Nokia profits swell, Alcatel-Lucent generates Q2 cash for first time since 2006

Nokia has unveiled its quarterly earnings report, laying claim to net sales of €3.2 billion in Q2 2015, with a growth in sales and profit prevalent across all three businesses. Alcatel-Lucent, meanwhile, reported a first Q2 of free cash flow generation since Alcatel and Lucent merged in 2006.

Success across all three of Nokia’s business lines in Q2 has been spearheaded by the growth in Nokia Technologies, which saw a 17% increase in operating profit year-on-year, and an 11% OP increase for its Networks division. HERE saw a 25% YOY growth in net sales, translating into a €27m operating profit, up 42% on Q1 and up from zero in Q2 2014.

Nokia’ CEO Rajeev Suri pointed towards operational efficiency as one of the key drivers behind the growth experienced by Nokia this quarter.

“I am particularly pleased by Nokia Networks, which delivered improved performance overall, despite a year-on-year decline in net sales on a constant currency basis,” he said. “Software sales were up significantly; core networking sales improved; we saw a reduced impact of strategic entry deals; Global Services had one of its best quarters in the history of the company; and costs remained well under control.”

“While we expect the telecoms infrastructure market to remain challenging, I believe that our highly disciplined operating model and strong execution capabilities will continue to differentiate us in this environment.”

Alcatel-Lucent has revealed gross profit of €1.2bn, up 12.5% year on year. Core networking, as one of the vendor’s primary business areas, saw an impressive 22% year on year actual growth in revenues, up to €1.675bn.

Michel Combes, Alcatel-Lucent CEO said the growth seen in Q2 is a landmark occasion for the vendor, seeing it generate free cash flow in Q2 for the first time since 2006.

“Our second quarter 2015 results represent a significant milestone for Alcatel-Lucent, reflecting the first Q2 of free cash flow generation since the merger of Alcatel and Lucent in 2006,” he said. “Alcatel-Lucent’s financial results for the first half of 2015 clearly show that the company has delivered on the key objectives of The Shift Plan, launched two years ago. The company is now well on track to complete its turnaround by the end of the year.”

Combes then stated ALu is progressing well towards the merge with Nokia.

“Today we can also report that progress towards the proposed combination with Nokia is well on track, in particular with regulatory approvals being secured in a number of jurisdictions,” he said.  “This is a positive endorsement of the project, as Alcatel-Lucent prepares to write the next chapter of its transformation story, and becomes part of a powerhouse in global communications today and long into the future.”

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