6-K 1 a13-3575_16k.htm 6-K

 

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

Pursuant to Rule 13a -16 or 15d -16 of

the Securities Exchange Act of 1934

 

Report on Form 6-K dated January 24, 2013

(Commission File No. 1-13202)

 

Nokia Corporation

Nokia House

Keilalahdentie 4

02150 Espoo

Finland

(Name and address of registrant’s principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

 

Form 20-Fx   Form 40-F: o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

 

Yes: o   Nox

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

 

Yes: o   Nox

 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes: o   Nox

 

 

 



 

INTERIM REPORT

 

 

Nokia Corporation

January 24, 2013 at 13:00 (CET +1)

 

Nokia Corporation Q4 and full year 2012 Interim Report

 

FINANCIAL AND OPERATING HIGHLIGHTS

 

Fourth quarter 2012 highlights:

 

Nokia Group non-IFRS EPS in Q4 2012 was EUR 0.06; reported EPS was EUR 0.05.

 

·                  Nokia Group achieves underlying operating profitability, with Q4 non-IFRS operating margin of 7.9%.

·                  Nokia Group strengthened its net cash position by approximately EUR 800 million sequentially, of which approximately EUR 650 million was generated by Nokia Siemens Networks.

·                  Devices & Services Q4 non-IFRS operating margin improved quarter-on-quarter to 1.3%, due to an increase in gross margin as well as a decrease in operating expenses.

·                  Nokia Siemens Networks non-IFRS operating margin improved quarter-on-quarter and year-on-year to a 14.4% in Q4, the highest level of underlying operating profitability since its formation in April 2007, primarily due to an increase in gross margin.

 

Full year 2012 highlights:

 

Nokia Group full year 2012 non-IFRS EPS was EUR -0.17; reported EPS was EUR -0.84.

 

·                  Nokia Group achieves underlying operating profitability, with full year 2012 non-IFRS operating margin of 0.4%.

·                  Nokia Group ends 2012 with a strong balance sheet and solid cash position. Gross cash was EUR 9.9 billion and net cash was EUR 4.4 billion, after incurring cash outflows related to restructuring of approximately EUR 1.5 billion and dividend payment of approximately EUR 750 million.

·                  To ensure strategic flexibility, the Nokia Board of Directors will propose that no dividend payment will be made for 2012 (EUR 0.20 per share for 2011). Nokia’s Q4 financial performance combined with this dividend proposal further solidifies the company’s strong liquidity position.

 

Commenting on the results, Stephen Elop, Nokia CEO, said:

 

“We are very encouraged that our team’s execution against our business strategy has started to translate into financial results. Most notably we are pleased that Nokia Group reached underlying operating profitability in the fourth quarter and for the full year 2012.

 

While the first half of 2012 was difficult for Nokia Group, in Q4 2012 we strengthened our financial position, improved our underlying operating margin in Devices & Services, introduced the HERE brand to expand our mapping and location experiences, and drove record profitability in Nokia Siemens Networks.

 

We remain focused on moving through our transition, which includes continuing to improve our product competitiveness, accelerate the way we operate and manage our costs effectively. All of these efforts are aimed at improving our financial performance and delivering more value to our shareholders.”

 

1



 

SUMMARY FINANCIAL INFORMATION

 

 

 

Reported and Non-IFRS fourth quarter 2012 results(1),(2)

 

Reported and Non-IFRS full
year 2012 results(1),(2)

 

EUR million

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

2012

 

2011

 

YoY
Change

 

Nokia Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

8 041

 

10 005

 

-20

%

7 239

 

11

%

30 176

 

38 659

 

-22

%

Operating profit

 

439

 

-954

 

 

 

-576

 

 

 

-2 303

 

-1 073

 

 

 

Operating profit (non-IFRS)

 

635

 

478

 

33

%

78

 

714

%

126

 

1 825

 

-93

%

EPS, EUR diluted

 

0.05

 

-0.29

 

 

 

-0.26

 

 

 

-0.84

 

-0.31

 

 

 

EPS, EUR diluted (non-IFRS)(3)

 

0.06

 

0.06

 

0

%

-0.07

 

 

 

-0.17

 

0.29

 

 

 

Net cash from operating activities

 

563

 

634

 

-11

%

-429

 

 

 

-354

 

1 137

 

 

 

Net cash and other liquid assets(4)

 

4 360

 

5 581

 

-22

%

3 564

 

22

%

4 360

 

5 581

 

-22

%

Devices & Services(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

3 854

 

5 997

 

-36

%

3 563

 

8

%

15 686

 

23 943

 

-34

%

Smart Devices net sales

 

1 225

 

2 747

 

-55

%

976

 

26

%

5 446

 

10 820

 

-50

%

Mobile Phones net sales

 

2 468

 

3 040

 

-19

%

2 366

 

4

%

9 436

 

11 930

 

-21

%

Mobile device volume (mn units)

 

86.3

 

113.5

 

-24

%

82.9

 

4

%

335.6

 

417.1

 

-20

%

Smart Devices volume (mn units)

 

6.6

 

19.6

 

-66

%

6.3

 

5

%

35.1

 

77.3

 

-55

%

Mobile Phones volume (mn units)

 

79.6

 

93.9

 

-15

%

76.6

 

4

%

300.5

 

339.8

 

-12

%

Mobile device ASP(6)

 

45

 

53

 

-15

%

43

 

5

%

47

 

57

 

-18

%

Smart Devices ASP(6)

 

186

 

140

 

33

%

155

 

20

%

155

 

140

 

11

%

Mobile Phones ASP(6)

 

31

 

32

 

-3

%

31

 

0

%

31

 

35

 

-11

%

Operating profit

 

276

 

203

 

36

%

-683

 

 

 

-1 100

 

884

 

 

 

Operating profit (non-IFRS)

 

52

 

292

 

-82

%

-263

 

 

 

-703

 

1 683

 

 

 

Operating margin %

 

7.2

%

3.4

%

 

 

-19.2

%

 

 

-7.0

%

3.7

%

 

 

Operating margin % (non-IFRS)

 

1.3

%

4.9

%

 

 

-7.4

%

 

 

-4.5

%

7.0

%

 

 

Location & Commerce(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

278

 

306

 

-9

%

265

 

5

%

1 103

 

1 091

 

1

%

Operating profit

 

-56

 

-1 205

 

 

 

-56

 

 

 

-301

 

-1 526

 

 

 

Operating profit (non-IFRS)

 

40

 

29

 

38

%

37

 

8

%

154

 

48

 

221

%

Operating margin %

 

-20.1

%

-393.8

%

 

 

-21.1

%

 

 

-27.3

%

-139.9

%

 

 

Operating margin % (non-IFRS)

 

14.4

%

9.5

%

 

 

14.0

%

 

 

13.9

%

4.4

%

 

 

Nokia Siemens Networks(5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

3 988

 

3 815

 

5

%

3 501

 

14

%

13 779

 

14 041

 

-2

%

Operating profit

 

251

 

67

 

275

%

182

 

38

%

-799

 

-300

 

 

 

Operating profit (non-IFRS)

 

575

 

176

 

227

%

323

 

78

%

778

 

225

 

246

%

Operating margin %

 

6.3

%

1.8

%

 

 

5.2

%

 

 

-5.8

%

-2.1

%

 

 

Operating margin % (non-IFRS)

 

14.4

%

4.6

%

 

 

9.2

%

 

 

5.6

%

1.6

%

 

 

 


Note 1 relating to non-IFRS (also referred to as “underlying”) results: In addition to information on our reported IFRS results, we provide certain information on a non-IFRS, or underlying business performance, basis.  Non-IFRS results exclude special items for all periods. In addition, non-IFRS results exclude intangible asset amortization, other purchase price accounting related items and inventory value adjustments arising from (i) the formation of Nokia Siemens Networks and (ii) all business acquisitions completed after June 30, 2008.  Nokia believes that our non-IFRS results provide meaningful supplemental information to both management and investors regarding Nokia’s underlying business performance by excluding the above-described items that may not be indicative of Nokia’s business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results. See note 2 below for information about the exclusions from our non-IFRS results. More information, including a reconciliation of our Q4 2012 and Q4 2011 non-IFRS results to our reported results, can be found in our complete Q4 2012 interim report with tables on pages 18 and 20-24. A reconciliation of our full year 2012 and full year 2011 non-IFRS results to our reported results can be found in the same report on pages 40-45.  A reconciliation of our Q3 2012 non-IFRS results to our reported results can be found in our complete Q3 interim report with tables on pages 19 and 22-26 published on October 18, 2012.

 

2



 

Note 2 relating to non-IFRS exclusions:

 

Q4 2012 — EUR 196 million (net) consisting of:

 

·                  EUR 255 million restructuring charge and other associated item in Nokia Siemens Networks, including EUR 34 million of net charges related to country and contract exits based on new strategy that focuses on key markets and product segments,  as well as an impairment of assets of EUR 2 million.

·                  EUR 9 million restructuring charge in Location & Commerce

·                  EUR 2 million restructuring related impairments in Devices & Services

·                  EUR 75 million net benefit from releases of restructuring provisions in Devices & Services

·                  EUR 21 million positive item from a cartel claim settlements in Devices & Services

·                  EUR 52 million net gain on sale of Vertu business in Devices & Services

·                  EUR 79 million net gain on sale of real estate in Devices & Services

·                  EUR 67 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks and the acquisition of Motorola Solutions’ networks assets

·                  EUR 87 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ

·                  EUR 1 million of intangible assets amortization and other purchase price related items arising from the acquisition of Novarra, MetaCarta and Motally in Devices & Services

 

Q3 2012 — EUR 654 million (net) consisting of:

 

·                  EUR 74 million restructuring charge and other associated items in Nokia Siemens Networks, including EUR 3 million of net charges related to country and contract exits based on new strategy that focuses on key markets and product segments.

·                  EUR 2 million restructuring charge in Location & Commerce

·                  EUR 454 million restructuring charge and other associated items in Devices & Services

·                  EUR 67 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks and the acquisition of Motorola Solutions’ networks assets

·                  EUR 91 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ

·                  EUR 1 million of intangible assets amortization and other purchase price related items arising from the acquisition of Novarra, MetaCarta and Motally in Devices & Services

·                  EUR 35 million positive item from a cartel claim settlement in Devices & Services

 

Q3 2012 taxes — EUR 157 million non-cash deferred tax expense related to corporate reorganizations arising from Location & Commerce business integration.

 

Q4 2011 — EUR 1 432 million (net) consisting of:

 

·                  EUR 1 090 million partial impairment of goodwill in Location & Commerce

·                  EUR 25 million restructuring charge in Location & Commerce

·                  EUR 119 million of intangible asset amortization and other purchase price accounting related items arising from the acquisition of NAVTEQ

·                  EUR 100 million restructuring charge and EUR 36 million associated impairments in Devices & Services

·                  EUR 2 million of intangible assets amortization and other purchase price related items arising from the acquisition of Novarra, MetaCarta and Motally in Devices & Services

·                  EUR 86 million of intangible asset amortization and other purchase price accounting related items arising from the formation of Nokia Siemens Networks and the acquisition of Motorola Solutions’ networks assets

·                  EUR 23 million restructuring charge and other associated items in Nokia Siemens Networks

·                  EUR 49 million benefit from a cartel claim settlement

 

Note 3 relating to non-IFRS Nokia EPS:

 

Nokia taxes were unfavorably impacted by Devices & Services taxes as no tax benefits are recognized for certain Devices & Services deferred tax items. If Nokia’s earlier estimated long-term tax rate of 26% had been applied, non-IFRS Nokia EPS would have been approximately 0.5 Euro cent higher in Q4 2012. Going forward on a non-IFRS basis, until a pattern of tax profitability is reestablished, Nokia expects to record quarterly tax expense of approximately EUR 50 million related to its Devices & Services business and approximately EUR 50 million related to its Nokia Siemens Networks business. Nokia expects to continue to record taxes related to its Location & Commerce business at a 26% rate.

 

Note 4 relating to Nokia net cash and other liquid assets: Calculated as total cash and other liquid assets less interest-bearing liabilities. For selected information on Nokia Group interest-bearing liabilities, please see the table on page 53 of the complete Q4 2012 interim report with tables

 

Note 5 relating to operational and reporting structure: We adopted our current operational structure during 2011 and have three businesses: Devices & Services, Location & Commerce and Nokia Siemens Networks and four operating and reportable segments: Smart Devices and Mobile Phones within Devices & Services, Location & Commerce and Nokia Siemens Networks. Smart Devices focuses on smartphones and Mobile Phones focuses on mass market mobile devices, including Asha full touch smartphones. Devices & Services also contains Devices & Services Other which includes net sales of our luxury phone business Vertu through October 12, 2012, spare parts and related cost of sales and operating expenses, as well as intellectual property related income and common research and development expenses. In October 2012, we completed the divestment of Vertu to EQT VI, a European private equity firm.  Location & Commerce focuses on the development of location-based services and local commerce. On November 13, 2012, Nokia introduced HERE, the new brand for its location and mapping service. For financial reporting purposes, the Location & Commerce business will be renamed as the HERE business, starting with the first quarter 2013. Nokia Siemens Networks is one of the leading global providers of telecommunications infrastructure hardware, software and services. Nokia Siemens Networks completed the acquisition of Motorola Solutions’ networks assets on April 30, 2011. Accordingly, the results of Nokia Siemens Networks for 2012 are not directly comparable to 2011.

 

Note 6 relating to average selling prices (ASP): Mobile device ASP represents total Devices & Services net sales (Smart Devices net sales, Mobile Phones net sales, and Devices & Services Other net sales) divided by total Devices & Services volumes. Devices & Services Other net sales includes net sales of Nokia’s luxury phone business Vertu through October 12, 2012, spare parts, as well as intellectual property income. Smart Devices ASP represents Smart Devices net sales divided by Smart Devices volumes. Mobile Phones ASP represents Mobile Phones net sales divided by Mobile Phones volumes.

 

3



 

NOKIA OUTLOOK

 

·                  Nokia expects its Devices & Services non-IFRS operating margin in the first quarter 2013 to be approximately negative 2 percent, plus or minus four percentage points. This outlook is based on Nokia’s expectations regarding a number of factors, including:

 

·                  competitive industry dynamics continuing to negatively affect the Mobile Phones and Smart Devices business units;

·                  the first quarter being a seasonally weak quarter;

·                  consumer demand, particularly for our Lumia and Asha smartphones;

·                  continued ramp up for our new Lumia smartphones;

·                  expected cost reductions under Devices & Services’ restructuring program; and

·                  the macroeconomic environment.

·                  Nokia continues to target to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately EUR 3.0 billion by the end of 2013.

·                  Nokia expects Location & Commerce non-IFRS operating margin in the first quarter 2013 to be negative due to lower recognized revenue from internal sales, which carry higher gross margin, and to a lesser extent by a negative mix shift within external sales.

·                  Nokia and Nokia Siemens Networks expect Nokia Siemens Networks non-IFRS operating margin in the first quarter 2013 to be approximately positive 3 percent, plus or minus four percentage points.  This outlook is based on Nokia Siemens Networks’ expectations regarding a number of factors, including:

·                  competitive industry dynamics;

·                  the first quarter being a seasonally weak quarter;

·                  product and regional mix;

·                  expected continued improvement under Nokia Siemens Networks’ restructuring program; and

·                  the macroeconomic environment.

·                  Nokia Siemens Networks now targets to reduce its non-IFRS annualized operating expenses and production overheads by more than EUR 1 billion by the end of 2013, compared to the end of 2011. Nokia Siemens Networks previous target was to reduce its non-IFRS annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011.

 

FOURTH QUARTER 2012 FINANCIAL AND OPERATING DISCUSSION

 

NOKIA GROUP

 

See note 5 to our Summary Financial Information table above concerning our current operational and reporting structure which we adopted during 2011. The following discussion includes information on a non-IFRS, or underlying business performance, basis. See notes 1 and 2 to our Summary Financial Information table above for information about our underlying non-IFRS results and the non-IFRS exclusions for the periods discussed below.

 

The following table sets forth the year-on-year and sequential growth rates in our net sales on a reported basis and at constant currency for the periods indicated.

 

FOURTH QUARTER 2012 NET SALES, REPORTED & CONSTANT CURRENCY(1)

 

 

 

YoY
Change

 

QoQ
Change

 

Group net sales — reported

 

-20

%

11

%

Group net sales - constant currency(1)

 

-23

%

12

%

Devices & Services net sales — reported

 

-36

%

8

%

Devices & Services net sales - constant currency(1)

 

-40

%

8

%

Nokia Siemens Networks net sales — reported

 

5

%

14

%

Nokia Siemens Networks net sales - constant currency(1)

 

1

%

16

%

 


Note 1: Change in net sales at constant currency excludes the impact of changes in exchange rates in comparison to the Euro, our reporting currency.

 

At constant currency Nokia Group’s net sales would have decreased 23% year-on-year and increased 12% sequentially.

 

The following table sets forth Nokia Group’s reported cash flow for the periods indicated and financial position at the end of the periods indicated, as well as the year-on-year and sequential growth rates.

 

4



 

 

NOKIA GROUP CASH FLOW AND FINANCIAL POSITION

 

EUR million

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Net cash from operating activities

 

563

 

634

 

-11

%

-429

 

 

 

Total cash and other liquid assets

 

9 909

 

10 902

 

-9

%

8 779

 

13

%

Net cash and other liquid assets(1)

 

4 360

 

5 581

 

-22

%

3 564

 

22

%

 


Note 1: Total cash and other liquid assets minus interest-bearing liabilities.

 

Year-on-year, net cash and other liquid assets decreased by EUR 1.2 billion in the fourth quarter 2012, primarily due to cash outflows related to restructuring of approximately EUR 1.5 billion, the payment of the dividend of approximately EUR 750 million, cash outflows related to net financial expenses and taxes as well as capital expenditures. This was partially offset by positive overall net cash from operating activities, excluding cash outflows related to restructuring, net financial expenses and taxes, as well as cash flows related to the receipt of quarterly platform support payments from Microsoft (which commenced in the fourth quarter 2011).

 

Sequentially, net cash and other liquid assets increased by EUR 796 million in the fourth quarter 2012, primarily due to positive Nokia Siemens Networks operating profits, the receipt of a USD 250 million (approximately EUR 196 million) quarterly platform support payment from Microsoft and proceeds from real estate sales and business divestments, partially offset by cash outflows related to restructuring, taxes and net financial expenses as well as capital expenditures.

 

In the fourth quarter 2012, Nokia Siemens Networks’ contribution to net cash from operating activities was approximately EUR 740 million, primarily due to net profit adjusted for non-cash items. At the end of the fourth quarter 2012, Nokia Siemens Networks’ contribution to the Nokia gross cash was EUR 2.4 billion and contribution to Nokia’s net cash was EUR 1.3 billion.

 

Our agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft.  In the fourth quarter 2012, we received a quarterly platform support payment of USD 250 million (approximately EUR 196 million). Under the terms of the agreement governing the platform support payments, the amount of each quarterly platform support payment is USD 250 million. We have a competitive software royalty structure, which includes annual minimum software royalty commitments. Minimum software royalty commitments are paid quarterly. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US dollars. Over the life of the agreement the total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitment payments. To date the amount of platform support payments received by Nokia has exceeded the amount of minimum royalty commitment payments to Microsoft. Thus for the remainder of the life of the agreement the total amount of the minimum software royalty commitment payments are expected to exceed the total amount of the platform support payments. In accordance with the terms of the agreement, the platform support payments and annual minimum software royalty commitment payments continue for a corresponding period of time.

 

During fourth quarter 2012, Nokia Group performed its annual goodwill impairment assessment. The methodology and models used for the annual impairment assessment are consistent with our second quarter 2012 interim analysis and our last annual assessment performed during the fourth quarter 2011.  Inputs to the valuation model, such as cash flows, discount rates and growth rates, have been updated to reflect our most recent projections and they materially align with the interim analysis conducted during second quarter 2012.

 

At the date of our 2012 annual impairment assessment, goodwill amounting to EUR 530 million, EUR 899 million, EUR 3 270 million and EUR 183 million was allocated to Mobile Phones, Smart Devices, Location & Commerce and Nokia Siemens Networks, respectively. No goodwill impairment charge was recorded during the fourth quarter 2012 as a result of the goodwill impairment assessment. However a change in any of the key assumptions used in measuring the recoverable value of our Location & Commerce business could have resulted in goodwill impairment. While we believe the estimated recoverable values are reasonable, actual performance in the short-term and long-term could be materially different from our forecasts, which could impact future estimates of recoverable value of our reporting units and could result in impairment charges.

 

DEVICES & SERVICES

 

The following table sets forth a summary of the results for our Devices & Services business for the periods indicated, as well as the year-on-year and sequential growth rates.

 

5



 

DEVICES & SERVICES RESULTS SUMMARY

 

 

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Net sales (EUR million)(1)

 

3 854

 

5 997

 

-36

%

3 563

 

8

%

Mobile device volume (million units)

 

86.3

 

113.5

 

-24

%

82.9

 

4

%

Mobile device ASP (EUR)

 

45

 

53

 

-15

%

43

 

5

%

Non-IFRS gross margin (%)

 

23.9

%

25.8

%

 

 

18.5

%

 

 

Non-IFRS operating expenses (EUR million)

 

869

 

1 262

 

-31

%

915

 

-5

%

Non-IFRS operating margin (%)

 

1.3

%

4.9

%

 

 

-7.4

%

 

 

 


Note 1: Includes IPR income recognized in Devices & Services Other net sales.

 

The year-on-year and sequential changes in our Devices & Services net sales, volumes, average selling prices and gross margin are discussed below under our Smart Devices and Mobile Phones business units.

 

Smartphone Volumes

 

In the fourth quarter 2012, Devices & Services total smartphone volumes were 15.9 million units, composed of:

 

·                  9.3 million Asha full touch smartphones in Mobile Phones

·                  4.4 million Lumia smartphones in Smart Devices

·                  2.2 million Symbian smartphones in Smart Devices

 

Devices & Services Other

 

Both year-on-year and sequentially, Devices & Services Other net sales were lower in the fourth quarter 2012 primarily due to the divestment of Vertu. Following the divestment of Vertu, Devices & Services Other net sales are comprised of IPR income and sales of spare parts. In the fourth quarter 2012, Devices & Services Other net sales benefitted from non-recurring IPR income of approximately EUR 50 million. Within Devices & Services Other, we estimate that our current annual IPR income run-rate is approximately EUR 0.5 billion.

 

Channel Inventory

 

We ended the fourth quarter 2012 at the higher end of our normal 4 to 6 week channel inventory range. On an absolute unit basis channel inventories increased sequentially.

 

Net Sales and Volumes by Geographic Area

 

The following table sets forth the net sales for our Devices & Services business for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area. IPR income is allocated to the geographic areas contained in this chart.

 

DEVICES & SERVICES NET SALES BY GEOGRAPHIC AREA

 

EUR million

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Europe

 

1 210

 

1 922

 

-37

%

985

 

23

%

Middle East & Africa

 

745

 

1 065

 

-30

%

682

 

9

%

Greater China

 

213

 

1 008

 

-79

%

278

 

-23

%

Asia-Pacific

 

941

 

1 297

 

-27

%

977

 

-4

%

North America

 

196

 

53

 

270

%

36

 

444

%

Latin America

 

549

 

652

 

-16

%

605

 

-9

%

Total

 

3 854

 

5 997

 

-36

%

3 563

 

8

%

 

The following table sets forth the mobile device volumes for our Devices & Services business for the periods indicated, as well as the year—on-year and sequential growth rates, by geographic area.

 

DEVICES & SERVICES MOBILE DEVICE VOLUMES BY GEOGRAPHIC AREA

 

million units

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Europe

 

19.4

 

25.3

 

-23

%

16.8

 

15

%

Middle East & Africa

 

21.8

 

25.9

 

-16

%

19.1

 

14

%

Greater China

 

4.6

 

14.7

 

-69

%

5.8

 

-21

%

Asia-Pacific

 

28.7

 

34.7

 

-17

%

30.1

 

-5

%

North America

 

0.7

 

0.5

 

40

%

0.3

 

133

%

Latin America

 

11.1

 

12.4

 

-10

%

10.8

 

3

%

Total

 

86.3

 

113.5

 

-24

%

82.9

 

4

%

 

6



 

On a year-on-year basis, the increases in North America net sales and volumes were primarily due to our Smart Devices business unit, most notably higher net sales and volumes of our Lumia devices. On a year-on-year basis, the decrease in Greater China net sales was primarily due to our Smart Devices business unit, most notably lower net sales of our Symbian devices. On a year-on-year basis, the decrease in Greater China volumes was primarily due to our Smart Devices business unit, most notably lower volumes of our Symbian devices as well as lower volumes of our Mobile Phones devices.

 

On a sequential basis, the increases in North America net sales and volumes were primarily due to our Smart Devices business unit, most notably higher net sales and volumes of our Lumia devices. On a sequential basis, the decreases in Greater China net sales and volumes were primarily due to lower net sales and volumes our Mobile Phones devices.

 

At constant currency Devices & Services’ net sales would have decreased 40% year-on-year and increased 8% sequentially.

 

Operating Expenses

 

Devices & Services non-IFRS operating expenses decreased 31% year-on-year and 5% sequentially in the fourth quarter 2012. On a year-on-year basis, operating expenses related to Mobile Phones and Smart Devices decreased 19% and 34% respectively, in the fourth quarter 2012. On a sequential basis, operating expenses related to Mobile Phones decreased by 12% while Smart Devices operating expenses increased 9%, respectively, in the fourth quarter 2012. In addition to the factors described below, the year-on-year changes were affected by the proportionate allocation of operating expenses being affected by the relative mix of sales and gross profit performance between Mobile Phones and Smart Devices. This resulted in higher and lower relative allocations to Mobile Phones and Smart Devices, respectively.

 

Devices & Services non-IFRS research and development expenses decreased 34% year-on-year in the fourth quarter 2012. On a sequential basis, Devices & Services non-IFRS research and development expenses decreased 8% in the fourth quarter 2012. Both the year-on-year and sequential declines were primarily due to ramping down Symbian and MeeGo, reductions in certain Mobile Phones related activities and overall cost controls.

 

Devices & Services non-IFRS sales and marketing expenses decreased 28% year-on-year in the fourth quarter 2012. On a year-on-year basis marketing expenses declined primarily due to lower marketing expenditure on Symbian, a lower cost base as a result of business divestments and tight cost control, partially offset by higher marketing expenditure related to our Lumia devices. On a sequential basis, Devices & Services non-IFRS sales and marketing expenses increased 3% in the fourth quarter 2012. Sequentially, marketing expenses increased primarily due to higher expenditure on Lumia and seasonality, partially offset by business divestments, headcount reductions and tight cost control.

 

Devices & Services non-IFRS administrative and general expenses decreased 30% year-on-year in the fourth quarter 2012 and 35% sequentially. The year-on-year and sequential decreases are primarily related to cost savings in support functions, business divestments and shared function cost categorization.

 

In the fourth quarter 2012, Devices & Services non-IFRS other income and expense had a negative year-on-year and positive sequential impact on profitability. On a reported basis, other income and expense was positively affected in the fourth quarter 2012 primarily as a result of net gains from the sale of real estate of EUR 79 million, the divestment of the Vertu business of EUR 52 million and a positive item of EUR 21 million from a cartel claim settlement, as well as an EUR 75 million net benefit related to restructuring provision releases as discussed in the “Cost Reduction Activities and Planned Operational Adjustments” section below.

 

Operating Margin

 

The lower year-on-year Devices & Services non-IFRS operating margin in the fourth quarter 2012 was primarily due to lower net sales and gross margin, partially offset by lower operating expenses.

 

The sequentially higher Devices & Services non-IFRS operating margin in the fourth quarter 2012 was primarily due to higher gross margin and to a lesser extent lower operating expenses.

 

Cost Reduction Activities and Planned Operational Adjustments

 

DEVICES & SERVICES RESTRUCTURING SUMMARY

 

EUR (million)

 

Q4/2012
(approximate)

 

Cumulative up 
to Q4/2012
(approximate)

 

Q1/2013
(approximate
estimate)

 

2013
(approximate
estimate)

 

Total
(approximate
estimate)

 

Restructuring related charges

 

-73

 

1 400

 

Not provided

 

Not provided

 

1 600

 

Restructuring related cash outflows

 

300

 

1 100

 

150

 

300

 

1 400

 

 

7



 

Nokia continues to target to reduce its Devices & Services non-IFRS operating expenses to an annualized run rate of approximately EUR 3.0 billion by the end of 2013.

 

At the end of the fourth quarter 2012, Devices & Services and Corporate Common had approximately 33 200 employees, a reduction of approximately 16 500 compared to fourth quarter 2011, and approximately 5 000 compared to third quarter 2012.

 

In connection with the implementation of our strategy announced in February 2011, we have announced and made a number of changes to our operations. In the fourth quarter of 2012, we recognized a net benefit of EUR 73 million related to restructuring provision releases and impairments related to our restructuring activities in Devices & Services. By the end of the fourth quarter 2012, we had recorded cumulative Devices & Services restructuring charges and other associated items of approximately EUR 1.4 billion. In total, we expect now cumulative Devices & Services restructuring charges of approximately EUR 1.6 billion before the end of 2013. This is approximately EUR 200 million less than what we estimated earlier.

 

By the end of the fourth quarter 2012, Devices & Services had cumulative restructuring related cash outflows of approximately EUR 1.1 billion. We expect Devices & Services restructuring related cash outflows to be approximately EUR 150 million in first quarter 2013 and approximately EUR 300 million in full year 2013. Of the total expected charges relating to restructuring activities of approximately EUR 1.6 billion, we expect Devices & Services non-cash charges to be approximately EUR 200 million. This means that we also now expect total restructuring related cash outflows to be approximately EUR 200 million less than what we estimated earlier.

 

SMART DEVICES

 

The following table sets forth a summary of the results for our Smart Devices business unit for the periods indicated, as well as the year-on-year and sequential growth rates.

 

SMART DEVICES RESULTS SUMMARY

 

 

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Net sales (EUR million)(1)

 

1 225

 

2 747

 

-55

%

976

 

26

%

Smart Devices volume (million units)

 

6.6

 

19.6

 

-66

%

6.3

 

5

%

Smart Devices ASP (EUR)

 

186

 

140

 

33

%

155

 

20

%

Gross margin (%)

 

18.0

%

19.9

%

 

 

-3.5

%

 

 

Operating expenses (EUR million)(2)

 

481

 

732

 

-34

%

441

 

9

%

Contribution margin (%)(2)

 

-21.6

%

-7.0

%

 

 

-48.9

%

 

 

 


Note 1: Does not include IPR income. IPR income is recognized in Devices & Services Other net sales.

Note 2: The year-on-year decrease in operating expenses was affected by the proportionate allocation of operating expenses being affected by the relative mix of sales and gross profit performance between Mobile Phones and Smart Devices, resulting in lower relative allocations to Smart Devices in the first, second, third and fourth quarters 2012. Accordingly, fourth quarter 2012 operating expenses are not directly comparable to fourth quarter 2011 operating expenses.

 

Net Sales

 

On a year-on-year basis, the decline in our Smart Devices net sales in the fourth quarter 2012 was due to lower volumes partially offset by higher ASPs. On a sequential basis, the increase in our Smart Devices net sales in the fourth quarter 2012 was due to higher ASPs and volumes.

 

Volume

 

During the fourth quarter 2012 we shipped 6.6 million Smart Devices units, of which 4.4 million were Lumia devices. During the fourth quarter 2012 our Smart Devices volumes were affected by supply constraints as we ramped up our production capacity, particularly related to the Lumia 920, which have continued into the first quarter 2013. Symbian devices accounted for 2.2 million units of our Smart Devices volumes in the fourth quarter 2012. We expect our Symbian devices to account for a significantly smaller portion of our overall Smart Devices volumes in the first quarter 2013 and going forward.

 

The year-on-year decline in our Smart Devices volumes in the fourth quarter 2012 continued to be driven by the strong momentum of competing smartphone platforms and our portfolio transition from Symbian devices to Lumia devices. The decline was primarily due to lower Symbian device volumes, partially offset by higher Lumia device

 

8



 

volumes. On a geographical basis, the decrease in volumes was due to lower volumes in Greater China, Europe, Asia-Pacific, Middle East and Africa and Latin America, partially offset by an increase in volumes in North America.

 

On a sequential basis, the increase in our Smart Devices volumes in the fourth quarter 2012 was primarily due to higher Lumia device volumes, partially offset by lower Symbian device volumes. On a geographical basis, the increase in volumes was primarily due to higher volumes in North America and Europe, partially offset by lower volumes in all other regions.

 

Average Selling Price

 

The year-on-year increase in our Smart Devices ASP in the fourth quarter 2012 was primarily due to a positive mix shift towards sales of our Lumia devices which carry a higher ASP than our Symbian devices, partially offset by our pricing actions taken in previous quarters in 2012 related to certain Lumia devices.

 

Sequentially, the increase in our Smart Devices ASP in the fourth quarter 2012 was primarily due to a positive mix shift towards sales of our newly launched Lumia devices which had a higher ASP, partially offset by general price erosion. The ASP of our Lumia devices in the fourth quarter 2012 was EUR 192, compared to EUR 160 in the third quarter 2012. The increase in Lumia ASPs was primarily due to a positive mix shift towards sales of our newly launched Lumia devices which had a higher ASP.

 

Gross Margin

 

The year-on-year decline in our Smart Devices gross margin in the fourth quarter 2012 was primarily due to greater price erosion than cost erosion, partially offset by a positive product mix shift towards higher gross margin Lumia devices as well as the absence of Symbian related allowances which were recognized in the fourth quarter 2011. From an operating system perspective, the year-on-year decline in our Smart Devices gross margin in the fourth quarter 2012 was primarily due to a lower Symbian gross margin.

 

On a sequential basis, the increase in our Smart Devices gross margin in the fourth quarter 2012 was primarily due to the absence of approximately EUR 120 million of inventory related allowances which were recognized in the third quarter 2012 as well as a positive product mix shift towards higher gross margin devices, and lower Symbian fixed costs per unit. From an operating system perspective, the sequential increase in our Smart Devices gross margin in the fourth quarter was primarily due to a higher Lumia gross margin as well as a higher Symbian gross margin.

 

Increases or decreases to Smart Devices inventory related allowances may be required in the future depending on several factors, including consumer demand and continued ramp up particularly related to our new Lumia devices.

 

MOBILE PHONES

 

The following table sets forth a summary of the results for our Mobile Phones business unit for the periods indicated, as well as the year-on-year and sequential growth rates.

 

MOBILE PHONES RESULTS SUMMARY

 

 

 

Q4/2012

 

Q4/2011

 

YoY
Change

 

Q3/2012

 

QoQ
Change

 

Net sales (EUR million)(1)

 

2 468

 

3 040

 

-19

%

2 366

 

4

%

Mobile Phones volume (million units)

 

79.6

 

93.9

 

-15

%

76.6

 

4

%

Mobile Phones ASP (EUR)

 

31

 

32

 

-3

%

31

 

0

%

Gross margin (%)

 

22.2

%

27.7

%

 

 

21.7

%

 

 

Operating expenses (EUR million)(2)

 

346

 

429

 

-19

%

393

 

-12

%

Contribution margin (%)(2)

 

8.2

%

13.5

%

 

 

4.9

%

 

 

 


Note 1: Does not include IPR income. IPR income is recognized in Devices & Services Other net sales.

Note 2: The year-on-year decrease in operating expenses was affected by the proportionate allocation of operating expenses being affected by the relative mix of sales and gross profit performance between Mobile Phones and Smart Devices, resulting in higher relative allocations to Mobile Phones in the first, second, third and fourth quarters 2012. Accordingly, fourth quarter 2012 operating expenses are not directly comparable to fourth quarter 2011 operating expenses.

 

Net Sales

 

On a year-on-year basis, the decline in our Mobile Phones net sales in the fourth quarter 2012 was due to lower volumes as well as lower ASPs. On a sequential basis, the increase in our Mobile Phones net sales in the fourth quarter 2012 was primarily due to higher volumes.

 

9



 

Volume

 

During the fourth quarter 2012 we shipped 79.6 million Mobile Phones units, of which 9.3 million were Asha full touch smartphones.

 

On a year-on-year basis, the decrease in our Mobile Phones volumes in the fourth quarter 2012 was primarily due to the decline in volumes of our lower priced devices that we sell to our customers for below EUR 30. Overall volumes of our higher priced devices that we sell to our customers for above EUR 30 also declined, despite the addition of Asha full touch smartphone volumes in the fourth quarter 2012.

 

On a sequential basis, the increase in our Mobile Phones volumes in the fourth quarter 2012 was primarily due to the increase in volumes of our lower priced devices that we sell to our customers for below EUR 30. Volumes of our higher priced devices that we sell to our customers for above EUR 30 also increased, partially due to growth in volumes of our Asha full touch smartphones.

 

Average Selling Price

 

The year-on-year decline in our Mobile Phones ASP in the fourth quarter 2012 was primarily due to general price erosion and an increased proportion of sales of lower priced devices, partially offset by the net positive impact related to foreign currency fluctuations.

 

On a sequential basis, our Mobile Phones ASP was flat in the fourth quarter 2012 as a mix shift towards higher priced devices, including our full touch Asha smartphones, as well as the net positive impact from foreign currency fluctuations were offset by general price erosion.

 

Gross Margin

 

The year-on-year decline in our Mobile Phones gross margin in the fourth quarter 2012 was primarily due to a negative product mix shift towards lower gross margin devices, as well as the net negative impact related to foreign currency fluctuations.

 

On a sequential basis, the increase in our Mobile Phones gross margin in the fourth quarter 2012 was primarily due to greater cost erosion than price erosion, partially offset by the net negative impact related to foreign currency fluctuations.

 

LOCATION & COMMERCE

 

On November 13, 2012, Nokia introduced HERE, the new brand for its location and mapping service. For financial reporting purposes, the Location & Commerce business will be renamed as the HERE business, starting with the first quarter 2013.

 

The following table sets forth a summary of the results for Location & Commerce for the periods indicated, as well as the year-on-year and sequential growth rates.

 

LOCATION & COMMERCE RESULTS SUMMARY

 

 

 

Q4/2012

 

Q4/2011

 

YoY 
Change

 

Q3/2012

 

QoQ 
Change

 

Net sales (EUR million)

 

278

 

306

 

-9

%

265

 

5

%

External net sales (EUR million)

 

204

 

200

 

2

%

179

 

14

%

Internal net sales (EUR million)

 

74

 

106

 

-30

%

86

 

-14

%

Non-IFRS gross margin (%)

 

82.0

%

77.8

%

 

 

80.4

%

 

 

Non-IFRS operating expenses (EUR million)

 

189

 

206

 

-8

%

175

 

8

%

Non-IFRS operating margin (%)

 

14.4

%

9.5

%

 

 

14.0

%

 

 

 

Net Sales

 

In the fourth quarter 2012, the year-on-year increase in external Location & Commerce net sales was primarily due to higher sales of map content licenses to vehicle customers due to higher consumer uptake of vehicle navigation systems. In the fourth quarter 2012, the sequential increase in external Location & Commerce net sales was primarily due to a higher consumer uptake of vehicle navigation systems as well as seasonally higher sales to personal navigation devices customers.

 

In the fourth quarter 2012, the year-on-year and sequential declines in internal Location & Commerce net sales were due to declines in sales to our Smart Devices business unit.

 

10



 

Gross Margin

 

On a year-on-year basis, the increase in Location & Commerce non-IFRS gross margin in the fourth quarter 2012 was primarily due to lower deferred cost of sales associated with internal sales and a higher gross margin within the vehicle segment, partially offset by lower sales to personal navigation device customers.

 

On a sequential basis, the increase in Location & Commerce non-IFRS gross margin in the fourth quarter 2012 was primarily due to lower deferred cost of sales associated with internal sales, a higher gross margin within the vehicle segment, and seasonally higher sales to personal navigation device customers.

 

Operating Expenses

 

Location & Commerce non-IFRS research and development expenses decreased 10% year-on-year due to cost reductions. On a sequential basis, research and development expenses increased 5% sequentially in the fourth quarter 2012 primarily due to increased project spending relating to software development and map creation.

 

Location & Commerce non-IFRS sales and marketing expenses decreased 8% year-on-year primarily due to cost reduction actions. On a sequential basis, sales and marketing expenses increased 22% sequentially in the fourth quarter due to higher marketing costs and investments to establish the new HERE brand.

 

Location & Commerce non-IFRS administrative and general expenses increased 6% year-on-year and increased 12% sequentially in the fourth quarter 2012. On a year-on-year and sequential basis, the increase was primarily due to the higher use of services provided by shared support functions.

 

Location & Commerce non-IFRS other income and expense for the fourth quarter 2012 was approximately zero, compared to expense of EUR 3 million in the fourth quarter 2011 and approximately zero in the third quarter 2012.

 

Operating Margin

 

The year-on-year increase in Location & Commerce non-IFRS operating margin in the fourth quarter 2012 was primarily due to lower operating expenses and higher gross margin, partially offset by lower net sales.

 

The approximately flat sequential Location & Commerce non-IFRS operating margin in the fourth quarter 2012 was primarily due to higher net sales and gross margin, almost entirely offset by higher operating expenses.

 

NOKIA SIEMENS NETWORKS

 

The following table sets forth a summary of the results for Nokia Siemens Networks for the periods indicated, as well as the year-on-year and sequential growth rates.

 

NOKIA SIEMENS NETWORKS RESULTS SUMMARY

 

 

 

Q4/2012

 

Q4/2011

 

YoY 
Change

 

Q3/2012

 

QoQ 
Change

 

Net sales (EUR million)

 

3 988

 

3 815

 

5

%

3 501

 

14

%

Non-IFRS gross margin (%)

 

36.0

%

29.2

%

 

 

32.2

%

 

 

Non-IFRS operating expenses (EUR million)

 

843

 

943

 

-11

%

797

 

6

%

Non-IFRS operating margin (%)

 

14.4

%

4.6

%

 

 

9.2

%

 

 

 

Net Sales

 

The following table sets forth Nokia Siemens Networks net sales for the periods indicated, as well as the year-on-year and sequential growth rates, by geographic area.

 

NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA

 

EUR million

 

Q4/2012

 

Q4/2011

 

YoY 
Change

 

Q3/2012

 

QoQ 
Change

 

Europe

 

1 058

 

1 272

 

-17

%

918

 

15

%

Middle East & Africa

 

388

 

394

 

-2

%

325

 

19

%

Greater China

 

416

 

438

 

-5

%

313

 

33

%

Asia-Pacific

 

1 176

 

909

 

29

%

1 266

 

-7

%

North America

 

426

 

293

 

45

%

285

 

49

%

Latin America

 

524

 

509

 

3

%

394

 

33

%

Total

 

3 988

 

3 815

 

5

%

3 501

 

14

%

 

11



 

The year-on-year increase in Nokia Siemens Networks’ net sales in the fourth quarter 2012 was primarily due to higher sales of both infrastructure equipment and services, partially offset by a decline in sales of business areas not consistent with Nokia Siemens Networks’ strategic focus. On a regional basis, the year-on-year growth was primarily due to higher net sales in Asia Pacific, most notably in Japan which saw strong growth in sales of both infrastructure equipment and services, as well as in North America which also saw strong growth in sales of both infrastructure equipment and services. This was partially offset by lower sales in Europe, most notably in Western Europe due to declines in sales of both infrastructure equipment and services. In the fourth quarter 2012, Nokia Siemens Networks net sales benefited from non-recurring IPR income of approximately EUR 30 million.

 

The sequential increase in Nokia Siemens Networks’ net sales in the fourth quarter 2012 was primarily due to higher sales of both services and infrastructure equipment consistent with industry seasonality. On a regional basis, the sequential growth was primarily due to higher net sales in North America which saw strong growth in sales of both infrastructure equipment and services, Latin America which saw strong growth in sales of both infrastructure equipment and services and Greater China which saw strong growth in sales of both services and infrastructure equipment, partially offset by lower sales in Asia Pacific, most notably Japan which saw a decline primarily in sales of infrastructure equipment. In the fourth quarter 2012, Nokia Siemens Networks net sales benefited from non-recurring IPR income of approximately EUR 30 million.

 

At constant currency Nokia Siemens Networks’ net sales would have increased 1% year-on-year and increased 16% sequentially.

 

Gross Margin

 

On a year-on-year basis, the increase in Nokia Siemens Networks’ non-IFRS gross margin in the fourth quarter 2012 was due to favorable product and regional mix towards higher gross margin revenues, particularly in infrastructure equipment and to a lesser extent services, driven mainly by Nokia Siemens Networks priority markets including Japan, Korea and North America, partially offset by lower infrastructure equipment gross margin in Europe. In addition, the year-on-year increase in Nokia Siemens Networks non-IFRS gross margin was also due to structural cost savings in its production overheads as part of its broader cost savings targets.

 

On a sequential basis, the increase in Nokia Siemens Networks’ non-IFRS gross margin in the fourth quarter 2012 was due to favorable product and regional mix towards higher gross margin revenues, in both services and infrastructure equipment, driven mainly by Latin America, North America and Europe, partially offset by Asia Pacific most notably in Japan. In addition, the sequential increase in Nokia Siemens Networks non-IFRS gross margin was also due to seasonally strong high gross margin software sales as well as structural cost savings in its production overheads as part of its broader cost savings targets.

 

Operating Expenses

 

Nokia Siemens Networks’ non-IFRS research and development expenses decreased 10% year-on-year in the fourth quarter 2012 primarily due to improvements in overall research and development efficiency. Sequentially, Nokia Siemens Networks’ non-IFRS research and development expenses increased 7% primarily due to higher accrued incentive expenses consistent with Nokia Siemens Networks’ business performance in the fourth quarter 2012, partially offset by cost control initiatives.

 

Year-on-year, Nokia Siemens Networks’ non-IFRS sales and marketing expenses decreased 11% in the fourth quarter 2012 primarily due to structural cost savings, partially offset by higher accrued incentive expenses consistent with Nokia Siemens Networks’ business performance in the fourth quarter 2012. On a sequential basis, Nokia Siemens Networks non-IFRS sales and marketing expenses increased 3% in the fourth quarter 2012 primarily due to higher accrued incentive expenses consistent with Nokia Siemens Networks’ business performance in the fourth quarter 2012, partially offset by structural cost savings.

 

Nokia Siemens Networks’ non-IFRS administrative and general expenses decreased 13% year-on-year in the fourth quarter 2012 primarily due to structural cost savings. On a sequential basis, Nokia Siemens Networks non-IFRS administrative and general expenses increased 5% in the fourth quarter 2012, primarily due higher accrued incentive expenses consistent with Nokia Siemens Networks’ business performance in the fourth quarter 2012, as well as higher expense reallocation to other function costs, which more than offset structural cost savings.

 

Nokia Siemens Networks’ non-IFRS other income and expense for the fourth quarter 2012 was an expense of EUR 16 million, compared to income of EUR 5 million in the fourth quarter 2011 and expense of EUR 8 million in the third quarter 2012.  On both a year-on-year and sequential basis, this was primarily due to changes in the doubtful account allowances.

 

12



 

Operating Margin

 

The year-on-year increase in Nokia Siemens Networks non-IFRS operating margin in the fourth quarter 2012 was primarily due to the higher gross margin and higher net sales, and to a lesser extent, lower operating expenses.

 

The sequential increase in Nokia Siemens Networks non-IFRS operating margin in the fourth quarter 2012 was primarily due to the higher net sales and gross margin, partially offset by higher operating expenses.

 

Strategy Update and Global Restructuring Program

 

NOKIA SIEMENS NETWORKS RESTRUCTURING SUMMARY

 

EUR (million)

 

Q4/2012 
(approximate)

 

Cumulative up
to Q4/2012 
(approximate)

 

Q1/2013 
(approximate 
estimate)

 

2013 
(approximate 
estimate)

 

2014 
(approximate 
estimate)

 

Total 
(approximate 
estimate)

 

Restructuring related charges

 

257

 

1 300

 

Not provided

 

Not provided

 

Not provided

 

1 300

 

Restructuring related cash outflows

 

180

 

650

 

200

 

450

 

200

 

1 300

 

 

On November 23, 2011, Nokia Siemens Networks announced its strategy to focus on mobile broadband and services and the launch of an extensive global restructuring program.

 

At the end of the fourth quarter 2012, Nokia Siemens Networks had approximately 58 400 employees, a reduction of approximately 15 300 compared to fourth quarter 2011, and approximately 2 200 compared to third quarter 2012.

 

Nokia Siemens Networks now targets to reduce its non-IFRS annualized operating expenses and production overheads by more than EUR 1 billion by the end of 2013, compared to the end of 2011. Nokia Siemens Networks previous target was to reduce its non-IFRS annualized operating expenses and production overheads by EUR 1 billion by the end of 2013, compared to the end of 2011. While these savings are expected to come largely from organizational streamlining, the company will also target areas such as real estate, information technology, product and service procurement costs, overall general and administrative expenses, and a significant reduction of suppliers in order to further lower costs and improve quality.

 

By the end of the fourth quarter of 2012, Nokia Siemens Networks had recorded cumulative restructuring charges and other associated items of approximately EUR 1.3 billion related to this restructuring program. In total we now expect cumulative Nokia Siemens Networks’ restructuring charges of approximately EUR 1.3 billion by the end of 2013, virtually all of which have now been recognized. This is approximately EUR 100 million more than our previous estimate.

 

By the end of the fourth quarter 2012, Nokia Siemens Networks had cumulative restructuring related cash outflows of approximately EUR 650 million related to this restructuring program. Nokia Siemens Networks expects restructuring-related cash outflows to be approximately EUR 200 million in the first quarter 2013, approximately EUR 450 million for the full year 2013, and approximately EUR 200 million for the full year 2014 related to this restructuring program. This means that we also now expect total restructuring related cash outflows to be approximately EUR 100 million more than what we estimated earlier.

 

Nokia Siemens Networks is focused on maintaining a strong financial position and liquidity profile.  Cash generation is a clear priority at Nokia Siemens Networks, and the company intends to be self-funding in all aspects of its operations.

 

Q4 OPERATING HIGHLIGHTS

 

NOKIA OPERATING HIGHLIGHTS

 

·                  Nokia completed its divestment of Vertu, the global leader in luxury mobile phones, to EQT VI. As part of the transaction, approximately 1 000 employees have transferred with Vertu. Nokia retains a 10% minority shareholding in Vertu.

·                  Nokia entered into a new patent license agreement with Research In Motion. The agreement results in settlement of all existing patent litigation between the companies and withdrawal of pending actions in the US, UK and Canada related to a recent arbitration tribunal decision.

·                  Nokia sold its head office building in Espoo, Finland, to Finland-based Exilion and has leased it back from Exilion on a long-term lease. The selling price was EUR 170 million.

 

13



 

·                  Nokia completed an offering of EUR 750 million of senior unsecured convertible bonds due 2017 convertible into ordinary shares of Nokia Corporation. Nokia intends to use the net proceeds of the offering to prudently manage its capital structure, proactively address upcoming maturities while preserving existing pools of liquidity and for general corporate purposes.

 

DEVICES & SERVICES OPERATING HIGHLIGHTS

 

SMART DEVICES

 

·                  Nokia commenced shipments of the Nokia Lumia 920 and the Nokia Lumia 820, the first devices in Nokia’s Windows Phone 8 range. The Lumia 920 is the flagship Windows Phone 8 smartphone, introducing the latest advances in Nokia PureView imaging innovation. The Lumia 820 brings high end smartphone innovation like wireless charging, super-sensitive touch displays and new augmented reality experiences, starting with Nokia City Lens, to a midrange price point.

·                  Nokia and Verizon Wireless commenced shipments of the Nokia Lumia 822, which provides Verizon Wireless customers with the high-end smartphone features of the Nokia Lumia 820 in a unique design package running on America’s largest 4G LTE network.

·                  Nokia and China Mobile announced the Lumia 920T, the first TD-SCDMA Windows Phone in China. With optical image stabilization, world class location and navigation services, and built-in wireless charging, the Lumia 920T is the world’s most innovative smartphone with the world’s largest mobile operator.

·                  Nokia introduced the Nokia Lumia 620, the third and most affordable in its range of Windows Phone 8 smartphones. Alongside the flagship Nokia Lumia 920 and mid-range Nokia Lumia 820, the Nokia Lumia 620 comes in a compact, colorful design and brings Windows Phone 8 to a more youthful audience.

 

MOBILE PHONES

 

·                  Nokia introduced the Nokia Asha 205 and Nokia 206 in both single SIM and dual SIM versions. Both devices reflect Nokia’s heritage by combining stylish design and long-lasting battery life. The Nokia Asha 205 and Nokia 206 are the first Mobile Phones devices to include Nokia’s exclusive Slam feature, which enables consumers to share multimedia content such as photos and videos with nearby friends almost instantly. Slam works with most Bluetooth-enabled mobile phones without the need to pair devices, and without the recipient needing to also have Slam.

·                  Nokia commenced shipments of the Nokia Asha 308 and Asha 309, models offering a fluid ‘swipe’ user interface and an open environment for third-party application development.

 

LOCATION & COMMERCE OPERATING HIGHLIGHTS

 

·                  Location & Commerce introduced a new brand — HERE — for our location-based products and services and has begun adopting the HERE brand in the portfolio. HERE is the first location cloud to deliver the world’s best maps and location experiences across multiple screens and operating systems. With the new brand, HERE, Nokia aims to inspire a new generation of location services and devices that make the mobile experience more personally significant for people everywhere. For financial reporting purposes, the Location & Commerce business will be renamed as the HERE business, starting with the first quarter 2013.

·                  To further extend its location services, Location & Commerce launched a maps application for iOS under the HERE brand. Based on HTML5, it includes offline capabilities, voice-guided walk navigation, and public transport directions. The application is available for free download from Apple’s App Store.

·                  Nokia announced a strategic partnership with Mozilla to bring new location experiences to the Firefox OS. Nokia plans to debut a mobile Web version of HERE Maps for the new Firefox OS next year. The companies are working together to give people the best mapping experience on Firefox OS.

·                  Nokia acquired earthmine inc. earthmine’s reality capture and processing technologies will become integral parts of the 3D map making capabilities of HERE.

·                  Nokia introduced LiveSight, a technology based on a highly accurate, 3D map of the world.  LiveSight enables a precise and intuitive augmented reality experience. Nokia City Lens, which was developed exclusively for Nokia Lumia devices and uses a phone’s camera viewfinder to make discovering the world as easy as lifting up a phone, is the first application providing a LiveSight-enabled experience.

·                  Oracle developed a built-in link between Oracle Fusion Middleware MapViewer and the Nokia Location Platform (NLP). This link removes the barrier to customized map integration and extends the benefits of global maps for business use to Oracle users.

·                  Nokia’s Location & Commerce business continued to strengthen its portfolio of location-based offerings for both Windows Phone 8 and Windows Phone 7.5:

·                  Location & Commerce brought its signature applications to the Nokia Lumia range on Windows Phone 8, including true offline maps for Nokia Maps and Nokia Drive+ (beta).

·                  Location & Commerce continued its support for Nokia’s Lumia range on Windows Phone 7.5 with new releases of Nokia Transport and Nokia Drive, extending the availability of the My Commute feature in Nokia Drive from five to 26 countries.  In addition, Location & Commerce also released a beta update to Nokia City

 

14



 

Lens for Lumia on Windows Phone 7.5, its LiveSight-based augmented reality application, which turns the phone’s camera viewfinder into a new way to see information about restaurants, shops, hotels and more overlaid onto the surfaces of buildings for the most intuitive way to find hidden gems.

·                  After announcing in early 2012 that it is teaming with Groupon to bring local and national deals to Nokia customers and integrating Groupon Now! deals into Nokia Maps for the Lumia range in the third quarter, Location & Commerce now also integrated Groupon Now! deals into its maps desktop offering on here.com.

 

NOKIA SIEMENS NETWORKS OPERATING HIGHLIGHTS

 

·                  Nokia Siemens Networks continued its mobile broadband deal momentum, adding commercial LTE deals in the fourth quarter, including: delivering a large, multi-city, TD-LTE deployment for China Mobile; preparing O2’s network in the UK to deliver LTE services across London and the south-east of England, ahead of an anticipated rapid launch of 4G in early 2013;  completing the first 4G pilot with TD-LTE technology in Southern Europe for COTA, a new player in Spanish telecoms, and Wimax Online; and helping Vodacom become the first operator to introduce voice and SMS alongside LTE in South Africa.

·                  Nokia Siemens Networks provided GSM and 3G mobile broadband infrastructure and services in Central and East Java, Sumatra, and Kalimantan for Indosat in Indonesia; and deployed Wide Band Adaptive Multi-Rate (WB-AMR) software for Smart Communications 3G network in Mega Manila in the Philippines, providing high-definition (HD) voice services to subscribers.

·                  Nokia Siemens Networks combined three powerful WCDMA software features with the introduction of its Liquid Radio WCDMA software suite to deliver faster data uploads and extract the full benefit from network resources and smartphone capabilities, helping operators improve customer satisfaction and cut churn while increasing revenue from greater 3G availability. Nokia Siemens Networks also launched a new package of services to ensure operators have the most profitable blend of macro and small cells for mobile broadband, as well as a new second-generation 3G femto access point that provides mobile coverage in the home or small office.

·                  Nokia Siemens Networks’ Flexi Zone was awarded the ‘Best of 4G award’ at 4G World in Chicago, in the Radio Access Network (RAN) and Small Cell Technology Product category for its RAN & small cell technology product, based on the company’s Liquid Radio architecture, recognizing mobile broadband innovative design, small cell technology and approach. In a recent proof of concept project based on Liquid Core architecture, Nokia Siemens Networks and a leading global operator jointly demonstrated that core virtualization and cloud management are viable technologies for deployment by operators.

·                  In Services, Nokia Siemens Networks launched an industry-first capability center - Service Operations and Management solution - which combines insights related to service performance with operations functions to enable operators to manage mobile broadband services and tackle service degradation before subscribers experience poor quality.

·                  Nokia Siemens Networks enhanced its award-winning Customer Experience Management (CEM) on Demand portal by adding three new software content packs and related services to help operators pinpoint actionable problems on internet-based maps in seconds and rank the individual customer perception of any problem they experience, in addition to providing trends in service use, network performance and customer experience.

·                  Guangdong Mobile, China Mobile’s largest subsidiary, selected Nokia Siemens Networks’ Customer Experience Management engine Serve at Once Intelligence (SAI) customer and business analysis suite to boost subscriber loyalty and revenue through analysis of real time customer insights. In December, Nokia Siemens Networks provided a unified network and service management dashboard solution as part of its CEM portfolio, including a video wall bigger than a tennis court, for Bharti Airtel in Gurgaon, India, to give the operator a complete network view and ensure the best possible service quality and user experience.

·                  Nokia Siemens Networks continued to drive towards its strategic focus on Mobile Broadband, announcing it had reached an agreement to sell its Optical Networks business to Marlin Equity Partners and its Business Support Systems business to Redknee. It also completed the divestment of the assets of the non-core IPTV business to Belgacom and Accenture.

 

NOKIA IN THE FOURTH QUARTER 2012

 

The following discussion is of Nokia’s reported results. Comparisons are given to the fourth quarter 2011 results, unless otherwise indicated.

 

Nokia’s net sales decreased 20% to EUR 8 041 million (EUR 10 005 million). Net sales of Smart Devices decreased 55% to EUR 1 225 million (EUR 2 747 million). Net sales of Mobile Phones decreased 19% to EUR 2 468 million (EUR 3 040 million). Net sales of the total Devices & Services business decreased 36% to EUR 3 854 million (EUR 5 997 million). Net sales of Location & Commerce decreased 9% to EUR 278 million (EUR 306 million). Net sales of Nokia Siemens Networks increased 5% to EUR 3 988 million (EUR 3 815 million).

 

15



 

Nokia’s gross profit decreased to EUR 2 584 million (gross profit of EUR 2 902 million), representing a gross margin of 32.1% (29.0%). Gross profit of Smart Devices decreased to EUR 221 million (gross profit EUR 546 million), representing 18.0% of Smart Devices net sales (19.9%).  Gross profit of Mobile Phones decreased to EUR 548 million (gross profit EUR 842 million), representing 22.2% of Mobile Phones net sales (27.7%).  Gross profit in the total Devices & Services business decreased to EUR 922 million (gross profit of EUR 1 550 million), representing a gross margin of 23.9% (25.8%). Gross profit in Location & Commerce was EUR 228 million (gross profit of EUR 238 million), representing a gross margin of 82.0% (77.8%). Gross profit in Nokia Siemens Networks was EUR 1 434 million (gross profit EUR 1 114 million), representing a gross margin of 36.0% (29.2%).

 

Nokia’s operating profit was EUR 439 million (operating loss of EUR 954 million), representing an operating margin of 5.5% (-9.5%). Contribution of Smart Devices decreased to EUR -264 million (EUR -191 million), representing -21.6% of Smart Devices net sales (-7.0%).  Contribution of Mobile Phones decreased to EUR 203 million (EUR 410 million), representing 8.2% of Mobile Phones net sales (13.5%).  Operating profit in the total Devices & Services business increased to EUR 276 million (operating profit of EUR 203 million), representing an operating margin of 7.2% (3.4%). Operating loss in Location & Commerce was EUR 56 million (operating loss of EUR 1205 million). Operating profit in Nokia Siemens Networks was EUR 251 million (operating profit EUR 67 million), representing an operating margin of 6.3% (1.8%). Group Common Functions expense totaled EUR 32 million (EUR 19 million).

 

In the period from October to December 2012, net financial expense was EUR 66 million (expense of EUR 21 million). Profit before tax was EUR 375 million (loss EUR 974 million). Profit was EUR 255 million (loss EUR 1 076 million), based on a profit of EUR 202 million (loss EUR 1 072 million) attributable to equity holders of the parent and a profit of EUR 53 million (loss of EUR 4 million) attributable to non-controlling interests. Earnings per share was EUR 0.05 (basic) and EUR 0.05 (diluted), compared with EUR -0.29 (basic) and EUR -0.29 (diluted) in the fourth quarter 2011.

 

16



 

CONSOLIDATED INCOME STATEMENTS, EUR million

(unaudited)

 

 

 

Reported

 

Reported

 

Non-IFRS

 

Non-IFRS

 

 

 

10-12/2012

 

10-12/2011 (1)

 

10-12/2012

 

10-12/2011

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

8 041

 

10 005

 

8 041

 

10 005

 

Cost of sales

 

-5 457

 

-7 103

 

-5 457

 

-7 103

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

2 584

 

2 902

 

2 584

 

2 902

 

Research and development expenses

 

-1 123

 

-1 408

 

-1 034

 

-1 311

 

Selling and marketing expenses

 

-745

 

-982

 

-679

 

-873

 

Administrative and general expenses

 

-220

 

-258

 

-220

 

-257

 

Impairment of goodwill

 

 

-1 090

 

 

 

Other income

 

235

 

87

 

83

 

38

 

Other expenses

 

-292

 

-205

 

-99

 

-21

 

 

 

 

 

 

 

 

 

 

 

Operating profit/loss

 

439

 

-954

 

635

 

478

 

Share of results of associated companies

 

2

 

1

 

2

 

1

 

Financial income and expenses

 

-66

 

-21

 

-66

 

-21

 

 

 

 

 

 

 

 

 

 

 

Profit/loss before tax

 

375

 

-974

 

571

 

458

 

Tax

 

-120

 

-102

 

-144

 

-184

 

 

 

 

 

 

 

 

 

 

 

Profit/loss

 

255

 

-1 076

 

427

 

274

 

 

 

 

 

 

 

 

 

 

 

Profit/loss attributable to equity holders of the parent

 

202

 

-1 072

 

212

 

226

 

Profit/loss attributable to non-controlling interests

 

53

 

-4

 

215

 

48

 

 

 

255

 

-1 076

 

427

 

274

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, EUR

 

 

 

 

 

 

 

 

 

(for profit/loss attributable to the equity holders of the parent)

 

 

 

 

 

 

 

 

 

Basic

 

0.05

 

-0.29

 

0.06

 

0.06

 

Diluted

 

0.05

 

-0.29

 

0.06

 

0.06

 

 

 

 

 

 

 

 

 

 

 

Average number of shares (1 000 shares)

 

 

 

 

 

 

 

 

 

Basic

 

3 710 985

 

3 710 158

 

3 710 985

 

3 710 158

 

Diluted (2)

 

3 930 910

 

3 710 158

 

3 930 910

 

3 715 950

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

316

 

380

 

161

 

173

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, total

 

13

 

9

 

13

 

9

 

 


(1) The presentation of Nokia Siemens Networks’ restructuring and other associated expenses has been aligned with other Nokia businesses and included within other expenses instead of impacting functions. Accordingly, included in Q4/11 other expenses is EUR 4 million restructuring charges, previously reflected within cost of sales (reversal of EUR 2 million), R&D (reversal of EUR 7 million), selling and marketing (EUR 4 million) and administrative expenses (EUR 9 million).

(2) Diluted EPS calculations include the impact from the outstanding convertible bonds which, if converted, would have resulted in lower interest expense in Q4 2012 and higher weighted average amount of outstanding shares. The calculation also includes the dilutive effect of the outstanding share-based compensation instruments.

 

17



 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME, IFRS, EUR million

(10-12/2012, 10-12/2011 and 1-12/2012 unaudited; 1-12/2011 audited)

 

 

 

10-12/2012

 

10-12/2011

 

1-12/2012

 

1-12/2011

 

 

 

 

 

 

 

 

 

 

 

Profit/loss

 

255

 

-1 076

 

-3 789

 

-1 488

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be reclassified subsequently to profit or loss

 

 

 

 

 

 

 

 

 

Translation differences

 

-18

 

384

 

15

 

9

 

Net investment hedge gains (+) / losses (-)

 

-6

 

-119

 

-29

 

-37

 

Cash flow hedges

 

-46

 

45

 

-42

 

116

 

Available-for-sale investments

 

2

 

24

 

35

 

70

 

Other increase/decrease, net

 

6

 

-29

 

10

 

-16

 

Income tax related to components of other comprehensive income/expense

 

-3

 

21

 

8

 

-16

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income/expense, net of tax

 

-65

 

326

 

-3

 

126

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income/expense

 

190

 

-750

 

-3 792

 

-1 362

 

 

 

 

 

 

 

 

 

 

 

Total comprehensive income/expense attributable to

 

 

 

 

 

 

 

 

 

equity holders of the parent

 

124

 

-782

 

-3 157

 

-1 083

 

non-controlling interests

 

66

 

32

 

-635

 

-279

 

 

 

190

 

-750

 

-3 792

 

-1 362

 

 

18



 

DEVICES & SERVICES, EUR million

(unaudited)

 

 

 

Reported
10-12/2012

 

Special
items &
PPA
10-12/2012

 

Non-IFRS
10-12/2012

 

Reported
10-12/2011

 

Special
items & PPA
10-12/2011

 

Non-IFRS
10-12/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

3 854

 

 

3 854

 

5 997

 

 

5 997

 

Cost of sales

 

-2 932

 

 

-2 932

 

-4 447

 

 

-4 447

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

922

 

 

922

 

1 550

 

 

1 550

 

% of net sales

 

23.9

 

 

 

23.9

 

25.8

 

 

 

25.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses (1)

 

-393

 

 

-393

 

-601

 

2

 

-599

 

% of net sales

 

10.2

 

 

 

10.2

 

10.0

 

 

 

10.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses (2)

 

-424

 

1

 

-423

 

-587

 

 

-587

 

% of net sales

 

11.0

 

 

 

11.0

 

9.8

 

 

 

9.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative and general expenses

 

-53

 

 

-53

 

-76

 

 

-76

 

% of net sales

 

1.4

 

 

 

1.4

 

1.3

 

 

 

1.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expenses (3)

 

224

 

-225

 

-1

 

-83

 

87

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss/profit

 

276

 

-224

 

52

 

203

 

89

 

292

 

% of net sales

 

7.2

 

 

 

1.3

 

3.4

 

 

 

4.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

54

 

-1

 

53

 

79

 

-2

 

77

 

 


(1) Amortization of acquired intangible assets of EUR 2 million in Q4/11.

 

(2) Amortization of acquired intangible assets of EUR 1 million in Q4/12.

 

(3) A net release of restructuring charges of EUR 75 million, related impairments of EUR 2 million, a positive item from a cartel claim settlement of EUR 21 million, a net gain from sale of a real estate of EUR 79 million and a net gain on sale of Vertu business of EUR 52 million recognized in Devices & Services Other in Q4/12. Restructuring charges of EUR 100 million, impairment of assets EUR 36 million and a benefit from a cartel claim settlement of EUR 49 million recognized in Devices & Services Other in Q4/11.

 

19



 

Location & Commerce, EUR million

(unaudited)

 

 

 

Reported
10-12/2012

 

Special
items & PPA
10-12/2012

 

Non-IFRS
10-12/2012

 

Reported
10-12/2011

 

Special
items &
PPA
10-12/2011

 

Non-IFRS
10-12/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

278

 

 

278

 

306

 

 

306

 

Cost of sales

 

-50

 

 

-50

 

-68

 

 

-68

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

228

 

 

228

 

238

 

 

238

 

% of net sales

 

82.0

 

 

 

82.0

 

77.8

 

 

 

77.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses (1)

 

-221

 

84

 

-137

 

-241

 

89

 

-152

 

% of net sales

 

79.5

 

 

 

49.3

 

78.8

 

 

 

49.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses (2)

 

-36

 

3

 

-33

 

-66

 

30

 

-36

 

% of net sales

 

12.9

 

 

 

11.9

 

21.6

 

 

 

11.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative and general expenses

 

-19

 

 

-19

 

-18

 

 

-18

 

% of net sales

 

6.8

 

 

 

6.8

 

5.9

 

 

 

5.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expenses (3)

 

-8

 

9

 

1

 

-1 118

 

1 115

 

-3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss/profit

 

-56

 

96

 

40

 

-1 205

 

1 234

 

29

 

% of net sales

 

-20.1

 

 

 

14.4

 

-393.8

 

 

 

9.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

128

 

-87

 

41

 

127

 

-119

 

8

 

 


(1) Amortization of acquired intangibles of EUR 84 million in Q4/12 and EUR 89 million in Q4/11.

 

(2) Amortization of acquired intangibles of EUR 3 million in Q4/12 and EUR 30 million in Q4/11.

 

(3) Restructuring charges of EUR 9 million in Q4/12. Restructuring charges of EUR 25 million and impairment of goodwill of EUR 1 090 million in Q4/11.

 

20



 

NOKIA SIEMENS NETWORKS, EUR million

(unaudited)

 

 

 

Reported
10-12/2012

 

Special
items &
PPA
10-12/2012

 

Non-IFRS
10-12/2012

 

Reported
10-12/2011
(1)

 

Special
items & PPA
10-12/2011
(1)

 

Non-IFRS
10-12/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

3 988

 

 

3 988

 

3 815

 

 

3 815

 

Cost of sales

 

-2 554

 

 

-2 554

 

-2 701

 

 

-2 701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

1 434

 

 

1 434

 

1 114

 

 

1 114

 

% of net sales

 

36.0

 

 

 

36.0

 

29.2

 

 

 

29.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses (2)

 

-509

 

5

 

-504

 

-566

 

6

 

-560

 

% of net sales

 

12.8

 

 

 

12.6

 

14.8

 

 

 

14.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses (3)

 

-285

 

62

 

-223

 

-329

 

79

 

-250

 

% of net sales

 

7.1

 

 

 

5.6

 

8.6

 

 

 

6.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative and general expenses (4)

 

-116

 

 

-116

 

-134

 

1

 

-133

 

% of net sales

 

2.9

 

 

 

2.9

 

3.5

 

 

 

3.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expenses (5)

 

-273

 

257

 

-16

 

-18

 

23

 

5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss/profit

 

251

 

324

 

575

 

67

 

109

 

176

 

% of net sales

 

6.3

 

 

 

14.4

 

1.8

 

 

 

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

133

 

-67

 

66

 

172

 

-86

 

86

 

 


(1) The presentation of Nokia Siemens Networks’ restructuring and other associated expenses has been aligned with other Nokia businesses and included within other expenses instead of impacting functions. Accordingly, included in Q4/11 other expenses is EUR 4 million restructuring charges, previously reflected within cost of sales (reversal of EUR 2 million), R&D (reversal of EUR 7 million), selling and marketing (EUR 4 million) and administrative expenses (EUR 9 million).

 

(2) Amortization of acquired intangibles of EUR 5 million in Q4/12 and EUR 6 million in Q4/11.

 

(3) Amortization of acquired intangibles of EUR 62 million in Q4/12 and EUR 79 million in Q4/11.

 

(4) Amortization of acquired intangibles of EUR 1 million in Q4/11.

 

(5) Restructuring and associated charges of EUR 255 million, including charges of EUR 34 million related to country and contract exits based on Nokia Siemens Networks’ new strategy that focuses on key markets and product segments, as well as impairment of assets EUR 2 million in Q4/12. Restructuring charges of EUR 23 million in Q4/11.

 

21



 

GROUP COMMON FUNCTIONS, EUR million

(unaudited)

 

 

 

Reported
10-12/2012

 

Special
items &
PPA
10-12/2012

 

Non-IFRS
10-12/2012

 

Reported
10-12/2011

 

Special
items & PPA
10-12/2011

 

Non-IFRS
10-12/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Administrative and general expenses

 

-32

 

 

-32

 

-30

 

 

-30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income and expenses

 

 

 

 

11

 

 

11

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

-32

 

 

-32

 

-19

 

 

-19

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

1

 

 

1

 

2

 

 

2

 

 

22



 

CONSOLIDATED INCOME STATEMENTS, EUR million

(unaudited)

NOKIA GROUP

 

 

 

Reported
10-12/2012

 

Special items
& PPA
10-12/2012

 

Non-IFRS
10-12/2012

 

Reported
10-12/2011
(1)

 

Special items &
PPA
10-12/2011(1)

 

Non-IFRS
10-12/2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

8 041

 

 

8 041

 

10 005

 

 

10 005

 

Cost of sales

 

-5 457

 

 

-5 457

 

-7 103

 

 

-7 103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

2 584

 

 

2 584

 

2 902

 

 

2 902

 

% of net sales

 

32.1

 

 

 

32.1

 

29.0

 

 

 

29.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses (2)

 

-1 123

 

89

 

-1 034

 

-1 408

 

97

 

-1 311

 

% of net sales

 

14.0

 

 

 

12.9

 

14.1

 

 

 

13.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and marketing expenses (3)

 

-745

 

66

 

-679

 

-982