
263
|
|
|
238
|
|
|
11
|
%
|
Europe
|
|
|
346
|
|
|
426
|
|
|
(19
|
)%
|
Greater China
|
|
|
107
|
|
|
89
|
|
|
20
|
%
|
Latin America
|
|
|
76
|
|
|
125
|
|
|
(39
|
)%
|
Middle East & Africa
|
|
|
102
|
|
|
101
|
|
|
1
|
%
|
North America
|
|
|
410
|
|
|
475
|
|
|
(14
|
)%
|
Total
|
|
|
1,304
|
|
|
1,453
|
|
|
(10
|
)%
|
Financial discussion
Net sales
In the three months ended March 31, 2017, IP Networks and Applications net sales decreased 10% compared to the three months ended
March 31, 2016.
The
year-on-year decrease in IP Networks and Applications net sales in the three months ended March 31, 2017 was due to IP/Optical Networks.
The
net sales performance in IP/Optical Networks was in comparison to a particularly strong three months ended March 31, 2016, which was driven by high order intake in the fourth
quarter 2015. The decrease in IP/Optical Networks net sales was primarily due to weakness in the communication service provider market for both IP routing and optical equipment. For IP routing, the
decrease was primarily related to North America, Europe and Latin America, partially offset by growth in Greater China. In addition, IP routing net sales were negatively affected by lower resale of
third party IP routers. For optical networks, the decrease was primarily related to Europe, Latin America and Middle East and Africa, partially offset by growth in Asia-Pacific.
17
Table of Contents
Operating profit
In the three months ended March 31, 2017, IP Networks and Applications operating profit decreased compared to the three months ended
March 31, 2016 primarily due to lower gross profit, partially offset by net positive fluctuation in other income and expense.
The
decrease in IP Networks and Applications gross profit compared to the three months ended March 31, 2016 was primarily due to IP/Optical Networks. The decrease in gross profit
and gross margin in IP/Optical Networks compared to the three months ended March 31, 2016 was primarily due to lower net sales.
IP
Networks and Applications other income and expenses was an income of EUR 4 million in the three months ended March 31, 2017, compared to an expense of EUR
8 million in the three months ended March 31, 2016. On a year-on-year basis, the change was primarily due to IP/Optical Networks and related to a settlement with a component supplier.
Nokia Technologies
Operational highlights
Licensing
Nokia's exclusive brand licensee for mobile phones and tablets, HMD Global, introduced three Nokia branded smartphones and a reimagined Nokia
3310 at Mobile World Congress. HMD announced that the products will begin shipping in the second quarter 2017.
Digital Media and Digital Health
Nokia announced that its Withings digital health products will launch under the Nokia brand in summer 2017. The rebranding will include
Withings' connected scales, trackers, blood pressure monitors and home cameras. Nokia also announced a redesigned Health Mate application to make it easier to add devices and share progress with
family and friends.
Nokia
launched its Patient Care Platform to enable doctors and patients the ability to remotely monitor patients with their smart devices. The platform, which is being used in a trial by
the UK's National Health Service, aims to better prevent and manage chronic conditions and drive timely and targeted patient care.
Nokia
announced that Chinese digital entertainment platform, Youku, chose the OZO virtual reality ecosystem of technologies to bring virtual reality content to the more than
500 million monthly active users of Youku's online video platform.
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
Nokia Technologies
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Net sales
|
|
|
247
|
|
|
198
|
|
|
25
|
%
|
Gross profit
|
|
|
234
|
|
|
196
|
|
|
19
|
%
|
Gross margin %
|
|
|
94.7
|
%
|
|
99.0
|
%
|
|
(430)bps
|
|
R&D
|
|
|
(61
|
)
|
|
(58
|
)
|
|
5
|
%
|
SG&A
|
|
|
(58
|
)
|
|
(32
|
)
|
|
81
|
%
|
Other income and expenses
|
|
|
0
|
|
|
0
|
|
|
|
|
Operating profit
|
|
|
116
|
|
|
106
|
|
|
9
|
%
|
Operating margin %
|
|
|
47.0
|
%
|
|
53.5
|
%
|
|
(650)bps
|
|
18
Table of Contents
Financial discussion
Net sales
In the three months ended March 31, 2017, Nokia Technologies net sales increased 25% compared to the three months ended March 31,
2016. Of the EUR 247 million of net sales in the three months ended March 31, 2017, EUR 231 million related to patent and brand licensing and EUR 16 million related to
digital health and digital media.
The
year-on-year increase in Nokia Technologies net sales in the three months ended March 31, 2017 was primarily related to higher net sales related to an IPR license agreement
that was expanded in the third quarter 2016, our brand partnership with HMD, non-recurring net sales primarily related to a new license agreement in the three months ended March 31, 2017 and
the acquisition of Withings in the second quarter 2016. This was partially offset by the absence of licensing income related to certain expired agreements and lower licensing income from certain
existing licensees. The vast majority of the net sales related to the new license agreement in the first quarter of 2017 were non-recurring in nature and related to prior periods. Approximately one
third of the overall year-on-year increase in Nokia Technologies net sales in the three months ended March 31, 2017 was due to non-recurring net sales.
Operating profit
In the three months ended March 31, 2017, the increase in Nokia Technologies operating profit compared to the three months ended
March 31, 2016 was primarily due to higher gross profit, partially offset by higher SG&A and R&D expenses.
The
increase in Nokia Technologies gross profit compared to the three months ended March 31, 2016 was primarily due to higher net sales, partially offset by lower gross margin.
The lower gross margin was primarily due to a higher proportion of digital health and digital media net sales, which carries a lower gross margin than patent and brand licensing.
The
slight increase in Nokia Technologies R&D expenses compared to the three months ended March 31, 2016 was primarily due to the ramp-up of our digital health and digital media
businesses, including the acquisition of Withings, partially offset by lower patent portfolio costs.
The
increase in Nokia Technologies SG&A expenses compared to the three months ended March 31, 2016 was primarily due to increased licensing-related litigation costs and higher
marketing costs related to our digital health business.
Group Common and Other
Financial highlights
|
|
|
|
|
|
|
|
|
|
|
Group Common and Other
EUR million
|
|
Q1'17
|
|
Q1'16
|
|
YoY change
|
|
Net sales
|
|
|
254
|
|
|
235
|
|
|
8
|
%
|
Gross profit
|
|
|
27
|
|
|
27
|
|
|
0
|
%
|
Gross margin %
|
|
|
10.6
|
%
|
|
11.5
|
%
|
|
(90)bps
|
|
R&D
|
|
|
(76
|
)
|
|
(73
|
)
|
|
4
|
%
|
SG&A
|
|
|
(56
|
)
|
|
(47
|
)
|
|
19
|
%
|
Other income and expenses
|
|
|
6
|
|
|
(5
|
)
|
|
|
|
Operating loss
|
|
|
(99
|
)
|
|
(99
|
)
|
|
0
|
%
|
Operating margin %
|
|
|
(39.0
|
)%
|
|
(42.1
|
)%
|
|
310bps
|
|
19
Table of Contents
Financial discussion
Net sales
In the three months ended March 31, 2017, Group Common and Other net sales increased 8% compared to the three months ended
March 31, 2016.
The
year-on-year increase in Group Common and Other net sales in the three months ended March 31, 2017 was primarily due to Radio Frequency Systems, partially offset by Alcatel
Submarine Networks.
Operating profit
In the three months ended March 31, 2017, Group Common and Other operating loss was flat compared to the three months ended
March 31, 2016, primarily due to a net positive fluctuation in other income and expenses, partially offset by higher SG&A expenses.
The
increase in SG&A expenses compared to the three months ended March 31, 2016 was primarily related to real estate utilization.
Group
Common and Other income and expenses was an income of EUR 6 million in the three months ended March 31, 2017, compared to an expense of EUR 5 million in the
three months ended March 31, 2016. On a year-on-year basis, the change was primarily due to a gain on the sale of an investment.
20
Table of Contents
Cash and cash flow
Nokia change in net cash and other liquid assets (EUR billion)
-
*
-
Cash
outflows related to net interest were EUR 130 million, approximately half of which were non-recurring in nature, and related to Nokia's tender offer to
repurchase certain bonds.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EUR million, at end of period
|
|
Q1'17
|
|
Q1'16
|
|
YoY
change
|
|
Q4'16
|
|
QoQ
change
|
|
Total cash and other liquid assets
(1)
|
|
|
8,820
|
|
|
12,486
|
|
|
(29
|
)%
|
|
9,327
|
|
|
(5
|
)%
|
Net cash and other liquid assets
(1)
|
|
|
4,409
|
|
|
8,246
|
|
|
(47
|
)%
|
|
5,299
|
|
|
(17
|
)%
|
-
(1)
-
Total
cash and other liquid assets consist of the following line items from our consolidated statement of financial position: Cash and cash equivalents,
available-for sale investments, liquid assets and investments at fair value through profit and loss, liquid assets. Net cash and other liquid assets equals total cash and other liquid assets less
long-term interest-bearing liabilities and less short-term interest-bearing liabilities. For details, please refer to note 13, "Notes to the consolidated statement of cash flows", in the
Financial statement information section in this report.
In
the three months ended March 31, 2017, Nokia's total cash and other liquid assets decreased by EUR 507 million and Nokia's net cash and other liquid assets decreased by
EUR 890 million. In the first quarter Nokia issued EUR 1,241 million of new bonds, and repurchased, through a tender offer, EUR 731 million of bonds including 2019 EUR notes,
2028 USD notes and 2029 USD notes. For details, please refer to note 12 "Interest-Bearing Liabilities" in the Financial statement information section in this report.
Foreign
exchange rates had EUR 49 million positive impact on net cash.
In
the three months ended March 31, 2017, net cash and other liquid assets were affected by the following factors:
In
the three months ended March 31, 2017, Nokia's net cash from operating activities was a negative EUR 473 million:
-
-
Nokia's adjusted net profit before changes in net working capital was EUR 291 million in the three months ended March 31, 2017.
-
-
Total cash outflows related to working capital were EUR 544 million.
21
Table of Contents
-
-
Nokia had EUR 153 million of restructuring and associated cash outflows in the three months ended March 31, 2017.
Excluding this, net working capital generated a decrease in net cash of EUR 391 million, primarily due to an increase in inventories and a decrease in short-term liabilities, partially offset
by a decrease in receivables.
-
-
The cash outflows related to the increase in inventories were EUR 386 million.
-
-
The cash outflows related to the decrease in short-term liabilities were EUR 242 million.
-
-
The cash inflows related to the decrease in receivables were EUR 237 million.
In
addition, Nokia's cash outflows related to income taxes were EUR 90 million. Also, cash outflows related to net interest were EUR 130 million, approximately half of
which were non-recurring in nature, and related to Nokia's tender offer to repurchase the 6.75% notes due February 4, 2019, the 6.50% debentures due January 15, 2028 and the 6.45%
debentures due March 15, 2029. The purpose of these transactions was to optimize Nokia's debt maturity profile, to lower average interest expense run rate and to eliminate subsidiary level
external debt.
In
the three months ended March 31, 2017, Nokia's net cash outflows from investing activities primarily related to the acquisition of subsidiaries of EUR 79 million and
purchase of shares in associated companies of EUR 10 million and capital expenditures of EUR 150 million.
In
the three months ended March 31, 2017, Nokia's net cash outflows from financing activities primarily related to share repurchases of EUR 237 million.
Shares
The total number of Nokia shares on March 31, 2017, equaled 5,836,055,012. On March 31, 2017, Nokia and its subsidiary companies
owned 153,302,017 Nokia shares, representing approximately 2.6% of the total number of Nokia shares and voting rights.
Dividend
As announced earlier, the Board proposes to the Annual General Meeting that a dividend of EUR 0.17 per share be paid for the financial
year 2016. The ex-dividend date would be on May 23, 2017 at New York Stock Exchange and on May 24, 2017 at Nasdaq Helsinki and Euronext Paris. The dividend record date would be on
May 26, 2017 and the dividend is expected to be paid on or about June 9, 2017. The actual dividend pay date outside Finland will be determined by the practices of the intermediary banks
transferring the dividend payments.
22
Table of Contents