Nokia’s Q3 2024 results reflect a mixed performance with net sales down by 7% year-over-year in constant currency terms, driven primarily by declines in its Mobile Networks division, particularly in India. This drop in sales was partially offset by growth in the Network Infrastructure and Nokia Technologies segments. Nokia’s gross margin saw significant improvement, rising by 490 basis points (bps) to 45.7%, largely due to a more favorable product mix and cost-cutting measures across business groups.
Operating margins also increased, with a 160 bps year-over-year rise to 10.5%, supported by cost control efforts and a reversal of some trade receivable loss allowances. Despite ongoing challenges in Mobile Networks, Nokia secured important deals and continues to forecast an acceleration in Network Infrastructure growth in Q4 2024. Cash generation remained strong with a free cash flow of EUR 0.6 billion, while the company’s outlook for full-year 2024 operating profit remains between EUR 2.3 billion and 2.9 billion.
CEO Pekka Lundmark expressed optimism for the company’s future, citing structural demand trends, the upcoming acquisition of Infinera, and opportunities in private wireless networks and the defense sector: “As I reflect on our performance in the third quarter, I am optimistic we are now turning the corner in many parts of our business, even if some continue to experience market weakness. Among the key highlights was a return to net sales growth in Network Infrastructure with Fixed Networks growing 9% in constant currency and IP Networks growing 6%. Order intake in Network Infrastructure continued to be robust with strong year-on-year growth and a growing order backlog. Additionally, we delivered a significant improvement in our gross margin at the group level and cash generation remained strong with EUR 621 million free cash flow in the quarter.”
“There are reasons for optimism across our portfolio. We expect a significant acceleration in growth in Q4 in Network Infrastructure and see a number of structural demand trends supporting our future growth. In Mobile Networks, although market dynamics are more challenging, we have secured several important deals in the quarter, remain confident in our competitive position and are improving our gross margin. In Cloud and Network Services we are seeing excellent momentum in 5G Core along with strong progress in network automation, cloudification and enabling network APIs. Nokia Technologies continues to benefit from greater stability following the conclusion of its smart-phone renewal cycle and is making good progress expanding into the new growth areas.”
“Across Nokia we are investing to create new growth opportunities outside of our traditional communications service provider market. We see a significant opportunity to expand our presence in the data center market and are investing to broaden our product portfolio in IP Networks to better address this. Our pending acquisition of Infinera will also bolster our Optical Networks exposure to this market and accelerate our growth opportunities. Additionally, we see a compelling new long-term opportunity in bringing 5G technology to the defense market and we continue to invest in private wireless networks where we are the clear market leader.”
Key points:
• Q3 2024 net sales: EUR 4.33 billion, down 7% year-over-year in constant currency.
• Q3 2024 gross margin: 45.7%, up 490 bps.
• Q3 2024 free cash flow: EUR 0.6 billion.
• Full-year 2024 operating profit outlook: EUR 2.3-2.9 billion.
• Strong performance in Network Infrastructure and Nokia Technologies.
