Nokia provides recast comparative segment results for 2020 reflecting new financial reporting structure

Nokia provides recast comparative segment results for 2020 reflecting new financial reporting structure

Nokia provides recast comparative segment results for 2020 reflecting new financial reporting structure

Nokia Corporation

Stock Exchange Release

11 March 2021 at 13:10 EET

Nokia today provides recast comparative segment financial information on a quarterly and annual basis for 2020, reflecting the previously announced organizational changes.

Changes in reporting structure, effective from 1 January 2021

On 29 October 2020, Nokia announced the first phase of its new strategy, outlining high-level strategic principles alongside a new operating model designed to better position the company for changing markets and align with customer needs. The new operating model is optimized for better accountability and transparency, increased simplicity and improved cost-efficiency. On 16 December 2020, Nokia provided an update on its new strategic focus areas and operating model together with its assumptions for its four new business groups and Group Common and Other in 2021 and over the longer term.

Accordingly, Nokia has revised its financial reporting structure to reflect its strategy, organizational structure and the way it evaluates operational performance and allocates resources. Reclassifications have been made in order to reflect the new organizational structure of the company.

The new model, effective from 1 January 2021, consists of four discrete business groups responsible for their own P&Ls and aligned with customer buying behavior: (i) Mobile Networks, (ii) Network Infrastructure, (iii) Cloud and Network Services and (iv) Nokia Technologies. As of 1 January 2021, these will also be the four reportable segments. In addition, Nokia will disclose segment-level data for Group Common and Other.

Within the new Network Infrastructure reportable segment, Nokia intends to provide net sales disclosure for the following businesses: (i) Fixed Networks, (ii) IP Networks, (iii) Optical Networks and (iv) Submarine Networks.

Nokia also intends to continue providing separate net sales disclosure for its different customer types: (i) Communication Service Providers, (ii) Enterprises and (iii) Licensees.

Changes from previous financial reporting structure to new financial reporting structure

The following seven product areas were reclassified into new reportable segments:

Network management was reclassified to Mobile Networks from Nokia Software

Submarine Networks was reclassified to Network Infrastructure from Group Common and Other

Packet Core was reclassified to Cloud and Network Services from Networks

Enterprise Solution Services was reclassified to Cloud and Network Services from Networks

Managed Services was reclassified to Cloud and Network Services from Networks

Network Cognitive Services was reclassified to Cloud and Network Services from Networks

Digital Automation and Analytics & IoT was reclassified to Cloud and Network Services from Group Common and Other

To summarize these changes, the new business groups will be comprised as follows:

Mobile Networks is now comprised of Mobile Access from our previous Networks reportable segment, plus the following reclassifications:

Into Mobile Networks:

Network management (from Nokia Software)

Out of Mobile Access from our previous Networks reportable segment:

Enterprise Solution Services (to Cloud and Network Services)

Managed Services (to Cloud and Network Services)

Network Cognitive Services (to Cloud and Network Services)

Network Infrastructure is now comprised of Fixed Access, IP Routing, and Optical Networks from our previous Networks reportable segment, plus the following reclassifications:

Into Network Infrastructure:

Submarine Networks (from Group Common and Other)

Out of IP Routing from our previous Networks reportable segment:

Packet Core (to Cloud and Network Services)

Cloud and Network Services is now comprised of our previous Nokia Software business group, plus the following reclassifications:

Into Cloud and Network Services:

Packet Core (from Networks)

Enterprise Solution Services (from Networks)

Managed Services (from Networks)

Network Cognitive Services (from Networks)

Digital Automation and Analytics & IoT (from Group Common and Other)

Out of our previous Nokia Software business group:

Network management (to Mobile Networks)

Finally, Group Common and Other continues to include Radio Frequency Systems (RFS), and the following product areas were reclassified into our new business groups:

Submarine Networks was reclassified to Network Infrastructure

Digital Automation and Analytics & IoT was reclassified to Cloud and Network Services

Recast comparative segment financial information for 2020

To provide a basis for comparison, the following summarized tables present a recasting of Nokias segment financial information on an unaudited basis for all four quarters of 2020 separately, as well as for the full year 2020.

More detailed tables are available in Excel format attached to this stock exchange release and at www.nokia.com/financials.

Mobile Networks (reported)

Q120 Q220 Q320 Q420 Q1-Q420

EUR million Reported Reported Reported Reported Reported

Net sales 2 345 2 424 2 448 3 180 10 397

Gross profit 706 848 878 1 232 3 663

Gross margin % 30.1% 35.0% 35.9% 38.7% 35.2%

Operating profit/(loss) (44) 104 182 273 515

Operating margin % (1.9)% 4.3% 7.4% 8.6% 5.0%

Other segment items

Depreciation and amortization (104) (105) (101) (103) (413)

Share of results of associated companies and joint ventures (4) 6 (2) 21 21

EBITDA 56 215 281 397 949

Mobile Networks (comparable)

Q120 Q220 Q320 Q420 Q1-Q420

EUR million

LINK:	https://www.nokia.com/about-us/news/releases/2021/03/11/nokia-provides...
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