Nokia Corporation Financial Report for Q3 and January-September 2017

Nokia Corporation

Interim report

October 26, 2017 at 08:00 (CET 1)

Nokia Corporation Financial Report for Q3 and January-September 2017

Strong earnings driven by Nokia Technologies

This is a summary of the Nokia Corporation financial report for Q3 and January-September 2017 published today. The complete financial report for Q3 and January-September 2017 with tables is available at www.nokia.com/financials. Investors should not rely on summaries of our financial reports only, but should review the complete reports with tables.

FINANCIAL HIGHLIGHTS

Non-IFRS net sales in Q3 2017 of EUR 5.5bn (EUR 6.0bn in Q3 2016). Reported net sales in Q3 2017 of EUR 5.5bn (EUR 5.9bn in Q3 2016). 7% year-on-year net sales decrease (4% decrease on a constant currency basis) in Q3 2017, on both a non-IFRS and reported basis.

Strong non-IFRS gross margin of 42.7% (40.0% in Q3 2016), and non-IFRS operating margin of 12.1% (9.3% in Q3 2016), driven by Nokia Technologies and resilience in Nokias Networks business. Reported gross margin of 39.7% (37.9% in Q3 2016) and reported operating margin of negative 4.2% (positive 0.9% in Q3 2016).

Non-IFRS diluted EPS in Q3 2017 of EUR 0.09 (EUR 0.04 in Q3 2016) benefited from a lower than expected non-IFRS tax rate of 15%. Reported diluted EPS in Q3 2017 of negative EUR 0.03 (negative EUR 0.02 in Q3 2016).

Given the strong year-on-year group-level performance with both gross and operating margins up significantly and continued momentum in the execution of our strategy, Nokias Board of Directors plans to propose a dividend of EUR 0.19 per share for 2017 (EUR 0.17 for 2016).

Nokias Networks business

9% year-on-year net sales decrease (6% decrease on a constant currency basis) in Q3 2017, primarily due to Ultra Broadband Networks, reflecting challenges related to market conditions and certain projects in Mobile Networks, primarily in North America and Greater China.

In Q3 2017, on a constant currency basis, the year-on-year net sales performance in IP Networks and Applications and Global Services improved, when compared to the year-on-year performance in Q2 2017. On a constant currency basis, year-on-year net sales grew by 2% in both Global Services and IP Routing.

Solid Q3 2017 gross margin of 38.6% supported by continued operational discipline. Operating margin of 6.9% reflected weak results in Ultra Broadband Networks, which was partially offset by improved year-on-year performance in Global Services and IP Networks and Applications.

Nokia Technologies

37% year-on-year net sales increase and 73% year-on-year operating profit increase in Q3 2017, primarily related to a settled arbitration in the third quarter 2017. Approximately EUR 180 million of the net sales were non-recurring in nature and related to catch-up net sales for prior periods. With fast and effective execution against our patent licensing strategy, we have approximately doubled our recurring license revenue from EUR 578 million in 2014.

Third quarter and January-September 2017 non-IFRS results. Refer to note 1, Basis of Preparation, in the Financial statement information section for further details 1

EUR million (except for EPS in EUR) Q317 Q316 YoY change Q217 QoQ change Q1-Q317 Q1-Q316 YoY change

Net sales - constant currency (non-IFRS) (4)% 2% (4)%

Net sales (non-IFRS) 5 537 5 956 (7)% 5 629 (2)% 16 555 17 241 (4)%

Nokias Networks business 4 823 5 329 (9)% 4 971 (3)% 14 696 15 744 (7)%

Ultra Broadband Networks 2 099 2 519 (17)% 2 165 (3)% 6 500 7 171 (9)%

Global Services 1 359 1 389 (2)% 1 448 (6)% 4 168 4 277 (3)%

IP Networks and Applications 1 365 1 421 (4)% 1 358 1% 4 028 4 295 (6)%

Nokia Technologies 483 353 37% 369 31% 1 099 745 48%

Group Common and Other 251 297 (15)% 307 (18)% 812 803 1%

Gross profit (non-IFRS) 2 365 2 381 (1)% 2 350 1% 6 911 6 814 1%

Gross margin % (non-IFRS) 42.7% 40.0% 270bps 41.7% 100bps 41.7% 39.5% 220bps

Operating profit (non-IFRS) 668 556 20% 574 16% 1 583 1 233 28%

Nokias Networks business 334 435 (23)% 406 (18)% 1 064 1 085 (2)%

Ultra Broadband Networks 78 278 (72)% 191 (59)% 514 589 (13)%

Global Services 110 39 182% 123 (11)% 289 175 65%

IP Networks and Applications 146 119 23% 91 60% 260 321 (19)%

Nokia Technologies 390 226 73% 230 70% 736 421 75%

Group Common and Other (56) (105) (47)% (62) (10)% (217) (274) (21)%

Operating margin % (non-IFRS) 12.1% 9.3% 280bps 10.2% 190bps 9.6% 7.2% 240bps

Financial income and expenses (non-IFRS) (63) (78) (19)% (63) 0% (207) (174) 19%

Taxes (non-IFRS) (90) (216) (58)% (74) 22% (211) (491) (57)%

Profit (non-IFRS) 516 264 95% 441 17% 1 159 574 102%

Profit attributable to the equity holders of the parent (non-IFRS) 514 258 99% 449 14% 1 160 605 92%

Non-controlling interests (non-IFRS) 2 6 (67)% (9) 0 (31) (100)%

EPS, EUR diluted (non-IFRS) 0.09 0.04 125% 0.08 12% 0.20 0.11 82%

Third quarter and January-September 2017 reported results. Refer to note 1, Basis of Preparation, in the Financial statement information section for further details 1

EUR million (except for EPS in EUR) Q317 Q316 YoY change Q217 QoQ change Q1-Q317 Q1-Q316 YoY change

Net Sales - constant currency (4)% 2% (3)%

Net sales 5 500 5 896 (7)% 5 619 (2)% 16 496 16 984 (3)%

Nokias Networks business 4 823 5 329 (9)% 4 971 (3)% 14 696 15 744 (7)%

Ultra Broadband Networks 2 099 2 519 (17)% 2 165 (3)% 6 500 7 171 (9)%

Global Services 1 359 1 389 (2)% 1 448 (6)% 4 168 4 277 (3)%

IP Networks and Applications 1 365 1 421 (4)% 1 358 1% 4 028 4 295 (6)%

Nokia Technologies 483 353 37% 369 31% 1 099 745 48%

Group Common and Other 251 297 (15)% 307 (18)% 812 803 1%

Non-IFRS exclusions (38) (60) (37)% (11) 245% (59) (258) (77)%

Gross profit 2 185 2 233 (2)% 2 236 (2)% 6 546 5 841 12%

Gross margin %

LINK:	http://www.nokia.com/en_int/news/releases/2017/10/26/nokia-corporation...
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