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Nokia Unveils Financial Results for Q1 2021

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Nokia, the multinational telecommunication, information technology and consumer electronics company, releases financial reports for the first quarter of the financial year 2021.

The company reported that it witnessed an increase in sales which raised the marginal bars as well as it bolstered the cash generation.

The dawn of the year brought about the constant currency net sales up to nine percent year-on-year and thanks to the strong growth in Network infrastructure and Mobile Networks, the company received an increase in net sales by three percent.

Enterprise constant currency net sales grew 18 percent year over year and 63 new customers were added. The company doubled the number in Q1 2020, where it reported that net sales increased by 14 percent in respect to this area.

Improvements in Mobile Networks, primarily driven by 5G growth and beneficial product and regional mix, as well as broad improvements in Network Infrastructure, resulted in a comparable gross margin of 38.2 percent (reported 37.9 percent).

Improvements in comparable operating profit across all business groups, with a comparable operating margin grew by 10.9 percent (reported 8.5 percent).

Earlier the diluted EUR which was 0.07 EPS dropped down to a diluted EUR of 0.05 diluted EPS.

Strong cash flow performance improved by the operating profit and successful receivables collection, in which a strong liquidity position, with net cash of EUR 3.7 billion rose to a total cash of EUR 8.8 billion.

Executing well on the three-phased strategy outlined at Capital Markets Day to achieve sustainable, profitable growth and technology leadership.

Pekka Lundmark, President and CEO, Nokia expressed his view on the Q1 2021 results. He felt that, at this point while maintaining the Outlook for the entire year, as we want to see how 2021 develops. The strong first quarter lays a firm basis for reaching the higher end of the comparable operating margin range of 7 to 10 percent. In 2021, we expect our normal quarterly earnings seasonality to be less pronounced, and we will continue to track overall market trends, including semiconductor availability visibility.

He further went on to say, “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”.

Further, the company including its business fear of being exposed to certain risk factors and uncertainties, where already certain customers are reassessing their vendors due to security issues, putting pressure on the company to invest in the short term in order to achieve long-term benefits.
Moreover, the company is also vary of the fact that the scope and duration of the COVID-19 impact, especially in certain countries, such as India, has slowed and distorted the economic recovery.

The company holds its expectations on Nokia Technologies to produce a small increase in comparable operating profit in full year 2021 compared to full year 2020, as well as stable long-term results.

“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”, added Lundmark.

Since the Group Common and Other consists mainly of support function costs. The corporation has now integrated the costs of support functions into our market classes. As a result, it expects Group Common and Other's net negative impact to fall to around EUR 200 million in 2021 and 2023, compared to previous levels.

Comparable financial revenue and expenditures are projected to be around EUR 250 million, with a longer-term forecast of around EUR 500 million for the year.

In the full year 2021 and over the longer term, comparable income tax expenditures are estimated to be around EUR 450 million, depending on geographic profit composition, net sales subject to withholding tax, and the timing of patent licensing cash flow.

Based on our current combination of net sales and overall costs, a 10 percent rise in the EUR/USD exchange rate will have a negative four to five percent effect on net sales and a neutral impact on operating profit.

“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”, added Lundmark.

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