NOK Nokia Corp

   By Dominic Chopping 
 

Finland's Nokia Corp. reported results for the third quarter on Thursday. Here's what we watched:

SALES: Sales fell 6.8% to 5.29 billion euros ($6.21 billion) against the EUR5.41 billion expected in a FactSet poll of analysts.

NET PROFIT: The company's adjusted net profit for the quarter rose to EUR300 million from EUR264 million a year earlier. Analysts polled by FactSet had expected net profit of EUR301 million. On a nonadjusted basis, Nokia's net profit rose to EUR193 million against an expected EUR73 million.

WHAT WE WATCHED:

--5G MOMENTUM: Nokia's key networks unit had a 7% fall in sales, dragged by lower levels of network deployment services, but profitability rose amid stronger margins. However, the company said it has lost share at one large North American customer, with some margin pressure in that market, and believes it needs to further increase research and development investments.

--MARGINS: Nokia saw continued margin expansion, primarily driven by its mobile access and optical networks units. Group adjusted operating margin rose to 9.2% from 8.4%. The network unit gross margin rose to 32.8% from 29.1% on a favorable product sales mix and improved 5G product costs, among other things.

--NEW CEO: New CEO Pekka Lundmark said the company will shuffle its operating model to better position the company for changing markets and align with customer needs. Four new business groups will be created along with new leadership teams. Further details will be provided at the capital markets day in March, it said.

--GUIDANCE: The CEO said Nokia's financial performance in 2021 is expected to be challenging. The company cut guidance, now expecting 2020 adjusted earnings per share of EUR0.23 plus or minus 3 European cents, from EUR0.25 plus or minus 5 European cents previously. It also now expects an adjusted operating margin of 9.0% plus or minus 1 percentage point from 9.5% plus or minus 1.5 percentage points previously. It said the adjusted operating margin in 2021 is expected at between 7% and 10%.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

October 29, 2020 07:53 ET (11:53 GMT)

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