Fullscreen User Comments
Share on Twitter Share on Facebook Share on LInkedIn Share on GooglePlus

Loading…

Loading…

Loading…

Loading…

Loading…

Nokia full year results are in, and they make grim reading

2013 was a year of uncertainty and change for Nokia. Its strategy of continuing with the Windows Phone platform saw sales of its devices continue to slide, yet salvation (of sorts) was at hand with the €5.4bn sale of its devices business to Microsoft, along with the departure of, shall we say, “divisive” CEO Stephen Elop. Nokia than took full control of the NSN partnership following the exit of Siemens, and decided that it would concentrate its resources on its ‘Here’ mapping operations.

With that in mind, we weren’t expecting much from the company’s interim full year financial figures released this morning, but oh dear… it’s a bit of a disaster.

Nokia's full year net sales for 2013 were €12.7bn, down 17 per cent compared to full year 2012. The saving grace was that last year’s operating loss turned into a profit of €519m – a mere 4 per cent margin but at least it was positive. We still need to look into this in detail to better understand the reverse.

The NSN business (now renamed Nokia Solutions and Networks) saw sales revenues fall 18 per cent to €11.2bn in the year, although earnings improved from a loss of €795m to a profit of €420m. As the figures show, this is pretty much the same as the performance of the whole group.

Excluding divestments of businesses not consistent with its new strategic focus, Q4 sales for NSN were down 15 per cent primarily due to “reduced wireless infrastructure deployment activity”, which affected both Global Services and Mobile Broadband. The year-on-year decrease in Mobile Broadband was attributed to lower sales in GSM and core networks, which were partially offset by an increase in LTE sales.

Nokia’s ‘Here mapping division reported a 17 per cent fall in sales revenue to €914m, although the company said “external net sales grew to €225m”. Its ‘Advanced Technologies’ division saw a slight fall in sales to €529m and an operating profit of €310m.

As for what it calls its “discontinued operation” – i.e. the old Devices and Services business – the picture was rather bleak. Net sales revenues for the year fell 29 per cent to €10.7bn, although it reduced its operating loss to €590m. Fourth quarter sales were down 5 per cent and year-on-year the quarter was down 29 per cent. Quarterly operating margin also fell to -7.5 per cent.

Nokia said there were lower net sales of both regular mobiles and “to a lesser extent” smartphones in the important fourth quarter 2013. It blamed the poor performance on “competitive industry dynamics, including intense smartphone competition”.

The sequential decline in discontinued operations net sales in the fourth quarter 2013 was primarily due to lower Smart Devices net sales. Our Smart Devices net sales were affected by competitive industry dynamics including the strong momentum of competing smartphone platforms. On a sequential basis, Mobile Phones net sales were approximately flat. Average Selling Prices for both smartphones and mobiles declined on both a year-on-year and sequential basis in Q4, but no further details were given.

There has been no comment from Microsoft. However, Risto Siilasmaa, Nokia Chairman and interim CEO said that Q4 was “a watershed moment in Nokia’s history”. He added:

“Having received overwhelmingly strong support from our shareholders at our extraordinary general meeting in November for the sale of our phones business to Microsoft, we are diligently working towards defining Nokia's future direction. I am pleased with the progress we have made thus far in our strategy evaluation and excited by the opportunities ahead for each of our three continuing businesses: NSN, Here and Advanced Technologies.”

Looking ahead, Nokia is hopeful that its NSN business can extend it operating margin to approach the 10 per cent mark. It also expects ‘Here’ to capture “longer term transformational growth opportunities”, which means it will negatively impact this year’s margins. ‘Advanced Technologies’ sales should increase during 2014, “after Microsoft becomes a more significant IPR licensee”.

Nokia said that the Microsoft deal is expected to close in the first quarter of 2014, subject to regulatory approvals and other customary closing conditions. As of the end of 2013, Nokia has received the majority of regulatory approvals for the transaction.

Join The Discussion

x By using this website you are consenting to the use of cookies. More information is available in our cookie policy. OK