Citing ongoing macroeconomic uncertainty that puts pressure on operator spending, Nokia reported Q4 2023 sales of EUR 5.707 billion, a decline of 21% y-o-y in constant currency (-23% reported). Q4 comparable diluted EPS was EUR 0.10; reported diluted EPS was EUR -0.01. Full year net sales declined 8% y-o-y in constant currency (-11% reported).
The company said it sees signs of stabilization with improving order trends.
Some highlights:
- Enterprise segment achieved 16% net sales growth in constant currency, accounting for over 10% of group net sales.
- Network Infrastructure showed progress with webscale orders, US government initiatives, and a significant customer in Asia for Fixed Wireless Access products.
- Optical Networks achieved a record of 800Gbps transmission on a single wavelength over 6,600km.
- Mobile Networks faced challenges but improved gross margin, and AT&T's decision to single-source RAN network was disappointing.
- The Cloud and Network Services business had a slight decline in net sales but improved profitability and launched Network as Code platform.
Nokia Technologies signed significant deals with Apple, Samsung, Honor, and OPPO, focusing on growth in licensing in new areas like automotive, consumer electronics, IoT, and multimedia.
Nokia CEO Pekka Lundmark states: "In 2023 we saw a meaningful shift in customer behavior impacting our industry driven by the macro-economic environment and high interest rates along with customer inventory digestion. This led to our full year net sales declining by 8% in constant currency. Proactive action across our organization meant we were able to protect our profitability while continuing to invest in R&D and we delivered a comparable operating margin of 10.7% for the full year. This was a resilient performance considering the challenging environment and lower contribution from our high margin patent licensing business as some renewals remained outstanding...
Looking ahead, we expect the challenging environment of 2023 to continue during the first half of 2024, particularly in the first quarter. However, we are now starting to see some green shoots on the horizon, with improving order intake for Network Infrastructure and some of the specific deals we have won. This is expected to drive a strong improvement in Network Infrastructure net sales growth in the second half of 2024 which we believe, even with a challenging first half, will drive solid growth for the full year. In Mobile Networks, we expect top line challenges in 2024 related to a more normalized pace of investment in India and the AT&T decision. We do expect further improvement in gross margin and then in the second half we will start to see more benefits from our cost savings program. At the Nokia level, we currently estimate that we will deliver comparable operating profit of between EUR 2.3 and 2.9 billion in 2024. We also target to deliver an improved free cash flow performance with conversion of between 30% and 60%."
