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2016-05-10

NOKIA: Nokia Corporation Interim Report for Q1 2016

Nokia Corporation

Interim Report
May 10, 2016 at 08:00 (CET +1)

Nokia Corporation Interim Report for Q1 2016

Non-IFRS financial results benefitted from expanded portfolio and continuation
of solid execution

This is a summary of the Nokia Corporation interim report for first quarter
2016 published today. The complete interim report for first quarter 2016 with
tables is available athttp://nokia.com/financials. Investors should not rely
on summaries of our interim reports only, but should review the complete
interim reports with tables.

FINANCIAL HIGHLIGHTS

* Non-IFRS net sales in Q1 2016 of EUR 5.6 billion. In the year-ago quarter,
non-IFRS net sales would have been EUR 6.1 billion on a comparable combined
company basis.
* Non-IFRS diluted EPS in Q1 2016 of EUR 0.03. Q1 2016 reflected the
acquisition of Alcatel-Lucent, which resulted in a higher share count, as
well as higher non-IFRS tax expenses due to unfavorable changes in the
regional profit mix. Note that Nokia's Q1 2016 non-IFRS diluted EPS was
reported as a combined company, whereas the Q1 2015 non-IFRS diluted EPS of
EUR 0.05 was reported on a Nokia stand-alone basis.
* In Q1 2016, the net cash and other liquid assets of the combined company
increased by EUR 471 million, to EUR 8.2 billion, compared to Nokia on a
standalone basis at the end of Q4 2015, primarily due to the acquisition of
Alcatel-Lucent, partially offset by cash outflows related to working
capital.

Nokia's Networks business

* 8% year-on-year net sales decrease in Q1 2016. Our performance was
primarily due to Ultra Broadband Networks, which declined 12% year-on-year
and 27% sequentially, consistent with our outlook for a greater than normal
seasonal decline in the wireless infrastructure market in Q1 2016. IP
Networks and Applications grew on a year-on-year basis.
* Strong non-IFRS gross margin of 38.3% in Q1 2016 primarily due to improved
product mix in Ultra Broadband Networks (led by Mobile Networks) and IP
Networks and Applications (led by IP/Optical Networks), as well as
efficiency gains.
* Non-IFRS operating margin of 6.5% in Q1 2016. The year-on-year increase of
2.8 percentage points was primarily due to the higher non-IFRS gross
margin, as well as continued focus on execution excellence.

Nokia Technologies

* 27% year-on-year net sales decrease in Q1 2016. Our performance was
affected by the absence of the following three items which benefitted Q1
2015: non-recurring adjustments to accrued net sales from existing
agreements, revenue share related to previously divested intellectual
property rights ("IPR"), and IPR divestments. Excluding these three items,
net sales increased year-on-year by approximately 10% due to higher
intellectual property licensing income.

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| First quarter 2016 results compared to combined company historicals. See note |
|1 to the financial statements for further details1,2 |
| Combined company historicals2 Combined company historicals2 |
| EUR million Q1'16 Q1'15 YoY change Q4'15 QoQ change |
| Net sales - constant currency (non-IFRS) (9)% (27)% |
| Net sales (non-IFRS) 5 603 6 129 (9)% 7 719 (27)% |
| Nokia's Networks business 5 181 5 662 (8)% 7 057 (27)% |
| Ultra Broadband Networks 3 729 4 227 (12)% 5 081 (27)% |
| IP Networks and Applications 1 452 1 435 1% 1 976 (27)% |
| Nokia Technologies 198 273 (27)% 413 (52)% |
| Group Common and Other 236 203 16% 254 (7)% |
| Gross profit (non-IFRS) 2 205 2 264 (3)% 3 272 (33)% |
| Gross margin % (non-IFRS) 39.4% 36.9% 250bps 42.4% (300)bps |
| Operating profit (non-IFRS) 345 276 25% 1 279 (73)% |
| Nokia's Networks business 337 209 61% 1 097 (69)% |
| Ultra Broadband Networks 234 168 39% 702 (67)% |
| IP Networks and Applications 103 42 145% 396 (74)% |
| Nokia Technologies 106 178 (40)% 311 (66)% |
| Group Common and Other (99) (111) (129) |
| Operating margin % (non-IFRS) 6.2% 4.5% 170bps 16.6% (1 040)bps |
-----------------------------------------------------------------------------------------------------------------------------------------

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| First quarter 2016 results compared to Nokia standalone historicals. See note |
|1 to the financial statements for further details1,3 |
| Nokia standalone historicals3 Nokia standalone historicals3 |
| EUR million (except for EPS in EUR) Q1'16 Q1'15 YoY change Q4'15 QoQ change |
| Profit (non-IFRS) 139 184 (24)% 575 (76)% |
| (Loss)/profit (613) 169 499 |
| EPS, diluted (non-IFRS) 0.03 0.05 (40)% 0.15 (80)% |
| EPS, diluted (0.09) 0.05 0.13 |
| Net cash and other liquid assets 8 246 4 672 76% 7 775 6% |
-------------------------------------------------------------------------------------------------------------------------------------
1Results are as reported unless otherwise specified. The results information
in this report is unaudited. Non-IFRS results exclude costs related to the
Alcatel-Lucent transaction, goodwill impairment charges, intangible asset
amortization and purchase price related items, restructuring related costs,
and certain other items that may not be indicative of Nokia's underlying
business performance. For Q1 2016 details, please refer to the year to date
discussion in the complete interim report and note 2, "Non-IFRS to reported
reconciliation", in the notes to the financial statements attached to the
complete interim report. A reconciliation of the Q1 2015 and the Q4 2015
non-IFRS combined company results to the reported results can be found in the
"Nokia provides recast segment results for 2015 reflecting new financial
reporting structure" stock exchange release published on April 22, 2016.

2Combined company historicals reflect Nokia's new operating and financial
reporting structure, including Alcatel-Lucent, and are presented as
additional information as described in the stock exchange release published
on April 22, 2016. For more information on the combined company historicals,
please refer to note 1, "Basis of Preparation", in the notes to the financial
statements attached to the complete interim report.

3Nokia standalone historicals are the recasting of Nokia's historical
standalone financial results, reflecting Nokia's updated segment reporting
structure, excluding Alcatel-Lucent. Beginning from the first quarter 2016,
Nokia results include those of Alcatel-Lucent on a consolidated basis.
Accordingly, Nokia results beginning from the first quarter 2016 are not
directly comparable to prior period Nokia standalone results.

SUBSEQUENT EVENTS

Nokia launches headcount reductions as part of global synergy and
transformation program

Nokia announced that it has started actions to reduce company personnel
globally as part of its synergy and transformation program.

The headcount reductions are expected to take place between now and the end of
2018, consistent with Nokia's synergy target timeline. Reductions will come
largely in areas where there are overlaps, as Nokia outlined on October 29,
2015. At the same time, Nokia is taking steps to adapt to challenging market
conditions and to shift resources to future-oriented technologies such as 5G,
the Cloud and the Internet of Things. As part of the program, Nokia also
continues to target savings in real estate, services, procurement, supply
chain and manufacturing.

Nokia plans to acquire Withings to accelerate entry into Digital Health

Nokia announced plans to acquire Withings S.A. ("Withings"), a pioneer and
leader in the connected health revolution with a family of award-winning
digital health products and services to help people all over the world lead
healthier, happier and more productive lives. Withings has approximately 200
employees and will be part of our Nokia Technologies business.

With this acquisition, Nokia is strengthening its position in the Internet of
Things in a way that leverages the power of the trusted Nokia brand, fits
with the Nokia's purpose of expanding the human possibilities of the
connected world, and puts Nokia at the heart of a very large addressable
market.

The planned transaction values Withings at EUR 170 million, would be settled
in cash and is expected to close in early Q3 2016 subject to regulatory
approvals and customary closing conditions.

CEO STATEMENT

Nokia's first quarter results demonstrate the strategic value of our
combination with Alcatel-Lucent.

I am pleased that we were able to deliver solid profitability in what is

Författare Hugin

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