In the fourth quarter of 2021, Nokia’s business performed largely as expected but its operating income was higher than expected considering the benefits from venture fund investments, which led to a stronger operating margin, exceeding the 2021 guidance.
As a result, preliminary and unaudited financial results for 2021 indicate that Nokia will achieve net sales of approximately €22.2 billion within its previous guidance of €21.7 to €22.7 billion and an operating margin of 12.4 to 12.6%, higher than its previous guidance of 10 to 12%.
In addition, the company estimates it has benefited from approximately 150 basis points of one-offs in FY21 to its operating margin - up from 100 basis points expected for its Q3 earnings, due in part to venture fund investments, a one-off software contract in Q2, bad debt provision reversals and some other one-time benefits.
Nokia's updated 2021 guidance based on preliminary and unaudited 2021 financials:
| Previous (28 Oct ’21) | Updated |
Net sales | €21.7bn to €22.7bn1 | Approx. €22.2bn |
Comparable operating margin | 10 to 12% | 12.4 to 12.6% |
Free cash flow | Clearly positive | Clearly positive |
Comparable ROIC | 17 to 21% | 17 to 21% |
For 2022, Nokia has published a new comparable operating margin of 11% to 13.5%. This new guidance considers estimated improvements in the underlying business, supply constraints and cost inflation.
In related news, earlier this year Nokia announced that it has been selected by cloud computing service provider, Capital Online to upgrade its IP backbone network.
Under the agreement, Capital Online will deploy the Nokia 7750 Service Router (SR) and 7250 IXR interconnect router platforms to enable the backbone to manage all traffic flows as well as the versatility to converge edge and core routing functions onto a common platform, smart traffic engineering with segment routing-MPLS, and granular QoS to address different traffic demands for reliable service delivery.
