Nokia Corporation has released its financial results for the fourth quarter (Q4) and full year ended December 2024. The company’s net sales in Q4 increased by nine per cent year-on-year (YoY) in constant currency (10 per cent reported). Network Infrastructure net sales grew strongly with all units contributing while Nokia Technologies grew significantly, and Cloud and Network Services also witnessed growth in Q4.
Comparable gross margin in Q4 increased by 250 basis points (bps) YoY to 47.2 per cent (reported increase 280 bps to 46.1 per cent), with a strong contribution from Nokia Technologies along with smaller contributions from other businesses. Meanwhile, comparable operating margin for Q4 increased 380 bps YoY to 19.1 per cent (reported up 540 bps to 15.3 per cent), mainly due to higher gross margin, continued cost control and higher contribution from Nokia Technologies. The comparable diluted earnings per share (EPS) for the period stood at EUR 0.18 while reported diluted EPS for the period were EUR 0.15. Further, free cash flow for the reported period stood at EUR 0.05 billion, with net cash balance of EUR 4.9 billion.
Furthermore, full year 2024 net sales declined by nine per cent in both reported and constant currency, of which seven per cent points were related to India. Comparable operating profit for the year stood at EUR 2.6 billion (reported EUR 2.0 billion). Moreover, full year comparable and reported diluted EPS were EUR 0.39 and EUR 0.23 respectively. The board also proposed dividend authorisation of EUR 0.14 per share.
In addition, Nokia expects comparable operating profit of between EUR 1.9 billion and 2.4 billion and free cash flow conversion from comparable operating profit of between 50 per cent and 80 per cent.
Commenting on the results, Pekka Lundmark, president and chief executive officer, said, “In the following quote, net sales growth rates are on a constant currency basis. We saw a strong finish to 2024 with nine per cent net sales growth YoY in Q4. I am optimistic that the improving market trends we are now seeing will persist into 2025. Alongside the net sales growth, we saw excellent profitability in Q4 with a comparable operating margin of 19.1 per cent. This meant our full year comparable operating profit was EUR 2.6 billion, at the mid-point of our guidance of EUR 2.3 to 2.9 billion. All business groups delivered a strong operational performance in the quarter. Net sales growth in network infrastructure accelerated to 17 per cent, with IP Networks growing 24 per cent, Fixed Networks 16 per cent and Optical Networks seven per cent. This reflected a strong recovery in demand from communication service providers, notably in North America. Mobile Networks net sales stabilised with continued resilience in gross margin. We also secured many important deals, winning 18,000 additional base station sites, since the start of 2024 on a net basis. This was achieved while maintaining our commercial and pricing discipline to protect our gross margins. Cloud and Network Services returned to seven per cent net sales growth in the quarter, despite a headwind of four per cent points from a prior business disposal, and its operating margin improved over the full year. Both Core Networks and Enterprise Campus Edge grew strongly. The Q4 saw the acquisition of Rapid’s technology assets. This will bolster our research and development (R&D) capacity in network as code and increase our developer access. Taken together with our autonomous networks’ application suite, we are accelerating our efforts to help operators fully automate and monetise their networks. Nokia Technologies had an extremely active quarter. We signed a deal with Transsion, a previously unlicensed mobile devices vendor, along with multimedia deals with HP and Samsung, as well as many other smaller deals. Our annual net sales run-rate increased to approximately between EUR 1.3 and 1.4 billion in Q4, progressing towards our mid-term EUR 1.4 to 1.5 billion target. We delivered a strong cash performance throughout 2024, ending with full year free cash flow of EUR 2.0 billion. This means we continue to have a strong balance sheet supporting our business with net cash of EUR 4.9 billion at the end of the year, even after returning EUR 1.4 billion to shareholders through dividend and share buybacks. The Board is proposing an increase in the dividend to EUR 0.14 per share in respect of the financial year 2024. We also continue to execute against our outstanding share buyback program to offset any dilution from the equity component of our pending Infinera acquisition. Going forward, our target remains to maintain a net cash position of between 10-15 per cent of annual net sales. Q4 also saw further progress in efforts to expand our presence in the data centre market. We signed important deals with Microsoft and Nscale for our data centre switching products, along with announcing partnerships with both Kyndryl and Lenovo. We are now stepping up our investments to broaden our addressable market in data centre IP networking. We will invest up to an additional EUR 100 million in annual operating expenses with a view to driving incremental net sales of EUR 1 billion by 2028. In the short-term this will moderate the pace of operating margin expansion in network infrastructure, but we anticipate a strong return on investment considering the momentum we already have today in the market. Looking further ahead into 2025, we expect the improved trends we have seen in network infrastructure in the second half of this year, to sustain and drive strong growth. Cloud and network services is also expected to grow with strong 5G Core momentum and growth in our enterprise campus edge business. End markets in mobile networks are improving and we currently assume largely stable net sales. Nokia Technologies is expected to deliver approximately EUR 1.1 billion of operating profit. At the Nokia level, we currently estimate we will deliver comparable operating profit of between EUR 1.9 and 2.4 billion in 2025. We also target free cash flow conversion from comparable operating profit of between 50 per cent and 80 per cent. Excluding the one-time items that benefited 2024 by over EUR 700 million which were mostly in the first half of the year, this guidance would imply a strong improvement in our comparable operating profit in 2025 despite select increased investments. Given the market volatility in 2024, our results demonstrate the responsiveness and capacity of the Nokia team to execute in all market conditions. I thank the whole Nokia team for their commitment, hard work and drive which made these results possible.”
