Nokia Posts Strong Fourth-Quarter Results Amid Robust Demand

Nokia Oyj reported better-than-expected earnings, saying demand for their products “remains robust” even amid a weaker macro-economic backdrop with phone carriers set to take a more cautious approach to spending on 5G networks. This is good news for the company, as they continue to produce quality products that people want and need.

Adjusted operating profit rose 27% to €1.15 billion ($1.3 billion) for the fourth quarter, the Espoo, Finland-based mobile network company said in a statement on Thursday. This is higher than the average analyst estimate of €946 million, according to a Bloomberg survey. Adjusted earnings per share came to 16 cents, which is also higher than what analysts had estimated.

"We said at the start of 2022 that it would be a year of acceleration, and we delivered what we promised," Chief Executive Officer Pekka Lundmark said in the statement. "We expect another year of growth."

Nokia shares rose by as much as 7.2% to €4.52 in Helsinki on Thursday, the biggest increase since July.

The ongoing economic challenges have put pressure on 5G equipment vendors, with sales shifting to lower-margin markets like India and reduced spending by US carriers. Last week, competitor Ericsson AB reported a bigger-than-expected drop in earnings after some of its major customers for 5G networks pulled back on spending, citing an uncertain economic environment.

Supply chain issues were a major constraint for us, especially when it came to semiconductors. However, that is no longer the case. The situation has normalized. The thing that has not yet normalized is lead times, which are unusually long, and that has a direct connection to our net working capital.

Nokia and Samsung have reached a new cross-license patent agreement that will allow Samsung to use Nokia's technology in its products in exchange for royalties. This agreement comes after the expiration of the companies' previous intellectual property contract.

Nokia announced that a long-term licensee has exercised an option to extend its license into perpetuity. This means that the licensee will continue to have the right to use Nokia's technology and intellectual property indefinitely.

Nokia stated that its operating margin would be 11.5% to 14% this year, compared to 12.5% last year, on a comparable basis. Sales are expected to rise to a maximum of €26.5 billion this year, Nokia said. Analysts who participated in a Bloomberg survey forecasted that the average net sales would be €25.4 billion.

Lundmark said that they started the year with a strong backlog, which is actually stronger than the backlog they had last year.