Nokia Corporation Financial Report for Q4 and full-year 2017

Nokia Corporation

Financial Statement Release

February 1, 2018 at 08:00 (CET 1)

Nokia Corporation Financial Report for Q4 and full-year 2017

Strong results driven by growth and solid performance in Nokias Networks business and record net sales in Nokia Technologies

Nokias Board of Directors will propose a dividend of EUR 0.19 per share for 2017 (EUR 0.17 for 2016).

Nokias Board of Directors is committed to proposing a growing dividend, including for 2018.

This is a summary of the Nokia Corporation financial report for Q4 and full-year 2017 published today. The complete financial report for Q4 and full-year 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 Q4 2017 of EUR 6.7bn (EUR 6.7bn in Q4 2016). Reported net sales in Q4 2017 of EUR 6.7bn (EUR 6.7bn in Q4 2016). On a constant currency basis, non-IFRS net sales increased 5% and reported net sales increased 6%, with 2% growth in Nokias Networks business and 80% growth in Nokia Technologies.

Solid non-IFRS gross margin of 41.4% (42.2% in Q4 2016) and strong non-IFRS operating margin of 15.1% in Q4 2017 (14.0% in Q4 2016), with resilience in Nokias Networks business and strong performance in Nokia Technologies. Reported gross margin of 39.0% (40.3% in Q4 2016) and reported operating margin of 6.3% in Q4 2017 (4.8% in Q4 2016).

Non-IFRS diluted EPS in Q4 2017 of EUR 0.13 (EUR 0.12 in Q4 2016) and EUR 0.33 in 2017 (EUR 0.22 in 2016). Reported diluted EPS in Q4 2017 of negative EUR 0.07 (EUR 0.11 in Q4 2016) and negative EUR 0.26 in 2017 (negative EUR 0.13 in 2016). In Q4 2017, reported diluted EPS was adversely affected by approximately EUR 0.13 due to re-measurement of deferred tax assets following the change in tax rates, primarily in the United States.

Strong cash performance in Q4 2017, with a EUR 1.8 billion sequential increase in net cash to EUR 4.5 billion, resulting from strong net working capital management.

Nokias Networks business

2% net sales growth at constant currency in Q4 2017 was driven by IP Networks and Applications and by Ultra Broadband Networks. The large year-on-year variations in foreign exchange rates had a negative impact on reported net sales, with net sales down 4% compared to the year-ago period.

Strong operational discipline produced a solid Q4 2017 gross margin of 37.6%, and an operating margin of 11.1%.

Results for full year 2017 (4% decrease in net sales on a constant currency basis and an operating margin of 8.3%) consistent with our guidance for full year 2017.

Nokia Technologies

79% year-on-year net sales increase and 146% year-on-year operating profit increase in Q4 2017, primarily related to new license agreements. Approximately EUR 210 million of the net sales in Q4 2017 (zero in Q4 2016) were non-recurring in nature and related to catch-up net sales, of which approximately EUR 80 million related to 2017 and EUR 130 million related to the prior years.

57% year-on-year net sales increase and 94% year-on-year operating profit increase in 2017, primarily related to new license agreements and settled arbitrations. Approximately EUR 300 million of the net sales in 2017 (zero in 2016) were non-recurring in nature and related to catch-up net sales for prior years.

Nokia Outlook for 2018 and 2020

Nokia targets a non-IFRS diluted EPS of EUR 0.23 to 0.27 in full year 2018 and EUR 0.37 to 0.42 in full year 2020.

Please refer to the full details and other targets in the Outlook section.

Fourth quarter and January-December 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) Q417 Q416 YoY change Q317 QoQ change Q1-Q417 Q1-Q416 YoY change

Net sales (non-IFRS) 6 668 6 731 (1)% 5 537 20% 23 223 23 972 (3)%

change in constant currency 5% 21% (1)%

Nokias Networks business 5 827 6 086 (4)% 4 823 21% 20 523 21 830 (6)%

change in constant currency 2% 22% (4)%

Ultra Broadband Networks 2 471 2 586 (4)% 2 099 18% 8 970 9 758 (8)%

change in constant currency 2% 19% (6)%

Global Services 1 642 1 759 (7)% 1 359 21% 5 810 6 036 (4)%

change in constant currency (1)% 22% (2)%

IP Networks and Applications 1 714 1 740 (1)% 1 365 26% 5 742 6 036 (5)%

change in constant currency 5% 27% (3)%

Nokia Technologies 554 309 79% 483 15% 1 654 1 053 57%

change in constant currency 80% 15% 57%

Group Common and Other 302 340 (11)% 251 20% 1 115 1 142 (2)%

change in constant currency (12)% 19% (5)%

Gross profit (non-IFRS) 2 762 2 842 (3)% 2 365 17% 9 674 9 657 0%

Gross margin % (non-IFRS) 41.4% 42.2% (80)bps 42.7% (130)bps 41.7% 40.3% 140bps

Operating profit (non-IFRS) 1 004 940 7% 668 50% 2 587 2 172 19%

Nokias Networks business 647 858 (25)% 334 94% 1 711 1 943 (12)%

Ultra Broadband Networks 267 333 (20)% 78 242% 781 922 (15)%

Global Services 121 230 (47)% 110 10% 411 406 1%

IP Networks and Applications 259 294 (12)% 146 77% 519 615 (16)%

Nokia Technologies 389 158 146% 390 0% 1 124 579 94%

Group Common and Other (31) (76) (59)% (56) (45)% (248) (350) (29)%

Operating margin % (non-IFRS) 15.1% 14.0% 110bps 12.1% 300bps 11.1% 9.1% 200bps

Financial income and expenses (non-IFRS) 2 (73) (72) 1% (63) 16% (280) (246) 14%

Taxes (non-IFRS) 2 (232) (204) 14% (90) 158% (443) (695) (36)%

Profit (non-IFRS) 716 676 6% 516 39% 1 875 1 250 50%

Profit attributable to the equity holders

of the parent (non-IFRS) 709 672 6% 514 38% 1 869 1 276 46%

Non-controlling interests (non-IFRS) 6 4 50% 2 6 (26)

EPS, EUR diluted (non-IFRS) 0.13 0.12 8% 0.09 44% 0.33 0.22 50%

LINK:	http://www.nokia.com/en_int/news/releases/2018/02/01/nokia-corporation...
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