Nokia beats estimates for Q4 profit: ‘great end to transformational year’

Nokia Corp (NYSE: NOK) reinstated shareholder returns after reporting better-than-expected net profit for the fiscal fourth quarter on Thursday. Shares still opened about 3.0% down as sales came in shy of estimates.

Q4 financial performance

Nokia said its net profit printed at €727 million versus the year-ago figure of €787 million. At €6.41 billion, its sales were down 5.0% YoY. In comparison, analysts had called for a lower €636 million in net profit but a higher €6.51 billion in sales.

On a reported basis, Nokia said its comparable operating margin stood at 11.5% in the fourth quarter – down 480 basis points due to lower Q4 seasonality. The telecom firm generated €400 million in free cash flow in the recent quarter. On CNBC’s “Squawk Box Europe”, CEO Pekka Lundmark said:

Outlook for fiscal 2022

Nokia agreed that supply constraints continued to be a challenge but has a positive outlook for 2022 on strong order backlog and improved margins. It forecasts up to a 7.0% annualised increase in sales this year on an 11% to 13.5% adjusted operating margin. The chief executive added:

The Finnish multinational wants to lift its underlying operating margin to over 14% over the next three to five years, as per the earnings press release. According to CEO Lundmark, 5G poses a great opportunity for Nokia that has a 4G and 5G combined market share of 26% at present, excluding China.

Nokia declared 8 cents per share of dividend on Thursday. The company also said it will repurchase €600 million worth of its stock. CEO Lundmark said: