Nokia Q4 sales surge thanks to India and enterprise growth

Finnish kit maker Nokia ended last year on a high, and it is optimistic about its prospects in 2023.

“While we are mindful of the uncertain economic outlook, demand remains robust,” said CEO Pekka Lundmark, in a statement accompanying his company’s Q4 and full-year report on Thursday. “We expect another year of growth and we are targeting full year net sales of between €24.9bn and €26.5bn, which implies between 2% and 8% growth in constant currency.”

Confidence in the long-term outlook is such that Nokia’s board has proposed raising the dividend to €0.12 per share for fiscal 2022, up from €0.08 in 2021.

Nokia has good reason to be upbeat.

Q4 net sales came in at €7.5 billion, up 11% on a constant currency basis. Operating profit jumped 19% to €882 million, and operating margin widened slightly to 11.8% from 11.5%. Turnover at both Nokia’s fixed and mobile networks divisions showed healthy gains. On the fixed side, sales were up 14% organically on last year to €2.71 billion, while the mobile division grew 3% to €2.96 billion.

At Nokia’s Cloud and Networks business, revenue was up 5% to €1.1 billion, driven by strong enterprise demand for campus networking services and infrastructure.

On a regional basis, India was by far the highlight, as accelerated 5G rollouts in Q4 saw sales more than double to €568 million from €248 million. It more than offset the slowdown in North America, which declined 12% to €2.07 billion due to lower sales of 5G equipment.

As for the full-year results, constant currency net sales were up 6%  to €24.91 billion from €22.2 billion, while operating profit grew to €2.32 billion from €2.16 billion. Operating margin narrowed slightly to 9.3% from 9.7%.

“We said at the start of 2022 that it would be a year of acceleration and we delivered what we promised,” said Lundmark. “The Nokia team did a great job navigating geopolitical, economic and supply challenges, successfully executed our strategy and delivered a strong full year performance.”

The optimism swirling around Nokia stands in contrast to its rival from neighbouring Sweden. Ericsson last week reported flat organic sales growth for Q4 and very little growth in 2022 as a whole. Its EBIT margin almost halved, and the company is bracing itself for a tough 2023 for its networks business, as operators ease up on capex.

While Ericsson’s financial report was met with a 5% fall in its share price, more or less the opposite greeted Nokia. At the time of writing, its shares were up by more than 4%.

Ericsson is working overtime to convince investors it has the foundations in place to grow enterprise revenues, but the fact remains that infrastructure sales account for more than two thirds of its top line. Meanwhile, Nokia is telling investors that it just needs to keep doing what it’s doing and all being well, numbers on the balance sheet that are supposed to go up, will go up.

In this tale of two vendors, one appears to be telling a more compelling story than the other.

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