The products and services that we provide have never been more critical in enabling the world to continue to function in an orderly way. About 1% of the shares were owned by Nokia Corporation during 2009. The difference between diluted and basic average number of shares was negligible during all the three years stated above. As we know technology changes at a rapid pace and if Nokia wants to remain competitive they must continue to put fresh ideas into action. We do not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. This is my last quarterly announcement as CEO of Nokia and I want to close with a note of thanks: thanks to our shareholders, thanks to our customers, thanks to our many other stakeholders, and a particular thanks to the great employees of Nokia. In Q2 2020, the estimated COVID-19 net impact was approximately EUR 300 million, composed of a negative impact of approximately EUR 400 million related to delivery and implementation challenges, partially offset by a positive impact of approximately EUR 100 million related to capturing a part of the negative net sales impact from Q1 2020. Networks and Nokia Software are expected to be influenced by factors including: Nokia Technologies is expected to be influenced by factors including: Additionally, our outlook is based on the following assumptions: ANALYST CONFERENCE CALL Nokia's analyst conference call will begin on July 31, 2020 at 3 p.m. Finnish time. Nokia's Networks business. Capital structure is how a company funds its overall operations and growth. Nokia is the only global supplier fully committed to O-RAN with commercial 5G Cloud-RAN networks. Tommi Uitto, President of Mobile Networks at Nokia, said: "Nokia is committed to leading the open mobile future by investing in Open RAN and Cloud RAN … From a technical perspective, the capital structure is the careful balance between equity and debt that a business uses to finance its assets, day-to-day operations, and future growth. Nokia's headquarters are in Espoo, Finland, in the greater Helsinki metropolitan area. Driving a lean corporate structure 29. Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries. Ian H. Giddy/NYU Capital Structure -11 Copyright ©2002 Ian H. Giddy Capital Structure 21 Ratings and Spreads Corporate bond spreads: basis points over Treasury curve Preferred Stock, Equity Stock, Reserves and Long- term Debts). Issuing Shares with Differential Voting Rights: Financial theory shows there is an optimal capital structure for each company that maximizes the value of the equity. Press Release. In addition, and in accordance with our prudent management of our capital structure, we took further proactive steps to strengthen our liquidity position by raising EUR 1.0 billion of debt in Q2 2020, on a net basis. Capital structure is a permanent type of funding that supports a company's growth and related assets. COVID-19     The COVID-19 crisis has made vividly clear the critical importance of connectivity to keep society functioning. Nokia Corporation is a Finnish multinational communications corporation, founded in 1865. In Q2 2020, we estimate that COVID-19 had an approximately EUR 300 million negative net impact on our net sales; with the majority of these net sales expected to be shifted to future periods, rather than being lost. In Q1 2020, the estimated COVID-19 impact was approximately EUR 200 million, and related primarily to supply chain disruptions. A company’s capital structure refers to the combination of its various sources of funding. Equity Share Capital with voting rights and equity share capital with differential rights as to dividend, voting or otherwise. During the COVID-19 pandemic, we have continued to advance our 5G roadmap and product evolution, as planned, and our COVID-19 mitigation actions in R&D have been very successful. The company competes with Nokia in this area but the total global addressable market is large, projected to be $700 billion in 2030 compared to less than $10 billion today. On a constant currency basis, both non-IFRS and reported net sales decreased 11%. Networks and Nokia Software are expected to be influenced by factors including: Our supply network consists of 25 factories around the globe and six hubs for customer fulfillment. The average basic number of shares during 2009 was 3.705 billion, 2008 was 3.743 billion and 2007 was 3.885 billion. ���[g�1��^�s�����cը��@RZ4�J5߲�&�C�jY��ɞv9*���cF�5�qex:���R�b".���t��2��zD2��Z��~ �c��WeM�. Nokia’s outlook for recurring free cash flow is expected to be supported by an improvement in net working capital performance and improved operational results, partially offset by a more substantial difference in 2020 between profit and free cash flow in Nokia Technologies; Non-IFRS financial income and expenses are expected to be an expense of approximately EUR 300 million in full year 2020 and over the longer-term. The difference between diluted and basic average number of shares was negligible during all the three years stated above. Excluding one-time licensing net sales in Q2 2020 and Q2 2019, net sales decreased 10% on both a non-IFRS and reported basis. Thank you all. Espoo, Finland – Nokia today announced a continuation of its long standing T-Mobile partnership with a five-year deal. Nokia market cap as of January 19, 2021 is $22.92B. Equity Share Capital with voting rights and equity share capital with differential rights as to dividend, voting or otherwise. Nokia responded that its investment rating is backed by its "strong liquidity position and capital structure," with a gross cash balance of €9.8 billion ($12.8 billion). 20 121. “Capital structure of a company refers to the make-up of its capitalisation and it includes all long-term capital resources viz., loans, reserves, shares and bonds.”—Gerstenberg. In this post, we shall examine the capital structure of a private limited company. COVID-19 has affected the valuations of certain assets, including investments in non-publicly quoted assets through Nokia’s venture fund investments and pension plans, the valuation of which is inherently challenging in fast-moving market conditions (for details, please refer to note 5, “Pensions and other post-employment benefits” and note 8, “Fair value of financial instruments” in the "Financial statement information" section included in Nokia Corporation interim report for Q2 and Half Year 2020). Since the interest expense on debt is tax deductible in most countries, a company can reduce its after-tax cost of capital by increasing debt relative to … 1 Free cash flow = net cash from/(used in) operating activities - capital expenditures + proceeds from sale of property, plant and equipment and intangible assets – purchase of non-current financial investments + proceeds from sale of non-current financial investments.. KEY DRIVERS OF NOKIA’S OUTLOOK. 1462 0 obj <> endobj It should be noted that Nokia and its businesses are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements. View nokia business summary and other industry information. Prioritizing capital towards areas where we can achieve leadership 28. About Nokia We create the technology to connect the world. About two-thirds of the company's net sales are generated by the Nokia Mobile Phones business group. The optimal capital structure of a firm is often defined as the proportion of debt and equity that result in the lowest weighted average cost of capital (WACCWACCWACC is a firm’s Weighted Average Cost of Capital and represents its blended cost of capital including equity and debt. Based on these assessments, COVID-19 is currently not expected to have such long-term effects on Nokia’s financial performance that it would require adjustments to the carrying amounts of goodwill and other intangible assets or deferred tax assets. Capital Structure and Liabilities Management at Nokia. In both areas we continue to make good progress. We continue to work closely with all our customers, to ensure that the changing needs and requirements at this time are well understood and that we respond appropriately to them. In Mobile Access, we saw healthy improvements in our radio portfolio, where roadmaps are strengthening, costs are coming down, and product performance is rising. These forward-looking statements reflect Nokia's current expectations and views of future developments and include statements regarding: A) expectations, plans or benefits related to our strategies, growth management and operational key performance indicators; B) expectations, plans or benefits related to future performance of our businesses (including the expected impact and timing of that impact of COVID-19 on our businesses and our customers’ businesses) and any expected future dividends including timing and qualitative and quantitative thresholds associated therewith; C) expectations and targets regarding financial performance, cash generation, results, the timing of receivables, operating expenses, taxes, currency exchange rates, hedging, cost savings, product cost reductions and competitiveness, as well as results of operations including targeted synergies, better commercial management and those results related to market share, prices, net sales, income and margins; D) expectations, plans or benefits related to changes in organizational and operational structure; E) expectations regarding competition within our market, market developments, general economic conditions and structural and legal change globally and in national and regional markets, such as China; F) our ability to integrate acquired businesses into our operations and achieve the targeted business plans and benefits, including targeted benefits, synergies, cost savings and efficiencies; G) expectations, plans or benefits related to any future collaboration or to business collaboration agreements or patent license agreements or arbitration awards, including income to be received under any collaboration or partnership, agreement or award; H) timing of the deliveries of our products and services, including our short term and longer term expectations around the rollout of 5G, investment requirements with such rollout, and our ability to capitalize on such rollout; as well as the overall readiness of the 5G ecosystem; I) expectations and targets regarding collaboration and partnering arrangements, joint ventures or the creation of joint ventures, and the related administrative, legal, regulatory and other conditions, as well as our expected customer reach; J) outcome of pending and threatened litigation, arbitration, disputes, regulatory proceedings or investigations by authorities; K) expectations regarding restructurings, investments, capital structure optimization efforts, uses of proceeds from transactions, acquisitions and divestments and our ability to achieve the financial and operational targets set in connection with any such restructurings, investments, capital structure optimization efforts, divestments and acquisitions, including our current cost savings program; L) expectations, plans or benefits related to future capital expenditures, reduction of support function costs, temporary incremental expenditures or other R&D expenditures to develop or rollout software and other new products, including 5G and increased digitalization; M) expectations regarding our customers' future actions, including our customers’ capital expenditure constraints and our ability to satisfy customer’s needs and retain their business; and N) statements preceded by or including “believe”, “expect”, “expectations”, “consistent”, “deliver”, “maintain”, “strengthen”, “target”, “estimate”, “plan”, “intend”, “assumption”, “focus”, “continue”, “should", "will” or similar expressions. Most companies are funded by a mix of debt and equity, including some short-term debt, some long-term debt, a number of shares of common stock, and perhaps shares of preferred stock. The financial information in this report is unaudited. endstream endobj Get the latest news from Nokia delivered straight to your inbox. Given our strong first-half improvement, we now expect free cash flow for full-year 2020 to be “clearly positive” compared to our earlier guidance of “positive”. Nokia Corporation (referred to as Nokia or Nokia Oyj) is a Finnish multinational communications corporation, founded in 1865, with customers in over 130 countries. Due to our strong free cash flow performance in the first six months of 2020, we no longer expect our free cash flow seasonality in 2020 to be similar to 2019. Adhering to the highest ethical standards, we transform how people live, work and communicate. Nokia supports T-Mobile 5G evolution with five-year expansion deal . For more information on currency exposures, please refer to note 1, “Basis of Preparation”, in the "Financial statement information" section included in Nokia Corporation interim report for Q2 and Half Year 2020. Capital structure refers to the permanent financing of the company, represented by owned capital and loan/debt capital (i.e.. Change in net sales at constant currency excludes the effect of changes in exchange rates in comparison to euro, our reporting currency. Issuing Shares with Differential Voting Rights: These results show that our execution has improved as planned and that we are well positioned to end the year with a significantly stronger financial position. If the capital structure of a company is with greater weightage on preference shares and debentures, the earnings leftover after paying fixed charges of dividend and interest on preference shares and debentures respectively will be claimed by relatively a smaller section of equity shareholders. Macroeconomic, industry and competitive dynamics. ?????????? These included the availability of a software upgrade that allows millions of Nokia 4G/LTE radios deployed to more than 350 customers to be migrated seamlessly to 5G; and plans to accelerate leadership in Open RAN. Nokia Corporation Stock Exchange Release December 16, 2020, at 08:00 (CET +1) Nokia provides a mid-point update on strategy and operating model. Supporting the essential services our customers provide. We believe we remain on track with our plans to drive progressive improvement over the course of 2020. Nokia Corporation (natively Nokia Oyj, referred to as Nokia; Finnish: , UK: / ˈ n ɒ k i ə /, US: / ˈ n oʊ k i ə /) is a Finnish multinational telecommunications, information technology, and consumer electronics company, founded in 1865. Therefore, Nokia has launched a Coronavirus Global Donation Fund. As previously announced, Nokia agreed to sell HERE, its mapping and location services business, to a consortium of leading German automotive companies. We took already early on a range of steps, including banning international travel for Nokia employees, except for strictly-defined ‘critical’ reasons; closing all our facilities to all visitors, with the exception of people engaged in essential maintenance and services, and asking our staff to work from home wherever possible. For details, please refer to note 2, "Non-IFRS to reported reconciliation", in the notes to the Financial statement information included in Nokia Corporation interim report for Q2 and Half Year 2020. Most companies are funded by a mix of debt and equity, including some short-term debt, some long-term debt, a number of shares of common stock, and perhaps shares of preferred stock. With our commitment to innovation, driven by the award-winning Nokia Bell Labs, we are a leader in the development and deployment of 5G networks. 423. We have in place strict protocols for Nokia facilities and provided clear advice to our employees about how they can mitigate the risks of COVID-19 in situations where they have to go about critical work. 7. We also saw a reduction driven by our proactive steps to reduce the volume of low margin services business. Q2 2020 was the fourth quarter in a row of solid cash performance. Remote working and schooling, robust delivery of basic services and smart deliveries are just some examples that have been enabled by connectivity solutions. Nokia Enterprise also grew year-on-year constant currency sales by 18% compared to one year ago and expanded margins. Preference Shares. Ollila immediately gave up the diversifica-tion tactic, adjusted the business structure drastically, narrowed the scope of operation, abandoned non-core %PDF-1.6 %���� ... As for Nokia, the company … These actions demonstrate our strong commitment to supporting global efforts to end the pandemic and overcoming the disruption and challenges we currently face. We also feel another sense of duty – to the societies where Nokia operates. These forward-looking statements are only predictions based upon our current expectations and views of future events and developments and are subject to risks and uncertainties that are difficult to predict because they relate to events and depend on circumstances that will occur in the future. As a result, we are adjusting upward both the midpoint of our full-year 2020 non-IFRS EPS and operating margin guidance within our previously disclosed outlook ranges. Investors should not rely on summaries of our financial reports only, but should review the complete financial reports with tables. Strong margin expansion, primarily driven by Mobile Access, Clear roadmap progress, particularly related to our 5G mid-band portfolio, Confidence in resilient customer base and strong liquidity position, 11% decrease in net sales, largely driven by COVID-19 and China, Positive operating profit, on a reported basis, in both Q2 and half year 2020, Within previously provided Outlook ranges for full year 2020, adjusted the non-IFRS mid-points for EPS to EUR 0.25 and operating margin to 9.5%, Delivered strong free cash flow year-to-date and raised 2020 recurring free cash flow guidance to be clearly positive. These statements are based on management’s best assumptions and beliefs in light of the information currently available to them. Market capitalization (or market value) is the most commonly used method of measuring the size of a publicly traded company and is calculated by multiplying the current stock price by the number of shares outstanding. x�cd```d`~$X� �@�u7�`� $8�202� ����,\ The WACC formula is = (E/V x Re) + ((D/V x Rd) x (1-T)). Nokia's other main business group is Nokia Networks, which is responsible for about 30 percent of net sales. Non-IFRS diluted EPS in Q2 2020 was EUR 0.06, compared to EUR 0.05 in Q2 2019, primarily driven by higher gross profit in Mobile Access within Networks, continued progress related to our cost savings program and a net positive fluctuation in financial income and expenses. Capital Structure is the mix between owner’s funds and borrowed funds. The complete financial report for Q2 and half year 2020 with tables is available at www.nokia.com/financials. Reported diluted EPS in the first six months of 2020 was EUR 0.00, compared to negative EUR 0.11 in the first six months of 2019. T-Mobile will utilize Nokia’s AirScale Radio platform to deploy an Ultra Capacity 5G layer with 2.5GHz Massive MIMO technology, shifting the … Our expectation that we will slightly underperform our primary addressable market, which is expected to be flattish on a constant currency basis in full year 2020, excluding China (, Our expectation for operating profit seasonality in 2020 to be similar to 2019, with the majority of operating profit to be generated in the fourth quarter. Nokia market cap history and chart from 2006 to 2020. The business risk remains constant and is assumed to be independent of capital structure and financial risk. Since the interest expense on debt is tax deductible in most countries, a company can reduce its after-tax cost of capital by increasing debt relative to … Profitability gains in the quarter were supported by a 4.5 percentage point year-on-year improvement in Networks gross margin, building on a 3.5 percentage point gain in the first quarter, and driving Nokia non-IFRS gross margin to 39.6%. Nokia Corporation Stock Exchange Release December 17, 2020, at 08:00 (CET +1) Nokia appoints Nishant Batra as Chief Strategy and Technology Officer and member of the Nokia Group Leadership Team 6%. It has been a pleasure and an honor. While the core business focused on incremental improvements, Nokia’s relatively small data group took up the innovation mantle. The annual distribution would be paid as quarterly dividends. (. +358 40 803 4080Email: investor.relations@nokia.com. (. In Q2 2020, Nokia’s gross and operating margin both expanded year-on-year, primarily driven by broad based strength in Networks, particularly in Mobile Access, with IP Routing and Fixed Access also contributing positively. Preference Shares. In 1996, it launched the world’s first smartphone, the Communicator, and was also responsible for Nokia’s first camera phone in 2001 and its second-generation smartphone, the innovative 7650. This, then, would be an example of … Nokia's new organizational structure places the company in a forward moving competitive environment. Ollila immediately gave up the diversifica-tion tactic, adjusted the business structure drastically, narrowed the scope of operation, abandoned non-core Media representatives can listen in via the link, or call +1-412-717-9224. Our communications service provider customers support more than 6.4 billion subscriptions with our radio networks, and our enterprise customers have deployed over 1,300 industrial networks worldwide. Nokia is a global technology company headquartered in Espoo, Finland offering a comprehensive portfolio of network equipment, software, services and licensing opportunities. Find the latest Institutional Holdings data for Nokia Corporation Sponsored American Depositary Shares (NOK) at Nasdaq.com. We are a public limited-liability company listed on the Nasdaq Helsinki, Euronext Paris and New York Stock Exchange. Potential risks and uncertainties related to the scope and duration of the COVID-19 impact and the pace and shape of the economic recovery following the pandemic; Competitive intensity, which is particularly impacting Mobile Access and is expected to continue at a high level in full year 2020, as some competitors seek to take share in the early stage of 5G; Our expectation that we will accelerate our product roadmaps and cost competitiveness through additional 5G investments in 2020, thereby enabling us to drive product cost reductions and maintain the necessary scale to be competitive; Our expectation that we will drive improvements in automation and productivity through additional digitalization investments in 2020; Customer demand could weaken and risk could increase further in India, after the country’s Supreme Court upheld a ruling that telecoms companies must pay retroactive license and spectrum fees; Opportunities and risks in North America following the completion of a merger, and, more broadly, the potential for temporary capital expenditure constraints due to potential mergers or acquisitions by our customers; The timing of completions and acceptances of certain projects; Some customers are reassessing their vendors in light of security concerns, creating near-term pressure to invest in order to secure long-term benefits; Our expectation that we will improve our R&D productivity and reduce support function costs through the successful execution of our cost savings program, which is explained in more detail in the Cost savings program section of Nokia Corporation interim report for Q2 and half year 2020; Our product and regional mix, including the impact of the high cost level associated with our first generation 5G products; and. Manufacturing, supply chain and logistics, Cloud operations, management and orchestration, North America government relations and public affairs, Airtel and Nokia to collaborate on Industry 4.0 applications for enterprises, New consortium to develop a 5G and beyond strategic roadmap for future European connectivity systems and components, Live-stream: Network insights in the time of COVID-19 and beyond, Amortization of acquired intagible assets, Nokia and the United Nations Sustainable Development Goals, Our portfolio – energy efficient and climate-driven, Governmental and multilateral organizations, 2020 Ada Lovelace Honoree Anne Lee “Pioneering Software Engineer” in telecommunications technology, 2020 Ada Lovelace Honoree Paola Galli “Need for Speed” in the field of Silicon Photonics, Dr. Katherine Guo, Nokia’s 2019 Ada Lovelace Honoree. Connect the world momentum was demonstrated by the progress we announced after the quarter.! 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