Strong First Half for Nokia, 2021 Outlook Revised Upwards

Nokia's net sales grew 9 percent on constant currency in the second quarter of 2021. The results were driven by growth across all business groups, with particular strength in Network Infrastructure. Reported net sales increased 4 percent.

CEO and president Pekka Lundmark carried out details of a promised revised outlook on the back of a strong Q2 performance, as he hailed the benefits of a new operating model which is driving its turnaround.

In its earnings statement Lundmark noted following a robust start to 2021, it was now expecting sales for full year 2021 to be in the €21.7 billion to €22.7 billion range, up from €20.6 billion to €21.8 billion. Nokia also lifted operating margin outlook to 10 to 12 percent from 7 to 10 percent, after executing faster than planned on their strategy in the first half which provides them with a good foundation for the full year.

However, Lundmark warned it still expected to face headwinds in the second half, particularly with market share loss and price erosion in North America. “Therefore, we still expect our typical quarterly earnings seasonality to be less pronounced in 2021. In addition, we continue to accelerate R&D investments and monitor risks around component availability, considering the strong demand for our products,“ he added.

Revenue in Q2 on a constant currency basis was up 9 percent year-on-year to €5.3 billion, driven by growth across all business groups, with particular strength in Network Infrastructure where it continued to gain market share, while also benefitting from a one-time software deal and 5G growth. Net profit rose from €99 million to €351 million.

Mobile Networks sales were up 3 percent to €2.4 billion; Network Infrastructure rose 20 percent to €1.8 billion; Cloud and Networks services increased 2 percent to €703 million and Nokia Technologies hit €401 million, a 20 percent increase. The latter benefited from new licensing deals, resulting in higher income.