CEO Rajeev Suri praised Nokia’s third quarter results for showing “progress and performance”, but sales fell two per cent to €3.04 billion.
Suri (pictured) said the “highlight” of the quarter was Nokia Network’s performance, where sales fell by two per cent to €2.88 billion. Strong growth in Greater China was partially offset by decreases in North America and Europe.
The performance in China was in contrast to last week’s results from Ericsson where the country weighed on the overall results.
At the segment level, Nokia saw a fall in mobile broadband sales partially relieved by a positive performance from global services, particularly system integration.
“Even if I am not pleased with the overall sales development, our strong profitability is testament to the strength of the operating model,” said Suri, who paid tribute to a “solid” quarter from Nokia Technologies with a seven per cent increase in sales to €162 million.
Suri’s optimism continued with a revised outlook for the networks unit. He said the operating profit margin will be around or slightly below the high end of its long-term target range of 8 per cent to 11 percent, against its earlier forecast of a margin around the midpoint of that range.
The Q3 figures are the company’s first without its HERE mapping business which was sold in August to a consortium of German automakers.
Suri’s “progress” was a reference to the €15.6 billion acquisition of Alcatel-Lucent, which moves closer to completion, as it receives approval from competition bodies.
A week ago, Nokia announced it had received all the necessary regulatory clearances, so that it can proceed with a public exchange offer. It has called an EGM for 2 December to request shareholder approval for the deal.
Nokia hopes to close the transaction in the first quarter of 2016.
Ahead of the December vote, Nokia announced a €7 billion programme to “optimise its capital structure”, which will involve approximately €4 billion in dividends and share buybacks, as well as €3 billion in de-leveraging. In addition Nokia says it will now target synergies of €900 million from the AlcaLu deal a year earlier than previously planned, in fiscal 2018.
On a group level, Nokia reported a Q3 profit of €188 million, which was massively down on a year ago figure of €2.3 billion, a figure inflated by tax gains.
At the operating level, profit increased to €475 million from €457 million in 2014, hence Suri’s positive words about profitability.