Nokia Oyj (NOK) Q3 2022 Earnings Call Transcript

For the period ending September 30, 2022

October 20, 2022 4:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

David Mulholland

Good morning, ladies and gentlemen. Welcome to Nokia's Third Quarter 2022 Results Call. I'm David Mulholland, Head of Nokia Investor Relations. And today with me is Pekka Lundmark, our President and CEO; along with Marco Wiren, our CFO.

Before we get started, a quick disclaimer. During this call, we will be making forward-looking statements regarding our future business and financial performance, and these statements are predictions that involve risks and uncertainties. Actual results may, therefore, differ materially from the results we currently expect. Factors that could cause such differences can be both external as well as internal operating factors. We have identified such risks in the Risk Factors section of our annual report on Form 20-F, which is available on our Investor Relations website.

Within today's presentation, references to growth rates will mostly be on a constant currency growth rate, and margins will be on our comparable reporting. Please note that our Q3 report and a presentation that accompanies this call are published on our website. The report includes both reported and comparable financial results and reconciliation between the two.

In terms of the agenda for today, Pekka will give a quick overview of our financial and strategic progress in the quarter. Marco will then go into a bit more detail of some of the key factors impacting our financial performance following with our outlook for 2022.

With that, let me hand over to Pekka.

Pekka Lundmark

Thank you, David, and good morning, everybody.

The third quarter marked a very important step for our company in the execution of our 3-phase strategy. If you recall, in the beginning of this year, we said we had completed our reset in 2021 and that we were moving it to accelerate in 2022, where we would focus on accelerating our sales growth and expanding our margins. For the first half of this year, the supply chain has really constrained us from delivering on that growth. But as we start to see some improvements in the supply chain, we are also seeing good progress on growth.

In the third quarter, our growth accelerated to 6% year-on-year, up from the 3% that we delivered in Q2. Importantly, this was driven by a strong improvement in Mobile Networks as we start to see benefits of our renewed competitiveness. From a profitability perspective, our margins continue to be impacted by the timing effects of outstanding deals in Nokia Technologies, which meant that our gross margin declined 40 basis points year-on-year and our operating margin declined 120 basis points.