Nokia records strong Q3 performance buoyed by LTE

Nokia enjoyed a strong quarter selling mobile broadband equipment during Q3, which helped boost year-on-year net sales at its core networks unit by 13 per cent, to €2.94 billion (US$3.66 billion), and widen the division’s non-IFRS operating profit margin from 8.4 per cent (Q3 2013) to 13.5 per cent.

At a group level, Nokia increased year-on-year Q3 net sales by 13 per cent, to €3.32 billion, and posted a non-IFRS operating profit of €457 million, up 33 per cent from Q3 2013.

However, Nokia also booked a non-cash charge of €1.2 billion for impairment of goodwill on Here, its mapping business. When that’s added into the mix, Nokia made an operating loss of €810 million.

Networks

Sales of mobile broadband kit jumped 33 per cent, to €1.67 billion, largely thanks to LTE deployments in North America, China and Taiwan. Mobile broadband net sales in Q3 were up sequentially, too, by 23 per cent.

Sales of higher-margin LTE kit also helped boost profits at the networks unit. Non-IFRS operating profit increased by an impressive 83 per cent (albeit from a relatively small base) from €217 million (Q3 2013) to €397 million. Operating margin – again on a non-IFRS basis – leapt from 8.4 per cent to 13.5 per cent. Gross margin widened from 36.6 per cent to 39.1 per cent.

One blip in the networks unit was Global Services, which saw year-on-year Q3 net sales fall by five per cent, to €1.27 billion. More encouragingly, Q3 sales at Global Services were up seven per cent compared with the previous quarter, helped by an increase in network implementation activity.

Nokia Technologies

Nokia Technologies (its R&D unit) achieved a nine per cent year-on-year growth in net sales, from €140 million to €152 million. Nokia explained that Microsoft had become a more significant intellectual property licensee during the quarter.

Mapping

Nokia’s mapping and location intelligence business, Here, is also making progress, boosting year-on–year net sales by 12 per cent, to €236 million, although it still only accounts for around seven per cent of group net sales. Here sold map data licences for the embedded navigation systems of 3.2 million new vehicles globally, compared to 2.6 million vehicles in Q3 2013.

Coinciding with the release of Q3 financials, Nokia announced the appointment of Sean Fernback as Here’s president (he was previously senior vice president) and a member of the group leadership team. Both roles come into effect from November 1, 2014.