Nokia has announced its results for the fourth quarter (Q4) 2020. In Q4 2020, Nokia’s operating profit performance was positively affected by approximately EUR 250 million. This was mainly due to two significant drivers: a timing benefit, as it recognized net sales at the very end of the quarter, which it had expected in 2021, and a net positive fluctuation in Nokia’s venture fund investments. Further, its non-IFRS and reported diluted EPS benefited by approximately EUR 0.035 from these items.
Further, the company’s net sales decreased 5per cent, primarily driven by lower net sales in Mobile Access, where a decline in network deployment and planning services was partially offset by growth in 5G radio access products. On a constant currency basis, Nokia net sales increased 1per cent in Q4 2020. In full year 2020, reported net sales decreased 6per cent, primarily due to network deployment and planning services in Mobile Access.
Meanwhile, Q4 2020 was the third quarter in a row of positive free cash flow for Nokia. During Q4 2020, net cash increased by approximately EUR 0.6 billion, resulting in an end-of-quarter net cash balance of approximately EUR 2.5 billion. During Q4 2020, total cash increased by approximately EUR 0.4 billion, resulting in an end-of-quarter total cash balance of approximately EUR 8.1 billion. Strong cash performance in Q4 and full year 2020 benefited from an early customer payment of approximately EUR 0.5 billion, which was expected in Q1 2021.
Commenting on the development, Pekka Lundmark, President and CEO, Nokia, said, Nokia delivered a solid Q4 to end 2020 at the high end of our Outlook range. We saw healthy gross margin and operating margin performance for both Q4 and full year 2020, supported by a regional mix shift towards the higher margin North America region and by our ongoing R&D efforts to enhance product quality and cost competitiveness. From a business group perspective, in Q4 and full year 2020, our gross margin improvement was primarily driven by Networks, as was our full year operating margin performance. In Q4, our operating profit performance benefited by approximately EUR 250 million from two unexpected, yet significant drivers: a timing benefit of approximately EUR 150 million as we recognized net sales at the very end of the quarter, which we had expected in 2021; and we had a net positive fluctuation in Nokia’s venture fund investments of approximately EUR 100 million. The healthy close to the year does not change our earlier communicated view for Nokia-level operating margin expected in 2021.”
