Nokia (NOKIA) Q2 2024 earnings summary

Executive summary

• Announced planned divestment of Submarine Networks (ASN) 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; North America saw growth.

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

• Cost savings program delivered EUR 400 million in run-rate savings, targeting EUR 800–1,200 million by 2026; headcount reduced by over 6,000 since program start.

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

Financial highlights

• Q2 2024 net sales: EUR 4,466 million, down 18% year-over-year; gross margin increased by 450 basis points to 44.7%.

• Operating margin at 9.5%, down 190 basis points year-over-year; comparable operating profit EUR 423 million (-32% year-over-year).

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

• Returned over EUR 300 million to shareholders via dividends and buybacks in Q2.

• Q2 comparable diluted EPS: EUR 0.06; reported diluted EPS: -EUR 0.03, impacted by a EUR 514 million non-cash impairment for Submarine Networks.

Outlook and guidance

• Full-year 2024 outlook reiterated: comparable operating profit EUR 2.3–2.9 billion; free cash flow conversion 30–60%.

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

• Mobile Networks net sales growth expected at -19% to -14%, operating margin 4.0–7.0%.

• Cloud and Network Services net sales growth expected at -5% to 0%, operating margin 6.0–9.0%.

• H2 2024 expected to see significant acceleration in net sales growth, with Q4 particularly strong.