Nokia expects strong 2022 as supply crunch eases

Publish January 12, 2022

Nokia now expects Q4 revenue of 6.4 billion euros

Finnish telecoms giant Nokia performed better than expected last year and foresees further growth in 2022 as a supply chain crunch and inflation are set to ease, the network equipment maker said Tuesday.

The announcement follows a string of quarterly earnings surprises for the network equipment maker, which last October managed to boost its third quarter profits despite a worldwide shortage of computer chips.

The group largely met expectations with 22.2 billion euros ($25.2 billion) in net sales last year.

But it raised its 2021 operating margin guidance to between 12.4 percent and 12.6 percent, up from 10 percent to 12 percent.

The boost was related to venture fund investments, a one-off software contract in the second quarter, “bad debt provision reversals and some other one-time benefits,” the company said in a statement.

Nokia now expects an operating margin ranging between 11 percent and 13.5 percent in 2022, citing “estimated continued improvements in the underlying business, supply constraints and cost inflation.”

Nokia chief executive Pekka Lundmark said last year that the company expects to see a gradual improvement in 2022, though it was not “100 percent” guaranteed.

Lundmark has been credited with turning around the fortunes of the network giant, which has been flagging in the race with Sweden's Ericsson and China's Huawei in the 5G network equipment market.

After taking the helm in mid-2020, Lundmark implemented widespread job cuts, with savings funnelled into developing more competitive technology.

The group has also partly benefitted from the misfortunes of rival Ericsson, whose China market share collapsed when Beijing retaliated against Sweden for banning Huawei from its 5G network rollout.

Finnish telecoms equipment maker Nokia on Tuesday said it expected to exceed its 2021 earnings guidance, with its venture fund investments driving the boost.

Nokia estimated a full-year 2021 comparable operating margin of 12.4-12.6 percent, above its previous guidance of 10-12 percent, and net sales of 21.7-22.7 billion euros — within its previously announced range.

The company said its underlying business performed largely as expected in the fourth quarter.

“However, other operating income was higher than expected including further benefits from venture fund investments, leading to a stronger comparable operating margin exceeding the 2021 guidance,” it said in a statement.

Nokia now expects Q4 revenue of 6.4 billion euros, below expectations of 6.5 billion euros, according to Reuters calculations.

The company is due to report full-year results on Feb. 3.

For 2022, Nokia said it expected a comparable operating margin of 11-13.5 percent.


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