Nokia Q4 and full year 2017 financial report released. Shares up almost 5%

Nokia Corporation released this morning their financial reports for the fourth quarter of 2017 and for the full year of 2017. In Q4 2017, Nokia reported (IFRS-includes ALU and other costs like goodwill impairment charges and similar) €6.65 billion ($8.25 billion) of revenue, approximately the same as last year. The Networks division saw a decline in revenue of 4% to €5.83 billion ($7.23 billion) that was split by groups as follows:

  • Ultra Broadband – €2.47 billion ($3.06 billion)
  • Global Sevices – €1.64 billion ($2.03 billion)
  • IP Networks and applications €1.71 billion ($2.12 billion)

Nokia Technologies in Q4 had €554 million ($687 million) in revenue, which is a 79% increase compared to Q4 2016. Operating profit of Networks was €647 million ($802 million), a decline of 25% Year-on-Year, while the Technologies division made €389 million ($482 million) in profits, an increase of 146% YoY. Overall, the company reported a loss of €378 million ($468 million). Under the non-IFRS standard of reporting (the one that excludes the above mentioned costs at the beginning of the article), in Q4 Nokia made a profit of €716 million ($887 million).

Nokia Technologies Q4 breakdown

Nokia Technologies had a great end of 2017, with significant increase in revenue and profits compared to the same period year before. Of the €554 million in revenue, €210 million were non-recurring, meaning a one-time or catch-up payment. In Q4 2016, Nokia Technologies had 0 euros of such payments. Last quarter, Digital Health and media earned Nokia €15 million in revenue, while patent and brand licensing took €540 million. No precise data for brand licensing was given.

Full year 2017

In full year 2017, Nokia reported €23.15 billion ($28.69 billion) in revenue, a 2% decline compared to 2016. The Networks business made €20.52 billion ($25.43 billion in revenue) and €781 million ($968 million) in profits, which was a 6% decline in revenue and 12% in profits compared to 2016. Nokia Technologies increased their yearly revenue by 57% to €1.65 billion ($2.05 billion) and profits by 94% to €1.12 billion ($1.39 billion). The company reported loss of €1.47 billion ($1.82 billion) for 2017, but under non-IFRS standard Nokia saw a profit of €1.875 billion ($2.32 billion) in 2017, a 50% increase on yearly basis.

Nokia Technologies full year breakdown

In 2017, Nokia Technologies nearly doubled their profits and cross the 1 billion (in euros and dollars) profit mark. For the whole year, the Health & Media division brought €54 million in revenue, while the patent and brand licensing business took €1.6 billion in revenue. The important thing is that Nokia points out that the revenue growth in patents happened mostly thanks to recurring sales, meaning Nokia earns more from regular license payments “new” partners like Apple, LG, Xiaomi or Huawei have made. To a lesser extent, brand partnership with HMD drove the growth, too.

Overall, Nokia beat estimates for Q4 2017. Earnings per share were €0.13, or €0.03 better than expected, with revenue beating estimates by €280 million. The proposed dividend for 2017 is €0.19, and Nokia stated, what will make shareholders especially happy, that they plan to further increase the dividend for 2018.

In terms of outlook, Nokia expects a 2-4% decline of the networks infrastructure market in 2018 and expects the situation to stabilize and turn black in 2019 and 2020, when a broader 5G deployment is expected.

The Helsinki stock exchange reacted positively to this report, and Nokia’s stock surged more than 4% at the start of the trading. This is really good news compared to Nokia’s competitor Ericsson whose shares fell 8% after the financial report yesterday.

Check the full results in PDF form here or on website here.