Strong profitable start to the year

• Q1 net sales grew 1% y-o-y in constant currency (+5% reported).
• Network Infrastructure grew 9% in constant currency, driven by strong demand in both Fixed and Submarine Networks while Cloud and Network Services also performed well growing 5% in constant currency with strength in Core Networks.
• Mobile Networks declined 4% in constant currency due to supply chain constraints while demand remains strong. Nokia Technologies declined 17% in constant currency as licenses that expired in 2021 have not yet renewed.
• Both reported and comparable basis gross margin expanded meaningfully y-o-y (+270bps and +250bps respectively) despite component cost inflation as we improved our cost competitiveness.
• Comparable operating margin was flat y-o-y at 10.9% as improved gross margins were offset by lower other operating income (was notably high in Q1 2021) and higher R&D investments.
• Reported operating margin fell 190bps y-o-y to 6.6% primarily due to a EUR 104m provision related to Russia.
• Comparable diluted EPS of EUR 0.07; reported diluted EPS of EUR 0.04.
• Free cash flow of EUR 0.3bn, net cash balance of EUR 4.9bn.
• Full year 2022 outlook is unchanged in constant currency. Full year net sales outlook applying 31 March 2022 exchange rates is EUR 22.9bn to EUR 24.1bn.

This is a summary of the Nokia Corporation financial report for Q1 2022 published today. Nokia only publishes a summary of its financial reports in stock exchange releases. The summary focuses on Nokia Group's financial information as well as on Nokia's outlook. The detailed, segment-level discussion will be available in the complete financial report hosted at www.nokia.com/financials. A video interview summarizing the key points of our Q1 results will also be published on the website. Investors should not solely rely on summaries of Nokia's financial reports and should also review the complete report with tables.

PEKKA LUNDMARK, PRESIDENT AND CEO, ON Q1 2022 RESULTS

During the first quarter of the year, we were shocked to see the Russian invasion of Ukraine. Nokia believes in human rights, international co-operation and the rule of law. Throughout the war our priority has been the safety and wellbeing of our people. We support our employees in Ukraine in multiple ways and are proud of their continued efforts to maintain our customers’ networks in the country. It has been clear for us since the early days of the invasion that continuing our presence in Russia would not be possible. We announced in early April that we will exit the Russian market in a responsible way and aim to provide the necessary support to maintain our customers’ networks, as we exit.

On a more positive note, I am pleased with our start to 2022. Demand in our end markets remains high, and although supply chain constraints continue to impact our growth, we delivered 1% constant currency net sales growth in Q1. Our comparable operating margin was stable year-on-year at 10.9% as strong underlying improvements in profitability were offset by rising R&D investment, lower other operating income compared to the year before and some timing effects in Nokia Technologies.

Network Infrastructure delivered again strong growth with continued robust momentum in both Fixed and Submarine Networks. In Mobile Networks supply constraints hindered our revenue growth, nevertheless we expect to return to growth this year due to our improved competitiveness. Our 5G Core business continued to drive good growth in Cloud and Network Services.

In Nokia Technologies we are in the process of renewing licenses which has led to some timing effects in net sales in the quarter. We are confident in the quality of our patent portfolio and expect to return to previously communicated €1.4-1.5bn annualized net sales run rate.

Overall, Q1 was a strong start for the year both in terms of net sales and profitability. The demand environment remains strong and while supply chain and inflation challenges remain, we are confident we can deliver our 2022 outlook and continue to make good progress towards our long-term targets.