Nokia 2020 Annual Report reveals company’s ownership interest in HMD Global, the maker of Nokia smartphones and more

For the turbulent year of 2020, where humanity faced multiple challenges, Nokia released the Annual Report about the company and the company’s performance in the year. The report is 227 pages long and covers segments like pay of top executives, number of employees, financial details, strategy overview, Nokia’s achievements in 2020, struggles and plans for the future.

From the financial point of view, Nokia reported 21.852 billion euro in revenue with an operating profit of 885 million euro. The revenue is 6% lower than in 2019, while the operating profit increased 82%. Nokia’s reported not profit/loss for 2020 was a loss of 2.513 billion euro.

Reason for such a reported loss is an increase in sales tax related to derecognition of Finnish deferred tax assets worth 2.9 billion euro. Nokia explained it this way: “The derecognition was required due to a regular assessment of our ability to utilize the tax assets in Finland in the foreseeable future that is done primarily based on our historical performance. These tax assets are not lost, and the derecognition can be reversed.”

In 2020, the average number of Nokia employees was 92039 with 6098 in Finland, 32686 in other European countries, 20511 in APAC region, 13749 in China, 12002 in North America, 3674 in Latin America, and 3319 in Middle East and Africa.

The bad news is that the number of employees declined compared to 2019 when Nokia employed 98322 or in 2018 when Nokia employed 103083 employees. With the change of leadership in 2020, Nokia also did a company wide survey that gathered responses from 50000 employees that said 88.7% of them feel pride in working at Nokia, while 75.1% agreed “that the working atmosphere enabled them to give their best.”

Nokia’s new CEO Pekka Lundmark has basically the same pay package as the former CEO Rajeev Suri, with a base salary of 1.3 million euro and different incentives based on performance and stock awards.

Maybe the most relevant part of Nokia to customers is Nokia Technologies, the unit that alongside patent and technology licensing, also handles brand licensing, which results we see in form of Nokia-branded smartphones, headphones, TVs, and even laptops. Nokia invested 4.1 billion euro in Research and Development in 2020, resulting in 1500 new patent fillings.

Nokia also mentioned some big names as customers of the OZO Audio technology including ASUS, Axon, HMD Global, OPPO, OnePlus, and Panasonic, while the company also has program to license Nokia’s patents in industries like connected cars, smart meters, payment terminals, asset tracking and other IoT device. As the word gets more connected, the company that contributes to the core “connection” technology will find more customers for its innovation.

In regards to HMD Global, we know Nokia was mentioned as one of the investors back in summer of 2020, which in fact was a share-conversion from a debt Nokia issued to HMD a year (or 2) earlier. In the “associated groups” of the annual report, it is mentioned that the group ownership interest of Nokia in HMD was 10.10% as of the end of 2020.

You can check the full report as PDF here. If you find more interesting tidbits from the report, be free to drop them in the comments down below. 🙂