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Nokia is feeling optimistic

Following a solid start to the year, Finnish kit vendor Nokia expects to tweak up its forward guidance later this month.

The fact that Nokia decided to tease such an announcement is intriguing – why not just wait until its Q2 earnings announcement on 29 July? At time of writing Nokia’s shares were up 8% so anyone who bought them yesterday stands to make a quick buck. The FT agrees such a move is ‘unusual’, especially since Nokia didn’t even say which bits of its guidance it has in mind.

Here’s what it did say:

Nokia is today providing an update to its financial guidance for full year 2021. In the second quarter Nokia saw continued strength in the business, improving its expectations for the full year. Nokia now expects to revise upwards its prior outlook ranges for 2021. Nokia plans to provide full details on its second quarter and half-year financial performance and revised full year 2021 guidance on 29 July 2021.

The previous outlook for 2021 (reiterated on 29 April 2021) was:

Net sales, adjusted for currency fluctuations1 €20.6bn to €21.8bn
Comparable operating margin 7 to 10%
Free cash flow Positive
Comparable ROIC 10 to 15%

 1) Assuming continuation of 2020 year-end EUR/USD rate of 1.23.

The only other information was a canned quote from Nokia CEO, Pekka Lundmark. “We are progressing well with our three-phased plan to achieve sustainable, profitable growth and technology leadership laid out at our Capital Markets Day in March,” he said.

“Our first half performance has shown evidence of this in good cost control and also benefited from strength in a number of our end markets. We continue to expect some headwinds in the second half as we have previously highlighted but our performance in the first half provides a good foundation for the full year.”

Doesn’t give us much to go on, does it? Once more you have to wonder why Nokia bothered. Nonetheless it makes a pleasant change to hear it sounding bullish rather than the faintly apologetic tone it has been forced to adopt in the light of strategic missteps in recent years. We all make mistakes and the measure of a person or organization is how they recover from them. In this (albeit flimsy) evidence Pekka is doing a good job.


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