Citing the effects of COVID-19 as well as a sharp decline in China, Nokia reported Q2 net sales of EUR 5.092 billion, down 11% from the EUR 5.694 billion a year earlier. However, Nokia reduced the volume of low margin services business, resulting in better-than-expected profitability and significant improvement in cash generation. There was a net profit of EUR 85 million, compoared with a loss of EUR 191 million a year ago.
- Nokia's Optical business experienced COVID-19 supply constraints in Q2 but these are expected to ease in Q3
- Nokia currently has 83 5G commercial deals and 32 live 5G networks
- Nokia estimates its 4G+5G mobile radio market share at 27% excluding China
- Nokia Enterprise confirmed 180 private 4G and 5G deals to date, an 18% yearly growth
Rajeev Suri, Nokia's outgoing CEO, states:
"At the start of the year, we said we would have a sharp focus on our Mobile Access business and improving cash generation. In both areas we continue to make good progress. Free cash flow in the quarter was positive €265 million, versus negative €1.0 billion one year ago, and Nokia ended Q2 with €1.6 billion of net cash, and €7.5 billion in total cash. Given our strong first-half improvement, we now expect free cash flow for full-year 2020 to be “clearly positive” compared to our earlier guidance of “positive”.
"In Mobile Access, we saw healthy improvements in our radio portfolio, where roadmaps are strengthening, costs are coming down, and product performance is rising. We have a particularly powerful portfolio in mid-band mobile radio, with proven products deployed with 55 customers, and the first live C-Band network demonstrated in the U.S. during the quarter. Pleasingly, our “5G Powered by ReefShark” shipments continue to increase and we believe we remain on track to reach 35% or better by year end. And, we now have 83 5G deals.""Our continued momentum was demonstrated by the progress we announced after the quarter ended. These included the availability of a software upgrade that allows millions of Nokia 4G/LTE radios deployed to more than 350 customers to be migrated seamlessly to 5G; and plans to accelerate leadership in Open RAN. Nokia is the only global supplier fully committed to O-RAN with commercial 5G Cloud-RAN networks. We also announced an expansion of our IP routing business into the data center market and highlighted that Apple was deploying our technology at its data centers."
"This is my last quarterly announcement as CEO of Nokia and I want to close with a note of thanks: thanks to our shareholders, thanks to our customers, thanks to our many other stakeholders, and a particular thanks to the great employees of Nokia. You have constantly made me proud and I expect that you will continue to do so in the many years to come. Thank you all. It has been a pleasure and an honor."
