Nokia sets key 2015 and long-term financial targets, outlines operational and strategic priorities
Nokia Corporation
Stock exchange release
November 14, 2014 at 09:00 (CET 1)
London, UK - Today, at its Capital Markets Day event, Nokia outlined its company vision and strategic priorities for its three businesses, set key 2015 and long-term financial targets for the company and detailed the operational priorities it expects will help create sustainable value for the long term.
The rapidly evolving world of technology provides the context for Nokias vision and strategy: now its about connecting things as well as people, and we expect to see more than 50 billion connected things - devices, modules and sensors - by 2025. We believe we have a powerful role to play in this world, a role of expanding the human possibilities of technology, said Nokia President and CEO, Rajeev Suri.
This meeting with investors comes on the heels of a quarter where we demonstrated growth across our three businesses. It showed the potential of this company when it starts to execute well, Suri said.
Nokia Group CFO Timo Ihamuotila added: The foundations for Nokia are solid. We have a strong balance sheet and are making clear progress with our capital structure optimization program.
As said before, recommencing an ordinary dividend is one of our main priorities, and we expect to continue to repurchase shares as part of our capital structure optimization program, Ihamuotila said.
Given Nokias pioneering role in connecting people and its strong technology capabilities, the companys vision is to expand the human possibilities of the connected world. Each of Nokias three businesses is well-placed to contribute to reaching this vision.
To tap the opportunities ahead and leverage its strong assets, Nokia will focus its approach to value creation on four areas:
- Disciplined business portfolio management and capital allocation;
- Clear business-specific strategies;
- Operational excellence; and
- A high-performance culture and strong values.
Looking at market dynamics, the competitive environment and the challenges that operators are facing, Nokia Networks strategy is to build on its current momentum while transforming to serve the operator of the future. The target is to grow slightly faster than the market over the long-term, create best-in-class, high quality products and services, and deliver on profitability goals.
The strategy for HERE is to leverage the location cloud and superior content in segments where Nokia can differentiate and capture value. The target is to win in automotive, grow in the enterprise segment and leverage the unique assets that HERE has with leading Internet players, while improving profitability through increased efficiency.
Nokia Technologies strategy builds on its world-leading patent portfolio. It will focus on patent, technology, and brand licensing as well as investment in products and services incubation based on Nokias innovation.
Nokias operational approach will help it execute its strategies. There will be a clear focus on operational excellence with the Nokia Business System (NBS), which provides a shared set of operating practices to create value across the three businesses. NBS includes three elements: investment optimization, performance management and talent management. Nokia also continues to target further improvement in its operations going forward, with a clear focus on efficiencies through automation and disciplined processes.
In addition to operational excellence, we are introducing a common, high-performance culture across the company. This is a long term project based on Nokias new values, and it will be implemented with discipline and rigor.
Long-term targets
- Nokia targets to grow Nokia Networks net sales slightly faster than the market over the long-term.
- Nokia now targets Nokia Networks long-term non-IFRS operating margin range to be 8% to 11%. This compares to Nokias previous target for Nokia Networks long-term non-IFRS operating margin range to be 5% to 10%.
- Nokia targets to record tax expenses in Nokia Groups Consolidated Income Statements at a long-term effective tax rate of approximately 25%. However, Nokia targets Nokia Groups cash tax obligations to continue at approximately EUR 250 million annually until Nokia Groups deferred tax assets have been fully utilized. The cash tax amount may vary depending on profit levels in different jurisdictions and the amount of license income potentially subject to withholding tax.
2015 business outlook
- Nokia expects Nokia Networks net sales to grow on a year-on-year basis for the full year 2015.
- Nokia expects Nokia Networks non-IFRS operating margin for the full year 2015 to be in-line with Nokia Networks new long-term non-IFRS operating margin range of 8% to 11%.
- Nokias outlook for Nokia Networks net sales and non-IFRS operating margin is based on expectations regarding a number of factors, including:
- Competitive industry dynamics;
- Product and regional mix;
- The timing of major network deployments; and
- Expected continued operational improvement.
- Nokia expects HEREs net sales to grow on a year-on-year basis for the full year 2015.
- Nokia expects HEREs non-IFRS operating margin for the full year 2015 to be between 5% and 10%.
- Nokia expects Nokia Technologies net sales to grow on a year-on-year basis for the full year 2015, excluding potential amounts related to the expected resolution of the arbitration with Samsung.
- Nokia expects Nokia Technologies non-IFRS operating expenses to increase meaningfully on a year-on-year basis for the full year 2015, related to higher investments in licensing activities, development of licensable technologies, and business enablers including go-to-market capabilities.
Additional financial guidance for 2015
- Nokia expects Nokia Group c
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Nokia sets key 2015 and long-term financial targets, outlines operational and strategic priorities
