Nokia Corporation Financial Report for Q2 and Half Year 2023

Resilient performance amidst macro uncertainty

  • Q2 net sales flat y-o-y in constant currency (-3% reported).
  • Enterprise net sales grew 27% y-o-y in constant currency (25% reported).
  • Comparable gross margin declined 180bps y-o-y to 38.8% (reported declined 200bps to 38.2%) due to regional mix in Mobile Networks, partly offset by a strong Network Infrastructure margin and catch-up net sales in Nokia Technologies.
  • Comparable operating margin declined y-o-y by 120bps to 11.0% (reported declined 130bps to 8.3%), due to the above mentioned gross margin factors, partly offset by lower operating expenses and higher other operating income.
  • Comparable diluted EPS of EUR 0.07; reported diluted EPS of EUR 0.05.
  • Free cash flow negative EUR 0.4bn, net cash balance of EUR 3.7bn.
  • As announced on 14 July 2023, Nokia now expects full year 2023 net sales in the range of EUR 23.2 billion to EUR 24.6bn with a comparable operating margin in the range of 11.5% to 13.0%.

This is a summary of the Nokia Corporation Financial Report for Q2 and Half Year 2023 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 A video interview summarizing the key points of our Q2 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 reports with tables.


In Q2 we delivered stable net sales in constant currency compared to the prior year. As a result of prudent management of our costs, we were able to deliver a solid comparable operating margin of 11.0% despite the regional mix headwinds faced in our Mobile Networks business. Considering the significant decline in major North American operators' investments, our operating margin has proved resilient, even adjusting for the EUR 80 million of catch-up net sales in Nokia Technologies.

The highlight of the quarter was the new long-term patent license agreement signed with Apple. This is another major milestone in our smartphone license renewal cycle. Our performance in Enterprise was also a highlight with net sales increasing by 27% in constant currency illustrating how well we are executing on this strategic pillar.

Our Network Infrastructure business saw a 6% decline in net sales in constant currency as macro uncertainty impacted the business, particularly in IP Networks which declined 11%. We also saw a decline in Fixed Networks, driven by Fixed Wireless Access and some modest inventory management, nonetheless fiber demand remains robust. In Optical Networks we saw continued strength with 16% growth. Supportive product mix in the quarter along with good cost discipline led to operating margin improving 160bps year-on-year.

Our Mobile Networks business continued to benefit from 5G deployments in India offsetting on-going weakness in North America, delivering 5% net sales growth in constant currency. Gross margin was largely in line with Q1 and continued cost discipline led to an operating margin of 7.9% in Q2.

Cloud and Network Services achieved net sales growth of 2% in constant currency and delivered a 2.2% operating margin in the quarter. We recently announced a strategic partnership with Red Hat for cloud infrastructure, another important milestone on the path to rebalancing the portfolio.

Nokia Technologies’ annual net sales run-rate remained approximately EUR 1.0 billion in Q2 excluding the catch-up benefit. Considering our current base of agreements, we now see that our net sales annual run-rate would be EUR 1.1 billion from January 2024, subject to any other material developments. We remain confident Nokia Technologies will return to an annual run-rate of EUR 1.4-1.5 billion as we work through the smartphone license renewal cycle and grow in new areas.

Earlier in the year I highlighted that we were starting to see signs of macroeconomic challenges along with inventory digestion impacting customer spending and this has intensified through the second quarter. In the second half we expect these trends to continue to impact our business, meaning we now see second half net sales broadly similar to the first half in both Network Infrastructure and Mobile Networks with some sequential improvement visible into Q4.

We have therefore reduced our net sales outlook for 2023 to EUR 23.2 billion to EUR 24.6 billion from the prior EUR 24.6 billion to EUR 26.2 billion. Proactive action by our business groups to manage cost is largely mitigating the impact to our operating margin and hence we only narrow the range to 11.5% to 13.0% from the prior 11.5% to 14.0%.

Looking beyond 2023, in Network Infrastructure we believe these impacts are mostly short-term in nature and that moving forward we see growth opportunities supported by the work we have been doing to diversify our customer base by growing in enterprise and webscale. In Mobile Networks there is still substantial need for operators to invest in 5G globally with only approximately 25% of the potential mid-band 5G base stations so far deployed outside China. We also remain focused on taking the necessary actions to improve our operating margin to double-digit. For the Group we remain committed to achieving at least 14% comparable operating margin longer-term.

Finally, given the strength of our balance sheet and EUR 3.7 billion net cash position I'm confident we have a firm foundation from which to navigate this period of uncertainty. I would like to thank all the Nokia employees for their hard work, cost focus and continued commitment.


EUR million (except for EPS in EUR) Q2'23 Q2'22 YoY change Constant currency YoY change Q1-Q2'23 Q1-Q2'22 YoY change Constant currency YoY change
Reported results                
Net sales 5 710 5 873 (3)% 0% 11 569 11 220 3% 4%
Gross margin % 38.2% 40.2% (200)bps   37.8% 40.4% (260)bps  
Research and development expenses (1 045) (1 091) (4)%   (2 154) (2 163) 0%  
Selling, general and administrative expenses (703) (728) (3)%   (1 432) (1 403) 2%  
Operating profit 474 564 (16)%   900 918 (2)%  
Operating margin % 8.3% 9.6% (130)bps   7.8% 8.2% (40)bps  
Profit for the period 289 460 (37)%   578 679 (15)%  
EPS, diluted 0.05 0.08 (38)%   0.10 0.12 (17)%  
Net cash and interest-bearing financial investments 3 660 4 546 (19)%   3 660 4 546 (19)%  
Comparable results                
Net sales 5 710 5 873 (3)% 0% 11 569 11 220 3% 4%
Gross margin % 38.8% 40.6% (180)bps   38.2% 40.7% (250)bps  
Research and development expenses (1 026) (1 069) (4)%   (2 119) (2 122) 0%  
Selling, general and administrative expenses (618) (623) (1)%   (1 259) (1 204) 5%  
Operating profit 626 714 (12)%   1 106 1 296 (15)%  
Operating margin % 11.0% 12.2% (120)bps   9.6% 11.6% (200)bps  
Profit for the period 414 585 (29)%   756 1 001 (24)%  
EPS, diluted 0.07 0.10 (30)%   0.13 0.17 (24)%  
ROIC1 13.9% 18.5% (460)bps   13.9% 18.5% (460)bps  

Comparable ROIC = Comparable operating profit after tax, last four quarters / invested capital, average of last five quarters’ ending balances. Refer to the Performance measures section in Nokia Corporation Financial Report for Q2 and Half Year 2023 for details.

Business group results Network
Cloud and Network Services Nokia
Group Common and Other
EUR million Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22 Q2'23 Q2'22
Net sales 1 978 2 153 2 623 2 593 742 753 334 305 35 77
YoY change (8)%   1%   (1)%   10%   (55)%  
Constant currency YoY change (6)%   5%   2%   10%   (53)%  
Gross margin % 37.1% 35.4% 33.4% 40.2% 36.5% 37.2% 100.0% 99.7% (2.9)% (5.2)%
Operating profit/(loss) 260 247 206 291 16 (5) 236 217 (91) (36)
Operating margin % 13.1% 11.5% 7.9% 11.2% 2.2% (0.7)% 70.7% 71.1% (260.0)% (46.8)%



Under the authorization by the Annual General Meeting held on 4 April 2023, the Board of Directors may resolve on the distribution of an aggregate maximum of EUR 0.12 per share to be paid in respect of financial year 2022. The authorization will be used to distribute dividend and/or assets from the reserve for invested unrestricted equity in four installments during the authorization period, in connection with the quarterly results, unless the Board decides otherwise for a justified reason.

On 20 July 2023, the Board resolved to distribute a dividend of EUR 0.03 per share. The dividend record date is on 25 July 2023 and the dividend will be paid on 3 August 2023. The actual dividend payment date outside Finland will be determined by the practices of the intermediary banks transferring the dividend payments.

Following this announced distribution, the Board’s remaining distribution authorization is a maximum of EUR 0.06 per share.

Share buyback program

In February 2022, Nokia’s Board of Directors initiated a share buyback program to repurchase shares to return up to EUR 600 million of cash to shareholders in tranches over a period of two years. The second EUR 300 million phase of the share buyback program started in January 2023 and it will end at the latest by 21 December 2023. Under this phase, Nokia has by 30 June 2023 repurchased 40 145 500 of its own shares at an average price per share of approximately EUR 4.14.


  Full Year 2023
Net sales1 EUR 23.2 billion to EUR 24.6 billion (-4% to +2% growth in constant currency)
Comparable operating margin2 11.5 to 13.0%
Free cash flow2 20 to 50% conversion from comparable operating profit

1Assuming the rate 1 EUR = 1.09 USD as of 30 June 2023 continues for the remainder of 2023 along with actual H1 foreign exchange rates (adjusted from prior 1.09 USD rate as of 31 March 2023).
Please refer to Performance measures section in Nokia Corporation Financial Report for Q2 and Half Year 2023 for a full explanation of how these terms are defined.

Nokia announced an update to its financial outlook for 2023 on 14 July 2023. Nokia's financial outlook prior to this was for net sales of EUR 24.6 billion to EUR 26.2 billion, a comparable operating margin of 11.5% to 14.0% and free cash flow of 20 to 50% conversion from comparable operating profit. The updates to Nokia's outlook assumptions highlighted below are already incorporated in the revised guidance.


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