Nokia Corporation Q1 2012 Interim Report
(Thomson Reuters ONE) -
Nokia Corporation
Interim report
April 19, 2012 at 13.00 (CET+1)
This is a summary of the first quarter 2012 interim report published today. The
complete first quarter 2012 interim report with tables is available at
http://www.nokia.com/results/Nokia_results2012Q1e.pdf. Investors should not rely
on summaries of our interim reports only, but should review the complete interim
reports with tables.
FINANCIAL AND OPERATING HIGHLIGHTS
- Q1 2012 net sales of EUR 7.4 billion (Q1 2011: EUR 10.4 billion)
- Non-IFRS EPS of EUR -0.08 and reported EPS of EUR -0.25
- Losses incurred due to greater than expected competitive challenges and
seasonality; reported losses also primarily driven by charges related to
restructuring activities
- Implementation of smartphone strategy proceeding:
- Expansion of Lumia portfolio to cover higher and lower price points (Lumia
900 and Lumia 610 announced in Q1)
- Expansion of geographic coverage to 45 countries currently (31 new countries
in Q1)
- Encouraging launch of Lumia 900 with AT&T in US in April
- Renewing feature phone portfolio with 7 new Asha products ramping up
- Taking action to drive improvements in the trajectory of Lumia sales and to
support feature phone sales
- Plans to accelerate and substantially deepen Devices & Services cost savings,
consistent with strategic focus. Nokia will share further details as quickly as
possible.
- Balance sheet remains strong with EUR 9.8 billion of gross cash at end-Q1; EUR
4.9 billion of net cash at end-Q1
- Estimates that current annual IPR royalty income run-rate is approximately EUR
0.5 billion
Commenting on the Q1 results, Stephen Elop, Nokia CEO, said: "We are navigating
through a significant company transition in an industry environment that
continues to evolve and shift quickly. Over the last year we have made progress
on our new strategy, but we have faced greater than expected competitive
challenges.
We have launched four Lumia devices ahead of schedule to encouraging awards and
popular acclaim. The actual sales results have been mixed. We exceeded
expectations in markets including the United States, but establishing momentum
in certain markets including the UK has been more challenging.
At the same time, the lower price tiers of our industry are undergoing a
structural change, and traditional feature phones are challenged by full touch
devices. As a result we are taking deliberate measures to continue to renew our
Series 40 platform, and we plan to strengthen our line-up in Q2 2012. We are
making investments in our Mobile Phones business unit aimed at addressing the
gaps in our offering.
We have a clear sense of urgency to move our strategy forward even faster. We
are pursuing step function changes by having launched the Lumia 610 and Lumia
900 in the first quarter, expanding market coverage, increasing advertising,
introducing key customer-requested features and broadening our most successful
go-to-market activities. At the same time, we have focused our efforts in the
low-end of smartphones and feature phone asset to drive improved business
results and conserve cash.
We are confident in our strategy and focused on responding urgently in the short
term and creating value for our shareholders in the long term."
SUMMARY FINANCIAL INFORMATION
The following table sets forth selective line items for the periods indicated,
as well as the year-on-year and sequential growth rates.
+--------------------+-----------------------------------------------------+
| | Reported and Non-IFRS first quarter 2012 results1,2 |
+--------------------+---------+---------+--------+---------+--------------+
| EUR million | Q1/2012 | Q1/2011 | YoY | Q4/2011 | QoQ |
| | | | Change | | Change |
+--------------------+---------+---------+--------+---------+--------------+
| Nokia | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net sales | 7 354 | 10 399 | -29% | 10 005 | -26% |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | -1 340 | 439 | | -954 | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | -260 | 704 | | 478 | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| EPS, EUR diluted | -0.25 | 0.09 | | -0.29 | |
+--------------------+---------+---------+--------+---------+--------------+
| EPS, EUR diluted | -0.08 | 0.13 | | 0.06 | |
| (non-IFRS)3 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net cash from | -590 | -173 | | 634 | |
| operating | | | | | |
| activities | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net cash and | 4 872 | 6 372 | -24% | 5 581 | -13% |
| other liquid | | | | | |
| assets4 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Devices & | | | | | |
| Services5 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net sales | 4 246 | 7 087 | -40% | 5 997 | -29% |
+--------------------+---------+---------+--------+---------+--------------+
| Smart Devices | 1 704 | 3 528 | -52% | 2 747 | -38% |
| net sales | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Mobile Phones | 2 311 | 3 407 | -32% | 3 040 | -24% |
| net sales | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Mobile device | 82.7 | 108.5 | -24% | 113.5 | -27% |
| volume | | | | | |
| (mn units) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Smart Devices | 11.9 | 24.2 | -51% | 19.6 | -39% |
| volume | | | | | |
| (mn units) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Mobile Phones | 70.8 | 84.3 | -16% | 93.9 | -25% |
| volume | | | | | |
| (mn units) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Mobile device | 51 | 65 | -22% | 53 | -4% |
| ASP6 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Smart Devices | 143 | 146 | -2% | 140 | 2% |
| ASP6 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Mobile Phones | 33 | 40 | -18% | 32 | 3% |
| ASP6 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -219 | 729 | | 203 | |
| profit | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -127 | 733 | | 292 | |
| profit | | | | | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -5.2% | 10.3% | | 3.4% | |
| margin % | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating margin % | -3.0% | 10.3% | | 4.9% | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Location & | | | | | |
| Commerce5 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net sales | 277 | 232 | 19% | 306 | -9% |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | -94 | -132 | | -1 205 | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | 36 | -16 | | 29 | 24% |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -33.9% | -56.9% | | -393.8% | |
| margin % | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | 12.9% | -6.9% | | 9.5% | |
| margin % | | | | | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Nokia Siemens | | | | | |
| Networks5,7 | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Net sales | 2 947 | 3 171 | -7% | 3 815 | -23% |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | -1 005 | -142 | | 67 | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating profit | -147 | 3 | | 176 | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -34.1% | -4.5% | | 1.8% | |
| margin % | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
| Operating | -5.0% | 0.1% | | 4.6% | |
| margin % | | | | | |
| (non-IFRS) | | | | | |
+--------------------+---------+---------+--------+---------+--------------+
Note 1 relating to non-IFRS results: Non-IFRS results exclude special items for
all periods. In addition, non-IFRS results exclude intangible asset
amortization, other purchase price accounting related items and inventory value
adjustments arising from (i) the formation of Nokia Siemens Networks and (ii)
all business acquisitions completed after June 30, 2008. More specific
information about the exclusions from the non-IFRS results can be found in note
2 below and for Q1 2012 and Q1 2011 in our complete Q1 2012 interim report with
tables on pages 20-22 and 24, and for Q4 2011 in our complete Q4 and full year
2011 report with tables on pages 4-5, 20-22 and 24 published on January
26, 2012.
Nokia believes that these non-IFRS financial measures provide meaningful
supplemental information to both management and investors regarding Nokia's
performance by excluding the above-described items that may not be indicative of
Nokia's business operating results. These non-IFRS financial measures should not
be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but
should be used in conjunction with the most directly comparable IFRS measure(s)
in the reported results. A reconciliation of our Q1 2012 and Q1 2011 non-IFRS
results to our reported results can be found in our complete Q1 2012 interim
report with tables on pages 18 and 20-24. A reconciliation of our Q4 2011 non-
IFRS results to our reported results can be found in our complete Q4 and full
year 2011 report with tables on pages 17 and 20-24 published on January
26, 2012.
Note 2 relating to non-IFRS exclusions:
Q1 2012 - EUR 1 080 million consisting of:
- EUR 772 million restructuring charge and other associated items in Nokia
Siemens Networks
- EUR 10 million restructuring charge in Location & Commerce
- EUR 91 million restructuring charge in Devices & Services
- EUR 86 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
and the acquisition of Motorola Solutions' networks assets
- EUR 120 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 1 million of intangible assets amortization and other purchase price
related items arising from the acquisition of Novarra, MetaCarta and Motally in
Devices & Services
Q1 2012 taxes - EUR 135 million valuation allowance for Nokia Siemens Networks
deferred tax assets impacting Nokia taxes.
Q1 2011 - EUR 265 million consisting of:
- EUR 28 million restructuring charge and other associated items in Nokia
Siemens Networks
- EUR 117 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
- EUR 116 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 4 million of intangible assets amortization and other purchase price
related items arising from the acquisition of OZ Communications, Novarra,
MetaCarta and Motally in Devices & Services
Q4 2011 - EUR 1 432 million (net) consisting of:
- EUR 1 090 million partial impairment of goodwill in Location & Commerce
- EUR 25 million restructuring charge in Location & Commerce
- EUR 119 million of intangible asset amortization and other purchase price
accounting related items arising from the acquisition of NAVTEQ
- EUR 100 million restructuring charge and EUR 36 million associated impairments
in Devices & Services
- EUR 2 million of intangible assets amortization and other purchase price
related items arising from the acquisition of Novarra, MetaCarta and Motally in
Devices & Services
- EUR 86 million of intangible asset amortization and other purchase price
accounting related items arising from the formation of Nokia Siemens Networks
and the acquisition of Motorola Solutions' networks assets
- EUR 23 million restructuring charge and other associated items in Nokia
Siemens Networks
- EUR 49 million positive item from a cartel claim settlement
Note 3 relating to non-IFRS Nokia EPS: Nokia taxes continued to be unfavorably
impacted by Nokia Siemens Networks taxes as no tax benefits are recognized for
certain Nokia Siemens Networks deferred tax items. In Q1 2012, one-quarter tax
expenses in Devices & Services also had an unfavorable impact. If Nokia's
estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would
have been approximately 2.1 Euro cents higher in Q1 2012.
Note 4 relating to Nokia net cash and other liquid assets: Calculated as total
cash and other liquid assets less interest-bearing liabilities.
Note 5 relating to operational and reporting structure: We adopted our current
operational structure during 2011 and have three businesses: Devices & Services,
Location & Commerce and Nokia Siemens Networks and four operating and reportable
segments: Smart Devices and Mobile Phones within Devices & Services, Location &
Commerce and Nokia Siemens Networks. Smart Devices focuses on smartphones and
Mobile Phones focuses on mass market feature phones. Devices & Services also
contains Devices & Services Other which includes net sales of our luxury phone
business Vertu, spare parts and related cost of sales and operating expenses, as
well as intellectual property related royalty income and common research and
development expenses. Location & Commerce focuses on the development of
location-based services and local commerce. Nokia Siemens Networks is one of the
leading global providers of telecommunications infrastructure hardware, software
and services.
Note 6 relating to average selling prices (ASP): Mobile device ASP represents
total Devices & Services net sales (Smart Devices net sales, Mobile Phones net
sales, and Devices & Services Other net sales) divided by total Devices &
Services volumes. Devices & Services Other net sales includes net sales of
Nokia's luxury phone business Vertu and spare parts, as well as intellectual
property royalty income. Smart Devices ASP represents Smart Devices net sales
divided by Smart Devices volumes. Mobile Phones ASP represents Mobile Phones net
sales divided by Mobile Phones volumes.
Note 7 relating to Nokia Siemens Networks: Nokia Siemens Networks completed the
acquisition of Motorola Solutions' networks assets on April 30, 2011.
Accordingly, the results of Nokia Siemens Networks for the first quarter 2012
are not directly comparable to its results for the first quarter 2011.
NOKIA OUTLOOK
- Nokia expects its non-IFRS Devices & Services operating margin in the second
quarter 2012 to be similar to or below the first quarter 2012 level of negative
3.0%. This outlook reflects that the first quarter 2012 benefit related to lower
warranty costs is expected to be non-recurring, as well as expectations
regarding a number of factors including:
- competitive industry dynamics continuing to negatively affect the Smart
Devices and Mobile Phones business units;
- timing, ramp-up, and consumer demand related to new products; and
- the macroeconomic environment.
- Nokia continues to target to reduce Devices & Services non-IFRS operating
expenses by more than EUR 1 billion for the full year 2013, compared to the full
year 2010 Devices & Services non-IFRS operating expenses of EUR 5.35 billion.
Nokia plans to accelerate and substantially deepen Devices & Services cost
savings, consistent with its strategic focus. Nokia will share further details
as quickly as possible.
- Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS
operating margin to clearly improve in the second quarter 2012 compared to the
first quarter 2012 level of negative 5.0%. Due to the nature of the
restructuring program as well as prevailing uncertain macroeconomic conditions,
the timing of improvements in profitability is uncertain and therefore Nokia
Siemens Networks' non-IFRS operating margin in 2012 is expected to be volatile.
- Nokia Siemens Networks continues to target to reduce its non-IFRS annualized
operating expenses and production overheads by EUR 1 billion by the end of
2013, compared to the end of 2011.
FIRST QUARTER 2012 FINANCIAL AND OPERATING DISCUSSION
NOKIA GROUP
We adopted our current operational structure during 2011 and have three
businesses: Devices & Services, Location & Commerce and Nokia Siemens Networks
and four operating and reportable segments: Smart Devices and Mobile Phones
within Devices & Services, Location & Commerce and Nokia Siemens Networks.
Smart Devices focuses on smartphones and Mobile Phones focuses on mass market
feature phones. Devices & Services also contains Devices & Services Other which
includes net sales of our luxury phone business Vertu, spare parts and related
cost of sales and operating expenses, as well as intellectual property related
royalty income and common research and development expenses. Location & Commerce
focuses on the development of location-based services and local commerce. Nokia
Siemens Networks is one of the leading global providers of telecommunications
infrastructure hardware, software and services.
The following discussion includes non-IFRS results information. Non-IFRS results
exclude special items for all periods. In addition, non-IFRS results exclude
intangible asset amortization, other purchase price accounting related items and
inventory value adjustments arising from (i) the formation of Nokia Siemens
Networks and (ii) all business acquisitions completed after June 30, 2008.
The following table sets forth the year-on-year and sequential growth rates in
our net sales on a reported basis and at constant currency for the periods
indicated.
+-------------------------------------------------------------------------+
| FIRST QUARTER 2012 NET SALES, REPORTED & CONSTANT CURRENCY1 |
+-------------------------------------------------------+--------+--------+
| | YoY | QoQ |
| | Change | Change |
+-------------------------------------------------------+--------+--------+
| Group net sales - reported | -29% | -26% |
+-------------------------------------------------------+--------+--------+
| Group net sales - constant currency1 | -29% | -28% |
+-------------------------------------------------------+--------+--------+
| Devices & Services net sales - reported | -40% | -29% |
+-------------------------------------------------------+--------+--------+
| Devices & Services net sales - constant currency1 | -38% | -30% |
+-------------------------------------------------------+--------+--------+
| Nokia Siemens Networks net sales - reported | -7% | -23% |
+-------------------------------------------------------+--------+--------+
| Nokia Siemens Networks net sales - constant currency1 | -9% | -24% |
+-------------------------------------------------------+--------+--------+
Note 1: Change in net sales at constant currency excludes the impact of changes
in exchange rates in comparison to the Euro, our reporting currency.
The following table sets forth Nokia Group's reported cash flow for the periods
indicated and financial position at the end of the periods indicated, as well as
the year-on-year and sequential growth rates.
+------------------------------------------------------------------------------+
|NOKIA GROUP CASH FLOW AND FINANCIAL POSITION |
+--------------------------------+-------+-------+----------+-------+----------+
|EUR million |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net cash from operating | -590| -173| | 634| |
|activities | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Total cash and other liquid | 9 793| 11 056| -11%| 10 902| -10%|
|assets | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Net cash and other liquid | 4 872| 6 372| -24%| 5 581| -13%|
|assets1 | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
Note 1: Total cash and other liquid assets minus interest-bearing liabilities.
Year-on-year, net cash and other liquid assets decreased by EUR 1.5 billion
primarily due to payment of the dividend, cash outflows related to the
acquisition of Motorola Solutions' networks assets and capital expenditures,
partially offset by a EUR 500 million equity investment in Nokia Siemens
Networks by Siemens, the receipt of quarterly platform support payments from
Microsoft and positive overall net cash from operating activities.
Sequentially, net cash and other liquid assets decreased by EUR 0.7 billion
primarily due to unfavorable and mostly non-recurring net working capital
changes in Devices & Services as well as operating losses, capital expenditure
and cash outflows related to restructuring, partially offset by a positive
contribution from Nokia Siemens Networks and the receipt of a quarterly platform
support payment from Microsoft.
Sequentially, Devices & Services net working capital changes in the first
quarter 2012 had a negative impact on net cash and other liquid assets. The
working capital change was primarily due to accounts payable balances declining
more than the combined declines in accounts receivable and inventory balances.
The end-of-quarter days of sales outstanding was higher sequentially resulting
from a lower proportion of net sales in regions with faster payment terms,
including India and China. The end-of-quarter days of sales in inventory was
higher sequentially resulting from the ramp-up of Lumia devices. Unless there
are similar fluctuations in the composition of Devices & Services net sales and
inventory, we expect the unfavorable impact of Devices & Services working
capital changes in the first quarter 2012 to be mostly non-recurring. We are
focused on improving Devices & Services working capital performance, and we see
opportunities to improve inventory, accounts payable and accounts receivable
management over the remainder of 2012.
In the first quarter 2012, Nokia Siemens Networks' contribution to net cash from
operating activities was approximately EUR 410 million. This was primarily
driven by working capital improvements, partially offset by operating losses.
In the first quarter 2012, Nokia Siemens Networks' working capital performance
improved by approximately EUR 540 million, primarily related to significantly
improved accounts receivables collection as well as higher advanced payments
from customers.
Our agreement with Microsoft includes platform support payments from Microsoft
to us as well as software royalty payments from us to Microsoft. In the first
quarter 2012, we received a quarterly platform support payment of USD 250
million (approximately EUR 189 million). We have a competitive software royalty
structure, which includes minimum software royalty commitments. Over the life of
the agreement, both the platform support payments and the minimum software
royalty commitments are expected to measure in the billions of US Dollars. The
total amount of the platform support payments is expected to slightly exceed the
total amount of the minimum software royalty commitments.
DEVICES & SERVICES
The following table sets forth a summary of the results for our Devices &
Services business for the periods indicated, as well as the year-on-year and
sequential growth rates.
+------------------------------------------------------------------------------+
|DEVICES & SERVICES RESULTS SUMMARY |
+--------------------------------+-------+-------+----------+-------+----------+
| |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net sales (EUR million)1 | 4 246| 7 087| -40%| 5 997| -29%|
+--------------------------------+-------+-------+----------+-------+----------+
|Mobile device volume (million | 82.7| 108.5| -24%| 113.5| -27%|
|units) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Mobile device ASP (EUR) | 51| 65| -22%| 53| -4%|
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS gross margin (%) | 24.4%| 28.8%| | 25.8%| |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating expenses (EUR| 1 123| 1 322| -15%| 1 262| -11%|
|million) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating margin (%) | -3.0%| 10.3%| | 4.9%| |
+--------------------------------+-------+-------+----------+-------+----------+
Note 1: Includes IPR royalty income recognized in Devices & Services Other net
sales.
Net Sales
The year-on-year and sequential decline in our Devices & Services net sales are
discussed below under our Smart Devices and Mobile Phones business units. We
estimate that our current annual IPR royalty income run-rate is approximately
EUR 0.5 billion. At constant currency, Devices & Services net sales would have
decreased 38% year-on-year and 30% sequentially.
The following table sets forth the net sales for our Devices & Services business
for the periods indicated, as well as the year-on-year and sequential growth
rates, by geographic area. IPR royalty income is allocated to the geographic
areas contained in this chart.
+------------------------------------------------------------------------------+
| DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA |
+----------------------+---------+---------+------------+---------+------------+
| EUR million | Q1/2012 | Q1/2011 | YoY Change | Q4/2011 | QoQ Change |
+----------------------+---------+---------+------------+---------+------------+
| Europe | 1 352 | 2 082 | -35% | 1 922 | -30% |
+----------------------+---------+---------+------------+---------+------------+
| Middle East & Africa | 737 | 1 088 | -32% | 1 065 | -31% |
+----------------------+---------+---------+------------+---------+------------+
| Greater China | 577 | 1 902 | -70% | 1 008 | -43% |
+----------------------+---------+---------+------------+---------+------------+
| Asia-Pacific | 945 | 1 317 | -28% | 1 297 | -27% |
+----------------------+---------+---------+------------+---------+------------+
| North America | 93 | 140 | -34% | 53 | 75% |
+----------------------+---------+---------+------------+---------+------------+
| Latin America | 542 | 558 | -3% | 652 | -17% |
+----------------------+---------+---------+------------+---------+------------+
| Total | 4 246 | 7 087 | -40% | 5 997 | -29% |
+----------------------+---------+---------+------------+---------+------------+
On a year-on-year basis Devices & Services net sales in the first quarter 2012
declined in all regions, particularly in China, primarily due to competitive
industry dynamics adversely affecting both our Mobile Phones and Smart Devices
net sales. On a sequential basis, Devices & Services net sales in the first
quarter 2012 declined in all regions, except for North America, where sales were
driven by the introduction of the Nokia Lumia 710 with T-Mobile.
Volume
The following table sets forth the mobile device volumes for our Devices &
Services business for the periods indicated, as well as the year-on-year and
sequential growth rates, by geographic area.
+------------------------------------------------------------------------------+
| DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA |
+----------------------+---------+---------+------------+---------+------------+
| million units | Q1/2012 | Q1/2011 | YoY Change | Q4/2011 | QoQ Change |
+----------------------+---------+---------+------------+---------+------------+
| Europe | 15.8 | 23.4 | -32% | 25.3 | -38% |
+----------------------+---------+---------+------------+---------+------------+
| Middle East & Africa | 21.4 | 22.2 | -4% | 25.9 | -17% |
+----------------------+---------+---------+------------+---------+------------+
| Greater China | 9.2 | 23.9 | -62% | 14.7 | -37% |
+----------------------+---------+---------+------------+---------+------------+
| Asia-Pacific | 26.1 | 27.3 | -4% | 34.7 | -25% |
+----------------------+---------+---------+------------+---------+------------+
| North America | 0.6 | 1.2 | -50% | 0.5 | 20% |
+----------------------+---------+---------+------------+---------+------------+
| Latin America | 9.6 | 10.5 | -9% | 12.4 | -23% |
+----------------------+---------+---------+------------+---------+------------+
| Total | 82.7 | 108.5 | -24% | 113.5 | -27% |
+----------------------+---------+---------+------------+---------+------------+
On a year-on-year basis, the decline in our total Devices & Services volumes in
the first quarter 2012 was driven by significantly lower volumes in both Mobile
Phones and Smart Devices volumes as discussed below.
The sequential decline in our total Devices & Services volumes in the first
quarter 2012 was driven by significantly lower Mobile Phones volumes and Smart
Device volumes, including lower seasonal demand for our devices, as discussed
below.
During the first quarter 2012, our overall channel inventory increased on a
sequential basis. We ended the first quarter 2012 around the high end of our
normal 4 to 6 week channel inventory range, but on an absolute unit basis,
channel inventories declined sequentially.
Average Selling Price
On a year-on-year basis, the overall decrease in our Devices & Services ASP in
the first quarter 2012 was driven primarily by the lower ASP in Mobile Phones, a
higher proportion of Mobile Phones sales and the negative impact from foreign
currency hedging, partially offset by higher IPR royalty income.
On a sequential basis, the overall decrease in our Devices & Services ASP in the
first quarter 2012 was driven primarily by a product mix shift towards Mobile
Phones and the negative impact from foreign currency hedging, partially offset
by a positive impact from the depreciation of the Euro against certain
currencies.
Gross Margin
On a year-on-year basis, the decline in our Devices & Services non-IFRS gross
margin in the first quarter 2012 was driven primarily by the significant gross
margin decline in Smart Devices and, to a much lesser extent, in Mobile Phones,
partially offset by higher IPR royalty income.
On a sequential basis, the decline in our Devices & Services non-IFRS gross
margin in the first quarter 2012 was driven primarily by gross margin declines
in both Smart Devices and Mobiles Phones, partially offset by a positive impact
from lower warranty costs, which is expected to be non-recurring, and higher IPR
royalty income.
Operating Expenses
Devices & Services non-IFRS operating expenses decreased 15% year-on-year and
11% sequentially in the first quarter 2012. On both a year-on-year and
sequential basis, operating expenses related to Mobile Phones increased 22% and
10%, respectively, in the first quarter 2012, whereas operating expenses related
to Smart Devices decreased 33% and 24%, respectively, in the first quarter
2012. These year-on-year and sequential changes resulted, in addition to the
factors described below, from the proportionate allocation of operating expenses
being impacted by the relative mix of sales and gross profit performance between
Mobile Phones and Smart Devices. This resulted in higher and lower relative
allocations to Mobile Phones and Smart Devices, respectively. In addition, both
the year-on-year and sequential decline in Smart Devices was driven by the cost
savings actions related to our Symbian and MeeGo activities.
Devices & Services non-IFRS research and development expenses decreased 22%
year-on-year in the first quarter 2012. On a sequential basis, Devices &
Services non-IFRS research and development expenses decreased 11% in the first
quarter 2012. Both the year-on-year and sequential declines were primarily due
to a reduction in Symbian and MeeGo related costs as well as ongoing cost
controls. This was partially offset by an increase in Mobile Phones research and
development expenses primarily due to investments in product development to
bring new innovations to the market in support of our strategy to bring the
internet and information to the next billion.
Devices & Services non-IFRS sales and marketing expenses decreased 8% year-on-
year in the first quarter 2012. On a sequential basis, Devices & Services non-
IFRS sales and marketing expenses decreased 16% in the first quarter 2012. Year-
on-year, marketing expenses declined primarily due to lower marketing
expenditure on Symbian, partially offset by higher marketing expenditure on
Lumia. Sequentially, marketing expenses declined primarily due to lower
marketing expenditure on MeeGo and Symbian.
Devices & Services non-IFRS administrative and general expenses decreased 5%
year-on-year in the first quarter 2012 as near-term cost controls were partially
offset by shared function cost categorization. On a sequential basis, Devices &
Services non-IFRS administrative and general expenses increased 26% in the first
quarter 2012 due to shared function cost categorization.
In the first quarter 2012, Devices & Services non-IFRS other income and expense
had a negative year-on-year and sequential impact on profitability. Reported
other income and expense was significantly adversely impacted in the first
quarter 2012 primarily as a result of restructuring-related expenses discussed
below, which were recognized in Devices & Services Other.
Cost Reduction Activities and Planned Operational Adjustments
We continue to target to reduce our Devices & Services non-IFRS operating
expenses by more than EUR 1 billion for the full year 2013, compared to the full
year 2010 Devices & Services non-IFRS operating expenses of EUR 5.35 billion. We
plan to accelerate and substantially deepen Devices & Services cost savings,
consistent with our strategic focus. Nokia will share further details as quickly
as possible.
During the first quarter 2012, Devices & Services recognized net charges of EUR
91 million related to restructuring activities. As of the end of the first
quarter 2012, we had recognized cumulative charges of EUR 888 million related to
restructuring activities.
While the total extent of the restructuring activities is still to be
determined, we currently anticipate cumulative charges in Devices & Services of
around EUR 900 million before the end of 2012 in relation to our previously
announced cost reduction target of more than EUR 1 billion. We also believe
total cash outflows related to our Devices & Services restructuring activities
will be below the level of the cumulative charges related to these restructuring
activities.
SMART DEVICES
The following table sets forth a summary of the results for our Smart Devices
business unit for the periods indicated, as well as the year-on-year and
sequential growth rates.
+------------------------------------------------------------------------------+
|SMART DEVICES RESULTS SUMMARY |
+--------------------------------+-------+-------+----------+-------+----------+
| |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net sales (EUR millions)1 | 1 704| 3 528| -52%| 2 747| -38%|
+--------------------------------+-------+-------+----------+-------+----------+
|Smart Devices volume (million | 11.9| 24.2| -51%| 19.6| -39%|
|units) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Smart Devices ASP (EUR) | 143| 146| -2%| 140| 2%|
+--------------------------------+-------+-------+----------+-------+----------+
|Gross margin (%) | 15.6%| 28.9%| | 19.9%| |
+--------------------------------+-------+-------+----------+-------+----------+
|Operating expenses (EUR | 556| 834| -33%| 732| -24%|
|millions)2 | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Contribution margin (%)2 | -18.3%| 5.3%| | -7.0%| |
+--------------------------------+-------+-------+----------+-------+----------+
Note 1: Does not include IPR royalty income. IPR royalty income is recognized in
Devices & Services Other net sales.
Note 2: The year-on-year and sequential decreases in operating expenses resulted
from the proportionate allocation of operating expenses being impacted by the
relative mix of sales and gross profit performance between Mobile Phones and
Smart Devices, resulting in lower relative allocations to Smart Devices in the
first quarter 2012.
Net Sales
The year-on-year decline in our Smart Devices net sales in the first quarter
2012 was primarily due to significantly lower Symbian volumes. On a sequential
basis, the decline in our Smart Devices net sales in the first quarter 2012 was
also due to lower Symbian volumes, partially offset by growing sales of Nokia
Lumia devices.
Volume
The year-on-year decline in our Smart Devices volumes in the first quarter 2012
continued to be driven by the strong momentum of competing smartphone platforms
relative to our Symbian devices. All regions showed a significant year-on-year
decline in the first quarter 2012 except for Latin and North America, which
showed slight year-on-year growth.
On a sequential basis, the decline in our Smart Devices volumes in the first
quarter 2012 was primarily driven by lower Symbian volumes in all regions, as
well as lower seasonal demand for our products, which more than offset the
sequential increase in Nokia Lumia device volumes.
Average Selling Price
The year-on-year decline in our Smart Devices ASP in the first quarter 2012 was
driven primarily by price erosion due to the competitive environment and a
higher proportion of sales of lower priced Symbian devices. This was partially
offset by sales of Nokia Lumia devices at an ASP of approximately EUR 220, as
well as a positive impact related to deferred revenue on services sold in
combination with our devices.
Sequentially, the slight increase in our Smart Devices ASP in the first quarter
2012 was driven primarily by a positive mix shift towards the sales of Nokia
Lumia devices, and a positive impact related to deferred revenue on services
sold in combination with our devices, partially offset by price actions taken
related to specific products across our portfolio due to the competitive
environment.
Gross Margin
The significant year-on-year decline in our Smart Devices gross margin in the
first quarter 2012 was driven primarily by greater price erosion than cost
erosion within our Symbian portfolio due to the competitive environment,
partially offset by a positive impact related to deferred revenue related on
services sold in combination with our devices and lower warranty costs.
On a sequential basis, the decline in our Smart Devices gross margin in the
first quarter 2012 was primarily driven by greater price erosion than cost
erosion mainly related to our Symbian and Nokia N9 smartphones, targeted price
reductions of the Nokia Lumia 710 to accelerate growth as well as higher per
unit fixed costs related to our Symbian devices due to declining volumes. The
overall sequential decline was partially offset by lower Symbian-related
allowances and lower warranty costs.
MOBILE PHONES
The following table sets forth a summary of the results for our Mobile Phones
business unit for the periods indicated, as well as the year-on-year and
sequential growth rates.
+------------------------------------------------------------------------------+
|MOBILE PHONES RESULTS SUMMARY |
+--------------------------------+-------+-------+----------+-------+----------+
| |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net sales (EUR millions)1 | 2 311| 3 407| -32%| 3 040| -24%|
+--------------------------------+-------+-------+----------+-------+----------+
|Mobile Phones volume (million | 70.8| 84.3| -16%| 93.9| -25%|
|units) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Mobile Phones ASP (EUR) | 33| 40| -18%| 32| 3%|
+--------------------------------+-------+-------+----------+-------+----------+
|Gross margin (%) | 25.9%| 27.9%| | 27.7%| |
+--------------------------------+-------+-------+----------+-------+----------+
|Operating expenses (EUR | 472| 387| 22%| 429| 10%|
|million)2 | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Contribution margin (%)2 | 4.6%| 16.5%| | 13.5%| |
+--------------------------------+-------+-------+----------+-------+----------+
Note 1: Does not include IPR royalty income. IPR royalty income is recognized in
Devices & Services Other net sales.
Note 2: The year-on-year and sequential increases in operating expenses resulted
from the proportionate allocation of operating expenses being impacted by the
relative mix of sales and gross profit performance between Mobile Phones and
Smart Devices, resulting in higher relative allocations to Mobile Phones in the
first quarter 2012.
Net Sales
On a year-on-year basis, our Mobile Phones net sales in the first quarter 2012
decreased due to the lower ASP and volumes. On a sequential basis, the decline
in our Mobile Phones net sales in the first quarter 2012 was due to lower
volumes.
Volume
On a year-on-year basis, the decline in our Mobile Phones volumes in the first
quarter 2012 was primarily driven by our reduced portfolio of higher priced
feature phones compared to the first quarter 2011, partially offset by sales of
recently introduced products which represented a higher proportion of our
portfolio. In addition, the year-on-year decline was due to distributors and
operators purchasing fewer of our feature phones during the first quarter 2012
as they reduced their inventories of our feature phones compared to increasing
their inventories in the first quarter 2011. The year-on-year decline in our
Mobile Phones volumes in the first quarter 2012 was most pronounced in China and
Europe primarily due to competition from more affordable smartphones and
increased competition from competitors with broader portfolios of feature phones
with more smartphone-like experiences, such as full touch devices.
On a sequential basis, the decline in our Mobile Phones volumes in the first
quarter 2012 was primarily driven by lower seasonal demand for our feature
phones and aggressive price competition, especially in entry-level feature
phones, partially offset by sales of recently introduced products which
represented a higher proportion of our portfolio. The sequential decline was
also due to distributors and operators purchasing fewer of our feature phones
during the first quarter 2012 as they reduced their inventories of our feature
phones compared to increasing their inventories in the fourth quarter 2011. In
addition, we faced increased competition from more affordable smartphones and
competitors with broader portfolios of feature phones with more smartphone-like
experiences, such as full touch devices. The sequential decline in our Mobile
Phones volumes in the first quarter 2012 was most pronounced in India and
Europe, primarily due to the factors mentioned above.
Average Selling Price
The year-on-year decline in our Mobile Phones ASP in the first quarter 2012 was
primarily driven by an increased proportion of sales of lower priced devices and
the negative impact from foreign currency hedging, partially offset by sales of
recently introduced higher priced devices, including the Asha family.
On a sequential basis, our Mobile Phones ASP increased slightly in the first
quarter of 2012 due to a mix shift towards recently-introduced higher priced
devices, including the Asha family, as well as the positive impact from the
depreciation of the Euro against certain currencies, partially offset by general
price erosion and the negative impact from foreign currency hedging.
Gross Margin
The year-on-year decline in our Mobile Phones gross margin in the first quarter
2012 was primarily due to greater price erosion than cost erosion, a negative
product mix shift towards lower gross margin feature phones, partially offset by
lower warranty costs.
The sequential decrease in our Mobile Phones gross margin in the first quarter
2012 was primarily due to greater price erosion than cost erosion, partially
offset by a positive impact related to deferred revenue on services sold in
combination with our devices and lower warranty costs.
LOCATION & COMMERCE
The following table sets forth a summary of the results for Location & Commerce
for the periods indicated, as well as the year-on-year and sequential growth
rates.
+------------------------------------------------------------------------------+
|LOCATION & COMMERCE RESULTS SUMMARY |
+--------------------------------+-------+-------+----------+-------+----------+
| |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net sales (EUR millions) | 277| 232| 19%| 306| -9%|
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS gross margin (%) | 77.7%| 81.0%| | 77.8%| |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating expenses (EUR| 174| 205| -15%| 206| -16%|
|millions) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating margin (%) | 12.9%| -6.9%| | 9.5%| |
+--------------------------------+-------+-------+----------+-------+----------+
Net Sales
The year-on-year increase in Location & Commerce net sales in the first quarter
2012 was primarily driven by higher recognition of deferred revenue related to
sales of map platform licenses to Smart Devices and, to a lesser extent, by
higher sales of map content licenses to vehicle customers due to higher consumer
uptake of vehicle navigation systems as well as higher sales to portable
navigation devices (PND) customers.
Sequentially, the decrease in Location & Commerce net sales in the first quarter
2012 was primarily due to seasonally lower sales to portable navigation devices
(PND) customers as well as lower sales of map update content licenses in the
vehicle segment.
Gross Margin
On a sequential basis, the Location & Commerce non-IFRS gross margin in the
first quarter 2012 remained unchanged.
On a year-on-year basis, the decline in Location & Commerce non-IFRS gross
margin in the first quarter 2012 was primarily due to a shift of research and
development operating expenses to cost of sales as a result of the divestiture
of the media advertising business.
Operating Expenses
Location & Commerce non-IFRS research and development expenses decreased 19%
year-on-year in the first quarter 2012 reflecting a shift in expenses from
research and development to costs of sales related to the divestiture of the
media advertising business. Location & Commerce non-IFRS research and
development expenses decreased 18% sequentially in the first quarter 2012
primarily driven by cost reduction actions.
Location & Commerce non-IFRS sales and marketing expenses decreased 14% year-on-
year and 17% sequentially. On a year-on-year and sequential basis, the primary
driver for the decrease was cost reduction actions. In addition, reduced
marketing spend contributed to the sequential decline.
Location & Commerce non-IFRS administrative and general expenses increased 25%
year-on-year and 11% sequentially in the first quarter 2012, primarily due to
higher use of services provided by shared support functions.
NOKIA SIEMENS NETWORKS
Nokia Siemens Networks completed the acquisition of Motorola Solutions' networks
assets on April 30, 2011. Accordingly, the results of Nokia Siemens Networks for
the first quarter 2012 are not directly comparable to its results for the first
quarter 2011.
The following table sets forth a summary of the results for Nokia Siemens
Networks for the periods indicated, as well as the year-on-year and sequential
growth rates.
+------------------------------------------------------------------------------+
|NOKIA SIEMENS NETWORKS RESULTS SUMMARY |
+--------------------------------+-------+-------+----------+-------+----------+
| |Q1/2012|Q1/2011|YoY Change|Q4/2011|QoQ Change|
+--------------------------------+-------+-------+----------+-------+----------+
|Net sales (EUR millions) | 2 947| 3 171| -7%| 3 815| -23%|
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS gross margin (%) | 26.6%| 26.9%| | 29.2%| |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating expenses (EUR| 937| 852| 10%| 943| -1%|
|millions) | | | | | |
+--------------------------------+-------+-------+----------+-------+----------+
|Non-IFRS operating margin (%) | -5.0%| 0.1%| | 4.6%| |
+--------------------------------+-------+-------+----------+-------+----------+
Net Sales
The following table sets forth Nokia Siemens Networks net sales for the periods
indicated, as well as the year-on-year and sequential growth rates, by
geographic area.
+------------------------------------------------------------------------------+
| NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA |
+----------------------+---------+---------+------------+---------+------------+
| EUR millions | Q1/2012 | Q1/2011 | YoY Change | Q4/2011 | QoQ Change |
+----------------------+---------+---------+------------+---------+------------+
| Europe | 930 | 1 001 | -7% | 1 272 | -27% |
+----------------------+---------+---------+------------+---------+------------+
| Middle East & Africa | 270 | 307 | -12% | 394 | -31% |
+----------------------+---------+---------+------------+---------+------------+
| Greater China | 209 | 322 | -35% | 438 | -52% |
+----------------------+---------+---------+------------+---------+------------+
| Asia-Pacific | 877 | 988 | -11% | 909 | -4% |
+----------------------+---------+---------+------------+---------+------------+
| North America | 283 | 169 | 67% | 293 | -3% |
+----------------------+---------+---------+------------+---------+------------+
| Latin America | 378 | 384 | -2% | 509 | -26% |
+----------------------+---------+---------+------------+---------+------------+
| Total | 2 947 | 3 171 | -7% | 3 815 | -23% |
+----------------------+---------+---------+------------+---------+------------+
The year-on-year decrease in Nokia Siemens Networks' net sales in the first
quarter 2012 was driven primarily by a decline in sales of infrastructure
equipment, which more than offset a slight increase in sales of services. The
sequential decline in Nokia Siemens Networks' net sales in the first quarter
2012 was driven primarily by industry seasonality.
At constant currency, Nokia Siemens Networks' net sales would have decreased 9%
year-on-year and 24% sequentially.
Gross Margin
The slight year-on-year decline in Nokia Siemens Networks' non-IFRS gross margin
in the first quarter 2012 was primarily due to an unfavorable mix towards lower
gross margin services revenues, partially offset by improved performance in
infrastructure equipment. On a year-on-year basis, Nokia Siemens Networks' non-
IFRS gross margin in the first quarter 2012 was negatively impacted by an
unfavorable regional sales mix.
On a sequential basis, the decrease in Nokia Siemens Networks' non-IFRS gross
margin in the first quarter 2012 was driven by an unfavorable product mix
towards lower margin services as well as lower seasonal revenues. On a
sequential basis, Nokia Siemens Networks' non-IFRS gross margin in the first
quarter 2012 was negatively impacted by an unfavorable regional sales mix.
Operating Expenses
Nokia Siemens Networks' non-IFRS research and development expenses increased
14% year-on-year in the first quarter 2012 primarily due to the addition of the
research and development operations related to the acquired Motorola Solutions
networks assets as well as investments in strategic initiatives. On a sequential
basis, Nokia Siemens Networks' non-IFRS research and development expenses in the
first quarter 2012 were approximately flat.
Nokia Siemens Networks' non-IFRS sales and marketing expenses decreased 3% year-
on-year in the first quarter 2012 primarily due to the lower net sales,
partially offset by the addition of the sales and marketing operations related
to the acquired Motorola Solutions networks assets. On a sequential basis, Nokia
Siemens Networks non-IFRS sales and marketing expenses decreased 3% in the first
quarter 2012 primarily due to the lower net sales.
Nokia Siemens Networks' non-IFRS administrative and general expenses increased
22% year-on-year in the first quarter 2012 primarily reflecting the addition of
Motorola Solutions' network assets. Sequentially, Nokia Siemens Networks non-
IFRS administrative and general expenses increased 6% in the first quarter 2012
primarily due to higher legal costs.
Nokia Siemens Networks' non-IFRS other income for the first quarter 2012 was
approximately flat on both a year-on-year and sequential basis.
Operating Margin
The lower year-on-year Nokia Siemens Networks non-IFRS operating margin in the
first quarter 2012 was primarily driven by lower net sales and increased
operating expenses.
Themen in dieser Pressemitteilung:
Unternehmensinformation / Kurzprofil:
Datum: 19.04.2012 - 06:02 Uhr
Sprache: Deutsch
News-ID 1105046
Anzahl Zeichen: 0
contact information:
Contact person:
Town:
Espoo
Phone:
Kategorie:
Business News
Anmerkungen:
Diese Pressemitteilung wurde bisher 82 mal aufgerufen.
Die Pressemitteilung mit dem Titel:
"Nokia Corporation Q1 2012 Interim Report
"
steht unter der journalistisch-redaktionellen Verantwortung von
NOKIA (Nachricht senden)
Beachten Sie bitte die weiteren Informationen zum Haftungsauschluß (gemäß TMG - TeleMedianGesetz) und dem Datenschutz (gemäß der DSGVO).
