Q2 2018: Nokia below expectations; Reiterates full year guidance
Finnish networks giant Nokia published this morning quarterly Financial results for the second quarter of 2018. Reuters reports that Nokia performed below analysts’ expectations, posting non-IFRS operating profit of €334 million, while the analylsts expected €373 million.
IFRS results, that include additional costs, show that Nokia operated with an operating loss of €271 million in Q2 2018, which is a reduction compared to the loss of €433 million in Q2 2017. The three main company’s reporting divisions – Networks, Technologies, Group and others – saw a decrease in revenue compared to Q2 2017.
In terms of operating profit, Nokia Technologies saw an increase of 27% to €292 million year on year. The revenue decreased, though, but slightly – just 2% compared to Q2 2017. You can check the details in the tables below.
● Net sales in Q2 2018 were EUR 5.3bn, compared to EUR 5.6bn in Q2 2017. On a constant currency basis, net sales would have been down 1%.
● Non-IFRS diluted EPS in Q2 2018 was EUR 0.03, compared to EUR 0.08 in Q2 2017. Reported diluted EPS in Q2 2018 was negative EUR 0.05, compared to negative EUR 0.07 in Q2 2017.
● In the second quarter, net cash and current financial investments decreased by approximately EUR 2.0 billion, primarily due to two expected items: the payment of the dividend of approximately EUR 940 million; and the payment of employee incentives related to Nokia’s business performance in 2017, which was the primary driver of the decrease in liabilities within net working capital of approximately EUR 600 million.
In Nokia’s detailed financial statement (that you can download as PDF by clicking here), the company mentions that “Nokia Technologies is now focused on licensing”. HMD is also mentioned. To be precise, about HMD Nokia states this: Our brand licensee, HMD Global, continued the refresh of its portfolio of Android smartphones with the Nokia 5.1, Nokia 3.1 and Nokia 2.1 models for global markets; and HMD launched its first smartphone with a notched display, the Nokia X6, exclusive to China.
For the full year of 2018, Nokia reiterated that the company expects the situation in networks to improve, because of 5G contracts in the second part of 2018. I’m a bit sad with the statement about Nokia Technologies, because Nokia Tech was founded (at least it was presented to media in that way), as a startup incubator inside Nokia that should give birth to the next big business. They started with OZO and later Nokia Tech, but all got cancelled and now it’s just patents. Considering the strength of the Nokia brand, I see a lot of missed opportunities in the consumer business, but what do I know…
The Helsinki Stock Exchange didn’t positively react to this financial report and the stock took a 8% dive this morning.
Source: Nokia Investor Relations