24th Jul 2014 07:00
Nokia / Miscellaneous 24.07.2014 07:00 Dissemination of a Regulatory Announcement, transmitted byDGAP - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.--------------------------------------------------------------------------- Nokia CorporationInterim ReportJuly 24, 2014 at 08.00 (CET+1) This is a summary of the Nokia Corporation Interim Report for Q2 2014 andJanuary-June 2014 published today. The complete Interim Report with tables forQ2 2014 and January-June 2014 is available athttp://company.nokia.com/financials. Investors should not rely on summaries ofNokia's interim reports only, but should review the full interim reports withtables. Nokia Corporation Interim Report for Q2 2014 and January-June 2014 FINANCIAL AND OPERATING HIGHLIGHTS Second quarter 2014 highlights for continuing operations: - Non-IFRS diluted EPS in Q2 2014 of EUR 0.06 (EUR 0.05 in Q2 2013); reporteddiluted EPS of EUR -0.01 (EUR -0.02 in Q2 2013) - Net sales in Q2 2014 of EUR 2.9 billion (EUR 3.2 billion in Q2 2013) Nokia Networks- In Q2 2014, Nokia Networks achieved strong underlying operating profitabilitywith non-IFRS operating profit of EUR 281 million, or 11.0% of net sales,compared to EUR 328 million, or 11.8% of net sales, in Q2 2013. The stronglevel of profitability for Nokia Networks in Q2 2014 and Q2 2013 was primarilydue to operational efficiency which benefitted both gross margin and operatingprofit. - Nokia Networks net sales in Q2 2014 were EUR 2.6 billion, compared to EUR 2.8billion in Q2 2013. - Excluding foreign currency fluctuations and the divestments of businesses notconsistent with its strategic focus, as well as the exiting of certain customercontracts and countries, Nokia Networks net sales would have increased 1%year-on-year. HERE- HERE net sales in Q2 2014 were approximately flat on a year-on-year basis.Excluding foreign currency fluctuations, HERE net sales in Q2 2014 would haveincreased 2% year-on-year. - In Q2 2014, HERE sold map data licenses for the embedded navigation systemsof 3.3 million new vehicles globally, compared to 2.7 million vehicles in Q22013. - HERE continued to focus on investing in longer term transformational growthopportunities, and announced the acquisitions of Medio and Desti. Nokia Technologies- Nokia Technologies net sales increased sequentially in Q2 2014, primarily dueto Microsoft becoming a more significant intellectual property licensee inconjunction with the sale of substantially all of the Devices & Servicesbusiness to Microsoft. Balance sheet highlights:- Nokia ended Q2 2014 with a strong balance sheet and solid cash position withgross cash of EUR 9.0 billion and net cash of EUR 6.5 billion compared to EUR6.9 billion and EUR 2.1 billion, respectively, at the end of Q1 2014. - In Q2 2014, Nokia completed the sale of substantially all of the Devices &Services business to Microsoft. Of the approximately EUR 5.0 billion of netcash impact from the proceeds, approximately EUR 4.8 billion benefitted Q2 2014with the balance expected to be received in the second half 2014. In connectionwith the completion of the transaction the EUR 1.5 billion Microsoftconvertible bonds were repaid. - During Q2 2014 we started the capital structure optimization program with theredemption of approximately EUR 950 million of Nokia Networks debt. As a resultof this, Nokia no longer has material financial covenants. January-June 2014 highlights for continuing operations: Nokia continuing operations net sales in January-June 2014 were EUR 5.6 billion- Nokia continuing operations net sales for the first half 2014 decreased 11%year-on-year. - Reported EPS for the first half 2014 was EUR 0.02, compared to EUR -0.04 inthe first half 2013. Commenting on the second quarter results, Rajeev Suri, Nokia President and CEO,said: Nokia's second quarter performance shows the strength of the company today. In Nokia Networks, our unique operating model has allowed us to deliver strongprofitability while improving our topline trend. Maintaining this balance willremain a clear priority in the second half of the year, when we expect Networksto return to year-on-year growth. Our expectations for the full year 2014 haveimproved and we now expect full year underlying profitability for Networks tobe at or slightly above our long term target range of 5 to 10 percent. HERE demonstrated good year-on-year growth in its automotive business, and wecontinue to invest to expand in this area, as well as in the enterprise andconsumer markets. The licensing and innovation engine of Nokia Technologiesremains very much on track. We see opportunities to expand this business withboth new and existing licensees, and the Technologies team continues toincrease its industry-leading patent portfolio. This performance, along with the many conversations I have had with customers,partners, employees and others in my first quarter as CEO, gives me a highdegree of confidence about our future. SUMMARY FINANCIAL INFORMATION -------------------------------------------------------------------------------- Reported and Non-IFRS Reported and second quarter 2014 Non-IFRS results1 January - June 2014 results1 EUR million Q2/14 Q2/13 YoY Q1/14 QoQ Q1- Q1- YoY Change Change Q2/ Q2/ Change 2014 2013 ----------------------------------------------------------------------------------------------------------------------------------------------------------------Continuing Operations Net sales 2 942 3 155 -7 % 2 664 10 % 5 606 6 295 -11 %Gross 44.0 % 43.6 % 45.7 % 44.8 % 41.4 % margin % (non-IFRS) Operating -940 -1 009 -7 % - 925 2 % -1 865 -2 013 -7 %expenses (non-IFRS) Operating 347 430 -19 % 304 14 % 651 684 -5 %profit (non-IFRS) Non-IFRS 62 419 62 125 702 exclusions Operating 284 12 242 17 % 526 -18 profit EPS, EUR 0.06 0.05 20 % 0.04 50 % 0.10 0.06 67 %diluted (non-IFRS) EPS, EUR -0.01 -0.02 0.03 0.02 -0.04 diluted (reported) Net cash 1 455 - - 198 1 653 - from operating activities Net cash 6 497 4 067 60 % 2 075 213 % 6 497 4 067 60 %and other liquid assets --------------------------------------------------------------------------------Discontinued Operations Net sales 497 2 579 -81 % 1 929 -74 % 2 426 5 344 -55 %Operating profit -110 -127 -306 -416 -200 (non-IFRS) Operating profit 3 075 -126 -326 2 749 -246 Net cash from -664 - - 336 -1 001 - operating activities --------------------------------------------------------------------------------Nokia Group (continuing and discontinued operations) EPS, EUR 0.03 0.00 -0.04 -0.01 -0.01 diluted (non-IFRS) EPS, EUR 0.61 -0.06 -0.06 0.54 -0.13 diluted (reported) Net cash 790 -196 -138 652 10 from operating activities Net cash 6 497 4 067 60 % 2 075 213 % 6 497 4 067 60 %and other liquid assets -------------------------------------------------------------------------------- Note 1 relating to results information and non-IFRS (also referred to as'underlying') results: The results information in this report is unaudited.Percentages and figures presented herein may include rounding differences andtherefore may not add up precisely to the totals presented and may vary frompreviously published financial information. In addition to information on ourreported IFRS results, we provide certain information on a non-IFRS, orunderlying business performance, basis. Non-IFRS results exclude all materialspecial items for all periods. In addition, non-IFRS results exclude intangibleasset amortization, other purchase price accounting related items and inventoryvalue adjustments arising from (i) the formation of Nokia Networks (formerlyNSN) and (ii) all business acquisitions completed after June 30, 2008. Nokiabelieves that our non-IFRS results provide meaningful supplemental informationto both management and investors regarding Nokia's underlying businessperformance by excluding the above-described items that may not be indicativeof Nokia's business operating results. These non-IFRS financial measures shouldnot be viewed in isolation or as substitutes to the equivalent IFRS measure(s),but should be used in conjunction with the most directly comparable IFRSmeasure(s) in the reported results. More information, including areconciliation of our Q2 2014 and Q2 2013 non-IFRS results to our reportedresults, can be found in our complete Q2 2014 report with tables on pages22-27. A reconciliation of our Q1 2014 non-IFRS results to our reported resultscan be found in our complete Q1 2014 interim report with tables on pages 19-23published on April 29, 2014. RISKS AND FORWARD-LOOKING STATEMENTS It should be noted that Nokia and its business are exposed to various risks anduncertainties and certain statements herein that are not historical facts areforward-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 continuingbusinesses Nokia Networks, HERE and Nokia Technologies; C) expectations, plansor benefits related to changes in leadership and operational structure; D)expectations regarding market developments, general economic conditions andstructural changes; E) expectations and targets regarding performance,including those related to market share, prices, net sales and margins; F) thetiming of the deliveries of our products and services; G) expectations andtargets regarding our financial performance, cost savings and competitiveness,as well as results of operations; H) expectations and targets regardingcollaboration and partnering arrangements; I) the outcome of pending andthreatened litigation, arbitration, disputes, regulatory proceedings orinvestigations by authorities; J) expectations regarding restructurings,investments, uses of proceeds from transactions, acquisitions and divestmentsand our ability to achieve the financial and operational targets set inconnection with any such restructurings, investments, divestments andacquisitions, including any expectations, plans or benefits related to orcaused by the transaction announced on September 3, 2013 where Nokia soldsubstantially 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 onmanagement's best assumptions and beliefs in light of the information currentlyavailable to it. Because they involve risks and uncertainties, actual resultsmay differ materially from the results that we currently expect. Factors,including risks and uncertainties that could cause these differences include,but are not limited to: 1) our ability to execute our strategies successfullyand in a timely manner, and our ability to successfully adjust our operations;2) our ability to sustain or improve the operational and financial performanceof our continuing businesses and correctly identify business opportunities orsuccessfully pursue new business opportunities; 3) our ability to execute NokiaNetworks' strategy and effectively, profitably and timely adapt its businessand operations to the increasingly diverse needs of its customers andtechnological developments; 4) our ability within our Nokia Networks businessto effectively and profitably invest in and timely introduce new competitivehigh-quality products, services, upgrades and technologies; 5) our ability toinvent new relevant technologies, products and services, to develop andmaintain our intellectual property portfolio and to maintain the existingsources of intellectual property related revenue and establish new suchsources; 6) our ability to protect numerous patented standardized orproprietary technologies from third-party infringement or actions to invalidatethe intellectual property rights of these technologies; 7) our ability withinour HERE business to maintain current sources of revenue, historically derivedmainly from the automotive industry, create new sources of revenue, establish asuccessful location-based platform and extend our location-based servicesacross devices and operating systems; 8) effects of impairments or charges tocarrying values of assets, including goodwill, or liabilities; 9) ourdependence on the development of the mobile and communications industry innumerous diverse markets, as well as on general economic conditions globallyand regionally; 10) Nokia Networks business' dependence on a limited number ofcustomers and large, multi-year contracts; 11) our ability to retain, motivate,develop and recruit appropriately skilled employees; 12) the potential complextax issues and obligations we may face, including the obligation to payadditional taxes in various jurisdictions and our actual or anticipatedperformance, among other factors, could result in allowances related todeferred tax assets; 13) our ability to manage our manufacturing, servicecreation and delivery, and logistics efficiently and without interruption,especially if the limited number of suppliers we depend on fail to deliversufficient quantities of fully functional products and components or delivertimely services; 14) potential exposure to contingent liabilities due to theSale of the D&S Business and possibility that the agreements we have enteredinto with Microsoft may have terms that prove to be unfavorable to us; 15) anyinefficiency, malfunction or disruption of a system or network that ouroperations rely on or any impact of a possible cybersecurity breach; 16) ourability to reach targeted results or improvements by managing and improving ourfinancial performance, cost savings and competitiveness; 17) management ofNokia Networks' customer financing exposure; 18) the performance of the partieswe partner and collaborate with, and our ability to achieve successfulcollaboration or partnering arrangements; 19) our ability to protect thetechnologies, which we develop, license, use or intend to use from claims thatwe have infringed third parties' intellectual property rights, as well as,impact of possible licensing costs, restriction on our usage of certaintechnologies, and litigation related to intellectual property rights; 20) theimpact of regulatory, political or other developments on our operations andsales in those various countries or regions where we do business; 21) exchangerate fluctuations, particularly between the euro, which is our reportingcurrency, and the US dollar, the Japanese yen and the Chinese yuan, as well ascertain other currencies; 22) our ability to successfully implement plannedtransactions, such as acquisitions, divestments, mergers or joint ventures,manage unexpected liabilities related thereto and achieve the targetedbenefits; 23) the impact of unfavorable outcome of litigation, arbitration,contract related disputes or allegations of health hazards associated with ourbusiness, as well as the risk factors specified on pages 12-35 of Nokia'sannual report on Form 20-F for the year ended December 31, 2013 under Item 3D.'Risk Factors.' Other unknown or unpredictable factors or underlyingassumptions subsequently proven to be incorrect could cause actual results todiffer materially from those in the forward-looking statements. Nokia does notundertake any obligation to publicly update or revise forward-lookingstatements, whether as a result of new information, future events or otherwise,except to the extent legally required. Nokia, Helsinki - July 24, 2014 Media and Investor Contacts: Corporate Communications, tel. +358 10 448 4900 email: [email protected] Relations Europe, tel. +358 4080 3 4080Investor Relations US, tel. +1 408 663 5685 Planned publication dates for interim reports in 2014- report for Q3 2014 and January-September 2014: October 23, 2014 Click on, or paste the following link into your web browser, to view theassociated documents https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=481396 News Source: NASDAQ OMX 24.07.2014 DGAP's Distribution Services include Regulatory Announcements,Financial/Corporate News and Press Releases.Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: EnglishCompany: Nokia FinlandPhone: Fax: E-mail: Internet: ISIN: FI0009000681Category Code: MSCTIDM: 0HAFSequence Number: 2136Time of Receipt: Jul 24, 2014 07:00:00 End of Announcement DGAP News-Service ---------------------------------------------------------------------------UK-Regulatory-announcement transmitted by DGAP - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement.
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