Nokia (NOKIA) Q2 2024 earnings summary

Executive summary

• Announced divestment of Submarine Networks (ASN) to the French state and intention to acquire Infinera, aiming to strengthen Network Infrastructure with three core units: Fixed, IP, and Optical Networks.

• Q2 2024 net sales declined 18% year-over-year in constant currency, mainly due to India’s 5G deployment peak in Q2 2023; North America saw growth.

• Order intake trends improved, especially in Network Infrastructure, supporting expectations for stronger H2 2024 and backlog expansion.

• Cost savings program delivered EUR 400 million in run-rate savings, targeting EUR 800 million–1.2 billion by 2026; headcount reduced by over 6,000 since program start.

• Free cash flow remained strong at approximately EUR 394–400 million in Q2, with net cash balance at EUR 5.5 billion.

Financial highlights

• Q2 2024 net sales: EUR 4,466–4,500 million, down 18% year-over-year; H1 2024 net sales: EUR 8,910 million, down 19%.

• Gross margin increased by 450 basis points to 44.7%, mainly due to Mobile Networks and EUR 150 million accelerated revenue from AT&T contract resolution.

• Operating margin at 9.5%, down 190 basis points year-over-year.

• Free cash flow: EUR 394 million in Q2; net cash: EUR 5.5 billion at quarter end.

• Over EUR 300 million returned to shareholders via dividends and buybacks in Q2.

Outlook and guidance

• Full-year 2024 outlook unchanged, tracking towards the midpoint or slightly below for operating profit guidance of EUR 2.3–2.9 billion.

• Free cash flow conversion guidance of 30%-60% is tracking towards the higher end.

• Network Infrastructure net sales growth expected at -2% to +3%, operating margin 11.5%-14.5%.

• Mobile Networks net sales planning assumption changed from a 10%-15% decline to a 14%-19% decline, but margin guidance raised to 4%-7%.

• Expect significant acceleration in net sales growth in H2, weighted towards Q4.