Yahoo Finance Nokia's (NOK) Q4 Earnings Beat Estimates, Revenues Rise
Nokia Corporation NOK reported strong fourth-quarter 2022 results, with the bottom and the top lines beating the respective Zacks Consensus Estimate, driven by solid sales growth in Nokia Technologies and Network Infrastructure. Region wise, the company witnessed massive growth in India as 5G deployments started to ramp up in the fourth quarter.
Net Income
Nokia booked a net profit of €3,152 million ($3,218 million) or €0.56 (57 cents) per share in the fourth quarter of 2022 compared with €680 million or €0.12 per share in the year-ago quarter. The significant improvement in earnings was primarily attributable to top-line growth and income tax benefit during the reported quarter.
Comparable profit came in at €929 million ($948.46 million) or €0.16 (16 cents) per share, up from €731 million or €0.13 per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by a couple of cents.
On reported basis, net profit for the year 2022 stands at €4,259 million ($4,348 million). This is significantly higher than €1,645 million reported in last year. Comparable net profit is €2,481 million ($2,532.9 million) for the year 2022 and 18% higher than prior year figure.
Nokia Corporation Price, Consensus and EPS Surprise
Nokia Corporation price-consensus-eps-surprise-chart | Nokia Corporation Quote
Revenues
Solid sales growth in Network infrastructure, Nokia Technologies followed by modest growth in Cloud and Network Services and Mobile Networks pushed revenues to €7,449 million ($7,606 million), up 16% year over year. Revenues beat the Zacks Consensus Estimate of $6,850 million. Broad-based growth and favorable currency impact also buoyed the top-line growth.
In 2022 full year Revenue stands at €24,911 million ($ 25,432.8 million) up 6% on a constant currency basis and year over year growth of 12%. Company’s revenue in the year 2021 was €22,202 million.
Segment Results
Network Infrastructure revenues totaled €2,709 million ($2,766 million), up 20% on a reported basis and 14% on a constant currency basis. The Optical Networks and IP Networks businesses have shown tremendous growth, with net revenues increasing by 21% and 11%, respectively, in constant currency. On a constant-currency (cc) basis, Submarine Networks' net sales increased 32% as webscale-driven project deployments continued to fuel growth.
Mobile Networks contributed €2,960 million ($3,022 million) to the total revenues with year-over-year growth of 7% on a reported basis and 3% on a constant currency basis. This segment was impacted by regional shift and Q4 operating margin declined to 6.8% from 9.8% in the prior-year quarter.
Cloud and Network Services accounted for €1,060 million ($1,088 million), increasing 10% on a reported basis and 5% at constant currency. The segment benefited from increased investments in private wireless and software, setting the foundation for future business expansion and profitable growth.
The company generated €679 million ($693.2 million) in sales from Nokia Technologies, marking a staggering 85% increase from the past year’s quarter. During the fourth quarter, one of Nokia’s long-term license holders extended the license for perpetuity. Customers' trust in Nokia is being boosted by its strong patent portfolio, which is also propelling this segment's revenue growth.
Region-wise, net sales surged 129% on a reported basis in India, followed by 28% year-over-year increase in Europe. Double-digit growth in Asia Pacific (up 17%) was attributable to higher revenues from Network Infrastructure, Mobile Networks and Cloud and Network Services. The company witnessed a 3% decline in sales on a reported basis in North America.
Other Details
In the fourth quarter of 2022, gross profit increased to €3,187 million ($3,253.7 million) from €2,534 million in the prior year. Improvement in Q4 operating margin is primarily driven by solid performance in Nokia Technologies and Network Infrastructure segments. The gross margin for Mobile Network segments decreased as a result of changes in regional mix. The company’s operating profit stands at €882 million ($900.4 million) in the fourth quarter of 2022.
Cash Flow and Liquidity
Nokia generated €3,813 million ($3,892.8 million) net cash from operating activities in 2022 compared with €3,358 million in 2021. As of Dec 31, 2022, the company had €5,467 million ($5,848.8 million) cash and cash equivalents with long-term interest-bearing liabilities of €4,249 million ($4,545.7 million) compared with €4,537 million in Dec 31,2021.
Outlook
For 2023, Nokia expects comparable operating margin in the range of 11.5-14%. The company anticipates net sales to increase by 2% to 8% in 2023 at constant currency to €24.9 million - €26.5 million.
Zacks Rank & Other Stocks to Consider
Nokia currently carries a Zacks Rank #3 (Hold). You can the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Motorola Solutions, Inc. MSI, carrying a Zacks Rank #2 (Buy), delivered an earnings surprise of 6.6%, on average, in the trailing four quarters. Earnings estimates for MSI for the current year have remained unchanged in the past 60 days at $10.20 per share.
Motorola is a leading communications equipment manufacturer and has strong market positions in bar code scanning, wireless infrastructure gear, and government communications.
Jabil Inc. JBL, sporting a Zacks Rank #1, delivered an earnings surprise of 8.7%, on average, in the trailing four quarters. Earnings estimates for JBL for the current year have remained unchanged in the past 30 days at $8.37 per share.
Jabil is one of the largest global suppliers of electronic manufacturing services. The company offers electronics design, production, product management and after-market services to customers catering to aerospace, automotive, computing, consumer, defense, industrial, instrumentation, medical, networking, peripherals, storage and telecommunications industries.
Arista Networks, Inc. ANET, carrying a Zacks Rank #2, delivered an earnings surprise of 12.7%, on average, in the trailing four quarters. Earnings estimates for ANET for the current year stands at $4.38 per share.
Arista is engaged in providing cloud networking solutions for data centers and cloud computing environments. The company offers 10/25/40/50/100 Gigabit Ethernet switches and routers optimized for next-generation data center networks.
Conversion Rate Used:
Note: €1 = $1.020949 (period average from Oct 1, 2022, to Dec 31, 2022)
€1 = $1.069850 (as of Dec 31, 2022)
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Nokia Corporation (NOK) : Free Stock Analysis Report
Jabil, Inc. (JBL) : Free Stock Analysis Report
Motorola Solutions, Inc. (MSI) : Free Stock Analysis Report
Arista Networks, Inc. (ANET) : Free Stock Analysis Report
