By Dominic Chopping
Finland’s Nokia Corp. is scheduled to report results for the fourth quarter on Thursday. Here’s what you need to know:
SALES FORECAST: Analysts polled by FactSet expect sales to fall 0.1% to 6.51 billion euros ($7.34 billion).
NET PROFIT FORECAST: Analysts expect Nokia’s reported net profit to rise to EUR508 million in the fourth quarter from a loss of EUR2.61 billion a year earlier. Earnings the previous year were weighed by the derecognition of Finnish deferred tax assets. On an adjusted non-IFRS basis, analysts expect net profit to fall to EUR636 million from EUR811 million a year earlier.
WHAT TO WATCH:
–NETWORKS: While there are set to be some headwinds to Nokia’s 4Q reported results, such as loss of work from Verizon and component shortages, analysts at UBS say organic growth could be solid in the quarter with positive revenue growth at constant currency of around 9%. “We expect Nokia to provide some guidance on group revenues that we expect to grow to EUR24 billion or 4% growth at constant currency. However, we would expect Nokia to be conservative and likely to guide slightly lower.”
–MARGINS: Nokia in January said that it expects to report a full-year comparable operating margin of 12.4% to 12.6%, above its previous guidance of 10% to 12%, after getting a 150 basis point benefit from one-offs related to venture fund investments, a one-off software contract in the second quarter, bad debt provision reversals, and some other one-time gains. The telecommunications-equipment supplier already disclosed its new full-year 2022 guidance, with an adjusted operating margin of 11% to 13.5% versus consensus of 12%, UBS says. The new guidance includes continued improvements in the underlying business, supply constraints and cost inflation. “It will be important in our view for Nokia to quantify the impact.”
–GUIDANCE: The company has issued quantitative guidance on FY23 for revenues, and management expects the company to grow faster than the market. Nokia currently expects 2023 operating margin between 10% and 13% with free cash flow clearly positive. “We expect management to provide 2023 guidance with revenue growth higher than the market and operating margin of 11%-13% (consensus 12%).”
–CASH: Beyond revenue growth and profitability, UBS says a strong focus for investors will remain on cash-flow generation.
Write to Dominic Chopping at [email protected]