Nokia Capital Markets Day 2014
(Thomson Reuters ONE) -
Nokia sets key 2015 and long-term financial targets, outlines operational and
strategic priorities
Nokia Corporation
Stock exchange release
November 14, 2014 at 09:00 (CET +1)
London, UK - Today, at its Capital Markets Day event, Nokia outlined its company
vision and strategic priorities for its three businesses, set key 2015 and long-
term financial targets for the company and detailed the operational priorities
it expects will help create sustainable value for the long term.
"The rapidly evolving world of technology provides the context for Nokia's
vision and strategy: now it's about connecting things as well as people, and we
expect to see more than 50 billion connected things - devices, modules and
sensors - by 2025. We believe we have a powerful role to play in this world, a
role of expanding the human possibilities of technology," said Nokia President
and CEO, Rajeev Suri.
"This meeting with investors comes on the heels of a quarter where we
demonstrated growth across our three businesses. It showed the potential of this
company when it starts to execute well," Suri said.
Nokia Group CFO Timo Ihamuotila added: "The foundations for Nokia are solid. We
have a strong balance sheet and are making clear progress with our capital
structure optimization program."
"As said before, recommencing an ordinary dividend is one of our main
priorities, and we expect to continue to repurchase shares as part of our
capital structure optimization program," Ihamuotila said.
Given Nokia's pioneering role in connecting people and its strong technology
capabilities, the company's vision is to expand the human possibilities of the
connected world. Each of Nokia's three businesses is well-placed to contribute
to reaching this vision.
To tap the opportunities ahead and leverage its strong assets, Nokia will focus
its approach to value creation on four areas:
- Disciplined business portfolio management and capital allocation;
- Clear business-specific strategies;
- Operational excellence; and
- A high-performance culture and strong values.
Looking at market dynamics, the competitive environment and the challenges that
operators are facing, Nokia Networks' strategy is to build on its current
momentum while transforming to serve the operator of the future. The target is
to grow slightly faster than the market over the long-term, create best-in-
class, high quality products and services, and deliver on profitability goals.
The strategy for HERE is to leverage the location cloud and superior content in
segments where Nokia can differentiate and capture value. The target is to win
in automotive, grow in the enterprise segment and leverage the unique assets
that HERE has with leading Internet players, while improving profitability
through increased efficiency.
Nokia Technologies' strategy builds on its world-leading patent portfolio. It
will focus on patent, technology, and brand licensing as well as investment in
products and services incubation based on Nokia's innovation.
Nokia's operational approach will help it execute its strategies. There will be
a clear focus on operational excellence with the Nokia Business System (NBS),
which provides a shared set of operating practices to create value across the
three businesses. NBS includes three elements: investment optimization,
performance management and talent management. Nokia also continues to target
further improvement in its operations going forward, with a clear focus on
efficiencies through automation and disciplined processes.
In addition to operational excellence, we are introducing a common, high-
performance culture across the company. This is a long term project based on
Nokia's new values, and it will be implemented with discipline and rigor.
Long-term targets
- Nokia targets to grow Nokia Networks' net sales slightly faster than the
market over the long-term.
- Nokia now targets Nokia Networks' long-term non-IFRS operating margin range to
be 8% to 11%. This compares to Nokia's previous target for Nokia Networks' long-
term non-IFRS operating margin range to be 5% to 10%.
- Nokia targets to record tax expenses in Nokia Group's Consolidated Income
Statements at a long-term effective tax rate of approximately 25%. However,
Nokia targets Nokia Group's cash tax obligations to continue at approximately
EUR 250 million annually until Nokia Group's deferred tax assets have been fully
utilized. The cash tax amount may vary depending on profit levels in different
jurisdictions and the amount of license income potentially subject to
withholding tax.
2015 business outlook
- Nokia expects Nokia Networks' net sales to grow on a year-on-year basis for
the full year 2015.
- Nokia expects Nokia Networks' non-IFRS operating margin for the full year
2015 to be in-line with Nokia Networks' new long-term non-IFRS operating margin
range of 8% to 11%.
- Nokia's outlook for Nokia Networks net sales and non-IFRS operating margin is
based on expectations regarding a number of factors, including:
- Competitive industry dynamics;
- Product and regional mix;
- The timing of major network deployments; and
- Expected continued operational improvement.
- Nokia expects HERE's net sales to grow on a year-on-year basis for the full
year 2015.
- Nokia expects HERE's non-IFRS operating margin for the full year 2015 to be
between 5% and 10%.
- Nokia expects Nokia Technologies' net sales to grow on a year-on-year basis
for the full year 2015, excluding potential amounts related to the expected
resolution of the arbitration with Samsung.
- Nokia expects Nokia Technologies' non-IFRS operating expenses to increase
meaningfully on a year-on-year basis for the full year 2015, related to higher
investments in licensing activities, development of licensable technologies, and
business enablers including go-to-market capabilities.
Additional financial guidance for 2015
- Nokia expects Nokia Group capital expenditures to be approximately EUR 200
million in 2015, primarily attributable to capital expenditures by Nokia
Networks.
- Nokia expects Nokia Group financial income and expenses, including net
interest expenses and the impact from changes in foreign exchange rates on
certain balance sheet items, to amount to an expense of approximately EUR 160
million in 2015, subject to changes in foreign exchange rates and the level of
interest bearing liabilities.
- Nokia expects Group Common Functions non-IFRS operating expenses to be
approximately EUR 120 million in 2015.
FORWARD-LOOKING STATEMENTS
It should be noted that Nokia and its businesses are exposed to various risks
and uncertainties and certain statements herein that are not historical facts
are forward-looking statements, including, without limitation, those regarding:
A) expectations, plans or benefits related to Nokia's strategies; B)
expectations, plans or benefits related to future performance of Nokia's
businesses Nokia Networks, HERE and Nokia Technologies; C) expectations, plans
or benefits related to changes in our leadership, operational structure and
operating model; D) expectations regarding market developments, general economic
conditions and structural changes; E) expectations and targets regarding
performance, including those related to market share, prices, net sales and
margins; F) timing of the deliveries of our products and services; G)
expectations and targets regarding our financial performance, operating
expenses, taxes, cost savings and competitiveness, as well as results of
operations; H) expectations and targets regarding collaboration and partnering
arrangements; I) outcome of pending and threatened litigation, arbitration,
disputes, regulatory proceedings or investigations by authorities; J)
expectations regarding restructurings, investments, uses of proceeds from
transactions, acquisitions and divestments and our ability to achieve the
financial and operational targets set in connection with any such
restructurings, investments, divestments and acquisitions, including any
expectations, plans or benefits related to or caused by the transaction where
Nokia sold substantially all of the Devices & Services business to Microsoft on
April 25, 2014 ("Sale of the D&S Business"); K) statements preceded by or
including "believe", "expect", "anticipate", "foresee", "sees", "target",
"estimate", "designed", "aim", "plans", "intends", "focus", "continue",
"project", "should", "will" or similar expressions. These statements are based
on the management's best assumptions and beliefs in light of the information
currently available to it. Because they involve risks and uncertainties, actual
results may differ materially from the results that we currently expect.
Factors, including risks and uncertainties that could cause such differences
include, but are not limited to: 1) our ability to execute our strategies
successfully and in a timely manner, and our ability to successfully adjust our
operations and operating models; 2) our ability to sustain or improve the
operational and financial performance of our businesses and correctly identify
business opportunities or successfully pursue new business opportunities; 3) our
ability to execute Nokia Networks' strategy and effectively, profitably and
timely adapt its business and operations to the increasingly diverse needs of
its customers and technological developments; 4) our ability within our Nokia
Networks business to effectively and profitably invest in and timely introduce
new competitive high-quality products, services, upgrades and technologies; 5)
our ability to invent new relevant technologies, products and services, to
develop and maintain our intellectual property portfolio and to maintain the
existing sources of intellectual property related revenue and establish new such
sources; 6) our ability to protect numerous patented standardized or proprietary
technologies from third-party infringement or actions to invalidate the
intellectual property rights of these technologies; 7) our ability within our
HERE business to maintain current sources of revenue, historically derived
mainly from the automotive industry, create new sources of revenue, for instance
in the enterprise business, successfully recognize and pursue growth
opportunities and extend the reach of our location services; 8) our dependence
on the development of the mobile and communications industry in numerous diverse
markets, as well as on general economic conditions globally and regionally; 9)
Nokia Networks' dependence on a limited number of customers and large, multi-
year contracts; 10) our ability to retain, motivate, develop and recruit
appropriately skilled employees; 11) the potential complex tax issues and
obligations we may face, including the obligation to pay additional taxes in
various jurisdictions and our actual or anticipated performance, among other
factors, which could result in allowances related to deferred tax assets; 12)
our ability to manage our manufacturing, service creation and delivery, and
logistics efficiently and without interruption, especially if the limited number
of suppliers we depend on fail to deliver sufficient quantities of fully
functional products and components or deliver timely services; 13) any
inefficiency, malfunction or disruption of a system or network that our
operations rely on or any impact of a possible cybersecurity breach; 14) our
ability to reach targeted results or improvements by managing and improving our
financial performance, cost savings and competitiveness; 15) management of Nokia
Networks' customer financing exposure; 16) the performance of the parties we
partner and collaborate with, as well as financial counterparties, and our
ability to achieve successful collaboration or partnering arrangements; 17) our
ability to protect the technologies, which we develop, license, use or intend to
use, from claims that we have infringed third parties' intellectual property
rights, as well as impact of possible licensing costs, restriction on our usage
of certain technologies, and litigation related to intellectual property rights;
18) the impact of regulatory, political or other developments, including those
caused by the impact of trade sanctions, natural disasters or disease outbreaks
on our operations and sales in those various countries or regions where we
conduct business; 19) exchange rate fluctuations, particularly between the euro,
which is our reporting currency, and the US dollar, the Japanese yen and the
Chinese yuan, as well as certain other currencies; 20) effects of impairments or
charges to carrying values of assets, including goodwill, or liabilities; 21)
our ability to successfully implement planned transactions, such as
acquisitions, divestments, mergers or joint ventures, manage unexpected
liabilities related thereto and achieve the targeted benefits; 22) the impact of
unfavorable outcome of litigation, arbitration, contract related disputes or
allegations of health hazards associated with our business; 23) potential
exposure to contingent liabilities due to the Sale of the D&S Business and
possibility that the agreements we have entered into with Microsoft may have
terms that prove to be unfavorable for us, as well as the risk factors specified
on pages 12-35 of Nokia's annual report on Form 20-F for the year ended December
31, 2013 under Item 3D. "Risk Factors." Other unknown or unpredictable factors
or underlying assumptions subsequently proven to be incorrect could cause actual
results to differ materially from those in the forward-looking statements. Nokia
does not undertake any obligation to publicly update or revise forward-looking
statements, whether as a result of new information, future events or otherwise,
except to the extent legally required.
Nokia Management, London, UK - November 14, 2014
About Nokia
Nokia invests in technologies important in a world where billions of devices are
connected. We are focused on three businesses: network infrastructure software,
hardware and services, which we offer through Nokia Networks; location
intelligence, which we provide through HERE; and advanced technology development
and licensing, which we pursue through Nokia Technologies. Each of these
businesses is a leader in its respective field. http://company.nokia.com
Media and Investor Contacts:
Corporate Communications, tel. +358 10 448 4900 email: press.services(at)nokia.com
Investor Relations Europe, tel. +358 4080 3 4080
Investor Relations US, tel. +1 650 644 4709
This announcement is distributed by GlobeNewswire on behalf of
GlobeNewswire clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: NOKIA via GlobeNewswire
[HUG#1871147]
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Datum: 14.11.2014 - 08:02 Uhr
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