Nokia Corporation Financial Report for Q1 2021

Nokia Corporation Financial Report for Q1 2021

Nokia Corporation

Interim report

29 April 2021 at 08:00 EET

Nokia Corporation Financial Report for Q1 2021

Sales growth in Q1 driving margin increase and strong cash generation

Strong start to the year with constant currency net sales up 9% year-on-year, driven by strong growth in Network Infrastructure and solid growth in Mobile Networks; reported net sales increased 3%

Enterprise constant currency net sales up 18% year-on-year, as we gained 63 new customers, more than doubling the number we added in Q1 2020; reported net sales increased 14%

Comparable gross margin of 38.2% (reported 37.9%), reflecting improvements in Mobile Networks, mainly driven by 5G growth and favorable product and regional mix, and broad improvements across Network Infrastructure

Comparable operating margin of 10.9% (reported 8.5%), with improvements in comparable operating profit across all business groups

Comparable diluted EPS of EUR 0.07; reported diluted EPS of EUR 0.05

Strong cash flow performance, driven by operating profit and good collection of receivables

Solid liquidity position, with net cash of EUR 3.7bn and total cash of EUR 8.8bn

Executing well on three-phased approach to achieve sustainable, profitable growth and technology leadership set out at Capital Markets Day

Full year 2021 and 2023 outlook maintained

This is a summary of the Nokia Corporation financial report for Q1 2021 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Groups financial information as well as on Nokias outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. Investors should not solely rely on summaries of Nokias financial reports but should also review the complete reports with tables.

PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q1 2021 RESULTS

We have delivered a robust start to the year with strong net sales, operating margin and cash flow. Today's results demonstrate that we are on track to deliver on our three-phased plan to achieve sustainable, profitable growth and technology leadership as announced at our recent Capital Markets Day.

I was particularly pleased by strong sales growth across our Network Infrastructure business group driven by increasing demand for next generation connectivity; good progress in Mobile Networks in securing full portfolio competitiveness; continued double-digit sales growth with our Enterprise customers; double-digit sales growth in North America; and good net sales development for Nokia Technologies.

At this point we are maintaining our Outlook for the full year, as we want to see how 2021 continues to develop. The solid first quarter provides a good foundation for achieving the higher end of the 7 to 10% comparable operating margin range. We expect our typical quarterly earnings seasonality to be less pronounced in 2021, and we continue to monitor overall market developments including visibility for semiconductor availability. I am proud of how we have continued to successfully deliver to our customers during the global semiconductor shortage.

I want to recognize all the hard work that the Nokia team has put in and thank them for delivering such a strong first quarter.

FINANCIAL RESULTS

EUR million (except for EPS in EUR) Q121 Q120 YoY change Constant currency YoY change

Reported results

Net sales 5 076 4 913 3% 9%

Gross margin %1 37.9% 35.3% 260bps

Research and development expenses1 (996) (1 007) (1)%

Selling, general and administrative expenses1 (649) (780) (17)%

Operating profit/(loss) 431 (76)

Operating margin % 8.5% (1.5)%

Profit/(loss) for the period 263 (115)

EPS, diluted 0.05 (0.02)

Net cash and current financial investments 3 689 1 320 179%

Comparable results

Net sales 5 076 4 914 3% 9%

Gross margin % 38.2% 36.4% 180bps

Research and development expenses (973) (974)

Selling, general and administrative expenses (552) (672) (18)%

Operating profit 551 116 375%

Operating margin % 10.9% 2.4% 850bps

Profit for the period 375 33 1 036%

EPS, diluted 0.07 0.01 600%

ROIC2 15.3% 11.5% 380bps

1) In Q4 2020, Nokia reclassified certain items of income and expenses from other operating income and expenses to the functions. The comparative reported results for Q1'20 have been revised accordingly. Refer to Note 1, Basis of preparation, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details.

2) Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters' ending balances. Refer to Note 10, Performance measures, in the Financial statement information section included in Nokia Corporation Financial Report for Q1 2021 for details.

Reconciliation of reported operating profit/(loss) to comparable operating profit

EUR million Q121 Q120 YoY change

Reported operating profit/(loss) 431 (76)

Amortization of acquired intangible assets 97 101

Restructuring and associated charges 36 87

Gain on sale of fixed assets (15) 0

Other 2 4

Comparable operating profit 551 116 375%

OUTLOOK

Full year 2021 Full year 2023

Net sales, adjusted for currency fluctuations1 EUR 20.6 billion to EUR 21.8 billion Grow faster than the market

Comparable operating margin2 7 to 10% 10 to 13%

Free cash flow3 Positive Clearly positive

Comparable ROIC2,4 10 to 15% 15 to 20%

1)Assuming continuation of 2020 year-end EUR/USD rate of 1.23

2) Comparable measures exclude intangible asset amortization and other purchase price fair value adjustments, goodwill impai

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