FIH being careful about HMD Mobile

FIH, the owner of about 15% of HMD bonds, has published its financial report for 2022. The name HMD is mentioned 137 times in the report, which underlines the importance of FIH’s investment in the Finnish company.

However, FIH mentioned several times that HMD isn’t performing as well as expected and that the company will closely monitor the return on its investment in HMD Global. Since inflation hit some markets where Nokia phones are still selling well, HMD’s revenues have dropped, prompting the FIH to cancel investments in more Nokia-branded smartphones and phones. The FIH also asked HMD to divest some products such as headphones.

FIH had great difficulty in collecting debts from HMD and the risk of default increased dramatically. FIH also stated that HMD’s fundraising in 2022 was unsuccessful and the company was closely monitoring the amount of outstanding receivables and assessing whether HMD could continue as a going concern and the risk of collecting overdue receivables and the associated default risk.

HMD suffered a loss of market share and was affected by the Ukraine war. This caused HMD to cancel or reduce orders for Nokia-branded phones, leaving FIH with lower volumes and more cost erosion.

HMD’s business was reorganised in Q4 2022 to achieve significant synergies and cost savings. HMD’s Board has extended the Series A2 financing round and hopes to close the round in 2023. HMD will continue to monitor the market closely and focus on markets where there is growth. As inflation in Africa and India has forced many manufacturers to reduce their feature phone portfolio and focus on entry-level smartphones, HMD will do the same (the reason why we see many C series smartphones).



This report clearly shows why Florian Seiche left the company and why others will leave. I just briefly went through the report, but you can download it at this link.

Thanks Narender for the tip ;).