Nokia 1Q Sales, Profit Beat Views on Higher 5G Demand -- Earnings Review

By Dominic Chopping

Finland's Nokia Corp. reported results for the first quarter on Thursday. Here's what we watched:

SALES: Sales rose 3.3% to 5.08 billion euros ($6.14 billion), beating the FactSet consensus of EUR4.75 billion. On a constant currency basis, net sales increased by 9%.

NET PROFIT: The company's adjusted net profit for the quarter rose to EUR373 million from EUR32 million a year earlier, driven by higher sales of its 5G network equipment. Analysts polled by FactSet had expected adjusted net profit of EUR90 million. On a reported basis, Nokia swung to a net profit EUR261 million.

WHAT WE WATCHED:

--5G MOMENTUM: Nokia's network infrastructure unit saw strength in North America and Greater China while its mobile networks business was driven by strong growth in 5G. At the end of 1Q, Nokia's 5G conversion rate--the rate of converting its 4G footprint into 5G--was approximately 90%, excluding China. Including China, it was about 80%. "We are targeting 4G + 5G market share, excluding China, to be approximately 25% to 27% in full year 2021, and we believe we are on track to meet this target."

--SUPPLY CHAIN: The company said it continues to monitor overall market developments including visibility for semiconductor availability, but it has so far continued to successfully deliver to customers during the global semiconductor shortage.

--GUIDANCE: Nokia maintained guidance for a 2021 adjusted operating margin of 7%-10%, but said the solid first quarter provides a good foundation for achieving the higher end of this range. The company still sees net sales adjusted for currency fluctuations of between EUR20.6 billion and EUR21.8 billion, and expects currency-adjusted sales in 2023 to grow faster than the market, with a comparable operating margin of 10%-13%.

Write to Dominic Chopping at [e-mail]

(END) Dow Jones Newswires

April 29, 2021 07:39 ET (11:39 GMT)

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