3rd Quarter Results
Nokia Corporation
16 October 2003
PRESS RELEASE
October 16, 2003
Strong volume growth and excellent profitability in mobile phones
- Nokia meets third-quarter sales and EPS targets
Highlights: 3Q 2003 (all comparisons are year on year)
• Net sales declined 5% to EUR 6.9 billion (up 4% at constant currency).
• Nokia Mobile Phones sales were flat at EUR 5.6 billion (up 9% at
constant currency).
• Nokia Networks sales declined 21% to EUR 1.2 billion.
• Nokia gains market share with 23% volume growth; industry mobile phone
volume growth accelerates to 15%.
• Nokia third-quarter mobile phone market share grows to 39%.
• Company doubles share of global CDMA handset market.
• Excellent pro forma and reported operating margins in mobile phones at
22.4% and 22.0%.
• Nokia Networks achieves breakeven.
• Nokia announces new operating structure for 2004.
• Pro forma EPS (diluted) was EUR 0.18. Reported EPS (diluted) was
EUR 0.17.
• Strong operating cash flow in the third quarter at EUR 1.2 billion.
JORMA OLLILA, CHAIRMAN AND CEO:
The third quarter brought a sharp increase in mobile phone volumes for Nokia.
Mobile phone market volumes rose an impressive 15% year on year for the quarter
to 118 million units, while Nokia's own volume growth accelerated even more
sharply, rising by 23% to 45.5 million units. The mobile phone market has
continued to strengthen throughout the year, and we now expect overall industry
volume for 2003 to be about 460 million units.
During the quarter, we saw our overall mobile phone market share rise to 39%, up
from 36% in the same quarter last year. In addition to our ongoing strength in
Europe, we established clear leadership in the US and the Americas markets. In
China, we have now gained the leading position in the GSM market, and see
ourselves strongly positioned to achieve overall market leadership there.
Following an announced commitment two years ago to strengthen our position in
the global CDMA handset market, I am very happy to see that we have now doubled
our share to the mid teens from the same quarter last year. We expect to see
continued momentum in CDMA going into the fourth quarter as we increase
shipments to China, India and all major US CDMA operators.
Recent months have marked our entry into a number of new and exciting areas of
mobility. We have introduced several camera phones, begun shipments of games
devices and announced half a dozen phones for new growth markets.
The Nokia N-Gage has just gone on sale at 30,000 stores around the world to a
very positive initial consumer response. Many outlets sold out of the device
during the first day of release. Following on from this, we are seeing strong
order intake from distributors and retailers. In September, we launched our
second 3G model, the Nokia 7600. Aside from its radical and innovative design,
the Nokia 7600 will be the smallest and lightest dual-mode WCDMA phone on the
market when shipments begin in the fourth quarter.
(Continued on page 3)
NOKIA THIRD QUARTER 2003 / JANUARY TO SEPTEMBER 2003 FINANCIAL RESULTS
3Q 2003 PRO FORMA REPORTED
(excludes goodwill amortization
and non-recurring items)
EUR (million) 3Q/2003 3Q/2002 Change (%) 3Q/2003 3Q/2002 Change (%)
Net sales 6 874 7 224 -5 6 874 7 224 -5
Nokia Mobile Phones 5 620 5 633 5 620 5 633
Nokia Networks 1 217 1 545 -21 1 217 1 545 -21
Nokia Ventures Organization 82 89 -8 82 89 -8
Operating profit 1 192 1 219 -2 1 154 859 34
Nokia Mobile Phones 1 257 1 249 1 1 235 1 226 1
Nokia Networks 19 80 -76 4 -250
Nokia Ventures Organization -55 -25 -120 -56 -31 -81
Common Group Expenses -29 -85 -29 -86
Operating Margin (%) 17.3 16.9 16.8 11.9
Nokia Mobile Phones (%) 22.4 22.2 22.0 21.8
Nokia Networks (%) 1.6 5.2 0.3 -16.2
Nokia Ventures Organization (%) -67.1 -28.1 -68.3 -34.8
Financial income and expenses 70 30 133 70 30 133
Profit before tax and 1 260 1 245 1 1 222 885 38
minority interests
Net profit 861 881 -2 823 610 35
EPS, EUR
Basic 0.18 0.19 -5 0.17 0.13 31
Diluted 0.18 0.18 0.17 0.13 31
- All pro forma figures for the third quarter can be found in the tables on page
8. A reconciliation of the pro forma figures to our reported results can be
found in the table on page 11.
- Pro forma adjustments for the third quarter 2003 consisted of amortization of
goodwill EUR 38 million.
January - September, 2003 PRO FORMA REPORTED
(excludes goodwill amortization
and non-recurring items)
EUR (million) Jan-Sep/ Jan-Sep/ Change (%) Jan-Sep/ Jan-Sep/ Change (%)
2003 2002 2003 2002
Net sales 20 666 21 173 -2 20 666 21 173 -2
Nokia Mobile Phones 16 609 16 469 1 16 609 16 469 1
Nokia Networks 3 914 4 455 -12 3 914 4 455 -12
Nokia Ventures Organization 258 352 -27 258 352 -27
Operating profit 3 237 3 765 -14 3 342 3 314 1
Nokia Mobile Phones 3 844 3 628 6 3 776 3 559 6
Nokia Networks -442 397 -260 33
Nokia Ventures Organization -123 -118 -4 -124 -135 8
Common Group Expenses -42 -142 -50 -143
Operating Margin (%) 15.7 17.8 16.2 15.7
Nokia Mobile Phones (%) 23.1 22.0 22.7 21.6
Nokia Networks (%) -11.3 8.9 -6.6 0.7
Nokia Ventures Organization (%) -47.7 -33.5 -48.1 -38.4
Financial income and expenses 281 104 170 281 104 170
Profit before tax and 3 509 3 850 -9 3 614 3 399 6
minority interests
Net profit 2 385 2 701 -12 2 424 2 335 4
EPS, EUR
Basic 0.50 0.57 -12 0.51 0.49 4
Diluted 0.50 0.56 -11 0.51 0.49 4
- All pro forma figures for the period January to September can be found in the
tables on page 9. A reconciliation of the pro forma figures to our reported
results can be found in the tables on page 11.
(Continued from page 1)
In our mobile networks business, we began seeing evidence of the market
stabilizing. The financial situation among our operator customers also appears
to be improving. During the quarter, for example, major global and Western
European operators began reconfirming their commitment to WCDMA in terms of
strengthening their network rollout capability. The 27,000 base stations we have
cumulatively supplied now make us the market leader in WCDMA radio access
networks.
In a move to further align Nokia's structure with our strategy, we have made the
decision to reconfigure Nokia into new highly interdependent parts from January
2004. Combined, our four business groups - Mobile Phones, Multimedia, Networks
and Enterprise Solutions - will form an offering that we believe no other
industry player can match. New horizontal entities will work very closely with
all business groups.
Under this new organization, we will be addressing emerging business areas in
the world of mobility, while continuing to build on leadership in mobile voice
communications. This will allow us to focus on each business segment with the
right dynamics, while at the same time achieving economies of scale that we
believe will go far beyond any levels previously seen in this industry. We are
very excited about this change and feel confident that it will allow us to
better serve our consumer, operator and enterprise customers.
Mobility is one of the great mega-trends of our time. It is changing how we live
our lives and how businesses are run. Under our new operational structure, we
are poised to seize the opportunity of the next growth wave in this industry and
bring the benefits of mobility to consumers, companies and communities across
the board.
BUSINESS DEVELOPMENT AND FORECASTS
Third-quarter sales
Nokia's third-quarter net sales of EUR 6.9 billion were down 5%, compared with
the third quarter 2002. On a constant currency basis, group net sales would have
been up 4% year on year.
Mobile phone net sales in the third quarter were flat year on year, in line with
guidance, reaching EUR 5.6 billion. Strong net sales growth in the Americas,
including the US, was virtually offset by flat sales in the Europe/Middle East/
Africa region and lower sales in Asia Pacific. While mobile phone volumes grew
by 23%, sales were adversely affected by a weak US dollar. On a constant
currency basis, mobile phone net sales would have grown 9% year on year. Sales
were also affected by an increased proportion of entry-level phone sales across
all regions, with the Americas and emerging markets such as India and Russia,
where entry-level phones predominate, accounting for an increased share of
Nokia's sales volumes.
Net sales in Nokia Networks were EUR 1.2 billion, down by 21%. On a constant
currency basis, net sales would have decreased by 13% year on year. While sales
grew slightly in the Americas, they were more than offset by lower sales in
Europe and Asia Pacific, compared with the third quarter 2002.
Nokia 3Q mobile phone volumes grow 23%
Industry mobile phone volume growth accelerated during the quarter, rising 15%
year on year. Nokia's own volume growth was significantly stronger at 23%,
reaching 45.5 million units. This faster-than-market growth was driven by gains
notably in the global CDMA market and in the Americas across all technologies.
Nokia grew its overall mobile phone market share year on year from 36% to 39%,
maintaining its share at the second quarter, 2003 level.
Third-quarter profitability
Third-quarter pro forma operating profit for the Nokia group declined by 2% year
on year to EUR 1.1 billion. Pro forma net profit for the group also declined by
2% year on year to EUR 861 million. Pro forma EPS (diluted) for the Nokia group
reached EUR 0.18, at the high end of guidance given in conjunction with the
company's mid-quarter update in September.
Pro forma operating profit at Nokia Mobile Phones was virtually unchanged from
the third quarter last year, at EUR 1.2 billion, while pro forma mobile phone
operating margins continued at excellent levels of 22.4%. Profitability was
largely driven by the company's continued strong product competitiveness and
operational efficiency.
Nokia Networks generated a small pro forma operating profit of EUR 19 million
and a positive pro forma operating margin of 1.6% in the quarter, as the company
began to see the benefits of increased efficiencies generated by recent
restructuring measures.
Nokia's cash position remained exceptional, with total available cash at EUR
10.8 billion by the end of the quarter.
Outlook for the fourth quarter, 2003
Net sales of Nokia Mobile Phones in the fourth quarter are expected to be flat
or slightly up year on year, muted by a major depreciation of the US dollar,
compared with the same period in 2002. Profitability at Nokia Mobile Phones is
expected to continue to be strong.
In Nokia Networks, the company estimates fourth-quarter net sales of
approximately EUR 1.4 billion, with pro forma operating profit expected to reach
breakeven.
Nokia expects fourth-quarter pro forma EPS (diluted) to be in the range of EUR
0.21 and EUR 0.23, while reported EPS (diluted) is expected to be between EUR
0.20 and EUR 0.22.
In the overall mobile phone industry, Nokia estimates fourth-quarter,
year-on-year industry volume growth to be in the mid teens, with Nokia's own
volumes clearly growing faster than the market. For the full year 2003, Nokia
now expects overall industry volume to be about 460 million units. The company's
own full-year unit volume growth is estimated to outpace that of the market.
Nokia continues to expect the overall network infrastructure market to decline
by 15% or more for the full year 2003.
Nokia announces new operating structure from January 2004
In a move to further align the company's overall structure with its strategy in
an increasingly complex operating environment, from January 1, 2004, Nokia will
be reconfigured into four business groups: Mobile Phones, Multimedia, Networks
and Enterprise Solutions. Units focusing on strategy, research, venturing and
business infrastructure will also contribute to both the strategic strengths and
operational excellence of all businesses.
Renewal has always been an important part of Nokia's identity and values. Under
the new structure, each business group will be positioned to meet the dynamics
of various specific market segments, while the introduction of companywide
horizontal entities is designed to further increase Nokia's efficiency and
competitiveness.
NOKIA MOBILE PHONES IN THE THIRD QUARTER
Nokia designs products that are easy to use and understand, focusing on
personalization and consumer choice. The new Nokia 3200, the company's first
general consumer camera phone, clearly illustrates this approach. Introduced in
September, this EDGE-capable phone for wide audiences, features an integrated
camera, color screen and do-it-yourself cutout covers.
In August, Nokia introduced two GSM entry-level phones targeting new growth
markets. The Nokia 1100 provides reliability and simplicity to first-time users
and the Nokia 2300 is optimized for voice and messaging, as well as fun and
personalization.
In Latin America, the company announced the Nokia 6560 phone, the world's
smallest and lightest TDMA (800/1900 MHz /AMPS) handset with color display and
dual-band functionality.
Nokia extends leadership in 3G WCDMA phones
In September, Nokia launched its second 3G model, the Nokia 7600, which combines
the latest mobile imaging features, enabling users to capture pictures and
videos, send and receive multimedia messages and email, as well as listen to
music. Aside from its radical and innovative design, the Nokia 7600 will be the
smallest and lightest dual-mode WCDMA phone on the market when shipments begin
in the fourth quarter.
Nokia has, to date, also introduced three EDGE-capable phones, the Nokia 3200,
Nokia 6200 and Nokia 6220.
Nokia N-GageTM pre-sales momentum
During August to early October, prior to the start of sales on October 7, gamers
across Europe got their first opportunity to test-drive the N-Gage mobile game
deck on the N-Gage Tour, which visited more than 50 cities in 16 European
countries.
In conjunction with N-Gage shipments, Nokia opened the N-Gage Arena service for
online and mobile game play. The N-Gage Arena is a home for the worldwide
virtual community of gamers to share their experiences as well as find other
players for mobile online fun.
In August, Nokia and SEGA Corporation announced an agreement in which Nokia
would acquire the assets of Sega.com Inc., a subsidiary of SEGA. This agreement
further enhances online games and service offerings for the N-Gage game deck, as
Sega.com's leading multi-player technology becomes an integral part of the
N-Gage experience.
The company also announced an agreement with Electronic Arts (EA), the world's
leading interactive entertainment software company, to deliver select EA titles
for the N-Gage platform.
Nokia continues to build mobility architecture
Nokia, ARM, STMicroelectonics and Texas Instruments announced in July the Mobile
Industry Processor Interface (MIPI) Alliance, a new industry initiative that
will define and promote open standards for interfaces for mobile application
processors. The alliance expects to ease implementation and design of related
hardware and software, promoting reuse and compatibility in mobile devices to
accelerate time-to-market.
Nokia, Psion plc and Motorola Inc. transferred shares of Symbian Ltd. from
Motorola's U.K. subsidiary, Motorola Ltd., to Nokia and Psion. The transfer was
completed in October.
New CDMA phone launches and increased CDMA market share
In August, the company completed the world's first CDMA2000 1xEV-DV high-speed
packet data phone call at Nokia's CDMA product creation center in San Diego.
Nokia further strengthened its CDMA product portfolio globally. In the US, Nokia
introduced the Nokia 3588i, a dual-band/tri-mode CDMA phone with large color
display, adjustable fonts and a selection of polyphonic ring tones, all giving
consumers numerous ways to personalize their phone. Also in the US, the company
introduced the Nokia 6225 phone, which features a built-in VGA camera and GPS
support for carriers implementing E911 systems.
In Asia Pacific, the company introduced the Nokia 3105, a new compact-sized CDMA
1X phone offering multimedia messaging, a WAP 2.0 browser and JavaTM games. In
China, Nokia launched the Nokia 2280, its first CDMA 1X mobile phone
specifically designed for China Unicom.
NOKIA NETWORKS IN THE THIRD QUARTER
Nokia now supplies equipment for half of the world's WCDMA networks
During the third quarter, Orange Group chose Nokia to continue as its global 3G
supplier. Nokia also signed a USD 100 million WCDMA 3G network agreement with
StarHub in Singapore. The company won a 3G core-network deal with Sunrise in
Switzerland. Under a framework agreement from February 2002, Nokia started
rolling out WCDMA 3G networks for O2 in Ireland, Germany and the UK.
By the end of the quarter, Nokia was supplying equipment, services and solutions
for half of the world's launched 3G networks.
Cost-optimized GSM solution for new growth markets
As part of the Nokia Mobile Entry solution, Nokia launched the Nokia Connect GSM
Solution for new growth markets. This integrated solution includes
infrastructure, network management and services, all aimed at halving the total
cost of ownership in network investment and operations. By the end of the
quarter, Nokia had contracts to supply the Nokia Connect GSM Solution to Oi in
Brazil and SMART Communications in the Philippines.
In addition to the Nokia Connect GSM Solution, the company launched its TETRA
Neat solution for Professional Mobile Radio start up, and the Nokia D500 Release
3 for IP multi-service broadband DSL. The Nokia D500 Release 3 can handle IP,
ATM and Ethernet traffic simultaneously, unlike any other DSLAM on the market
today.
During the third quarter, Nokia announced GSM contracts in China with the China
Unicom Shanghai branch and Jiangxi MCC, in Peru with TIM, and with Viaero
Wireless and Westlink Communications in the United States. In Hong Kong, the
company won an EDGE network contract with CSL. Nokia also won GSM/GPRS/EDGE
network deals with AIS and DTAC in Thailand as well as announcing an MMS and
GPRS contract with MobiNil in Egypt.
NOKIA VENTURES ORGANIZATION IN THE THIRD QUARTER
During the quarter, Nokia Internet Communications sustained its sound
performance and introduced new mobile connectivity and secure content management
products. Sales for the third quarter of 2003 were flat both sequentially and
year on year, reflecting continued weakness in the US dollar, as well as slow
general IT spending.
Nokia Home Communications launched several new digital television receivers for
the European market, including products supporting interactive Multimedia Home
Platform (MHP) services and interoperability with imaging mobile phones.
NOKIA IN THE THIRD QUARTER 2003 (REPORTED)
(International Accounting Standards (IAS) comparisons given to the third quarter
2002 results unless otherwise indicated)
Nokia's net sales decreased by 5% to EUR 6 874 million (EUR 7 224 million).
Sales of Nokia Mobile Phones were flat at EUR 5 620 million (EUR 5 633 million).
Sales of Nokia Networks decreased by 21% to EUR 1 217 million (EUR 1 545
million). Sales of Nokia Ventures Organization decreased by 8% and totaled EUR
82 million (EUR 89 million).
Operating profit increased by 34% to EUR 1 154 million (EUR 859 million),
representing an operating margin of 16.8% (11.9%). Operating profit in Nokia
Mobile Phones increased by 1% to EUR 1 235 million (EUR 1 226 million),
representing an operating margin of 22.0% (21.8%). Operating results in Nokia
Networks increased to an operating profit of EUR 4 million (operating loss of
EUR 250 million), representing an operating margin of 0.3% (-16.2%). Nokia
Ventures Organization reported an operating loss of EUR 56 million (operating
loss of EUR 31 million). Common Group Expenses, which comprises Nokia Head
Office and Nokia Research Center, totaled EUR 29 million (EUR 86 million).
Financial income totaled EUR 70 million (EUR 30 million). Profit before tax and
minority interests was EUR 1 222 million (EUR 885 million). Net profit totaled
EUR 823 million (EUR 610 million). Earnings per share increased to EUR 0.17
(basic) and to EUR 0.17 (diluted), compared with EUR 0.13 (basic) and EUR 0.13
(diluted) in the third quarter 2002.
NOKIA IN JANUARY - September 2003 (REPORTED)
(IAS comparisons given to January - September 2002 results, unless otherwise
indicated)
Nokia's net sales decreased by 2% to EUR 20 666 million (EUR 21 173 million).
Sales of Nokia Mobile Phones increased by 1% to EUR 16 609 million (EUR 16 469
million). Sales of Nokia Networks decreased by 12% to EUR 3 914 million (EUR 4
455 million). Sales of Nokia Ventures Organization decreased by 27% and totaled
EUR 258 million (EUR 352 million).
Operating profit increased by 1% to EUR 3 342 million (EUR 3 314 million),
representing an operating margin of 16.2% (15.7%). Operating profit in Nokia
Mobile Phones increased by 6% to EUR 3 776 million (EUR 3 559 million),
representing an operating margin of 22.7% (21.6%). Operating results in Nokia
Networks decreased to an operating loss of EUR 260 million (operating profit of
EUR 33 million), representing an operating margin of -6.6% (0.7%). Nokia
Ventures Organization reported an operating loss of EUR 124 million (operating
loss of EUR 135 million). Common Group Expenses, which comprises Nokia Head
Office and Nokia Research Center, totaled EUR 50 million (EUR 143 million).
Financial income totaled EUR 281 million (EUR 104 million). Profit before tax
and minority interests was EUR 3 614 million (EUR 3 399 million). Net profit
totaled EUR 2 424 million (EUR 2 335 million). Earnings per share increased to
EUR 0.51 (basic) and to EUR 0.51 (diluted), compared with EUR 0.49 (basic) and
EUR 0.49 (diluted) in January to September 2002.
The average number of employees during January to September was 51 682. At
September 30, Nokia employed a total of 51 124 people (51 748 people at December
31, 2002).
At September 30, 2003, net debt-to-equity ratio (gearing) was -70% (-61% at
December 31, 2002). During January to September, 2003, capital expenditure
amounted to EUR 314 million (EUR 348 million).
Nokia repurchased a total of 33 784 450 shares over the Helsinki Exchanges at an
aggregate purchase price of EUR 449 801 008.99 during the period between July 18
and August 29. The shares were repurchased as part of the stock repurchase plan
of the company. The aggregate par value of the shares repurchased is EUR 2 027
067 and they represent 0.70% of the share capital and total voting rights at the
company. The repurchases did not have any significant effect on the relative
holdings of the other shareholders of the company or on the voting powers among
them.
At September 30, the Group companies owned 55 467 571 Nokia shares. The shares
had an aggregate par value of EUR 3 328 054.26, representing 1.16% of the share
capital and total voting rights at the company. The number of issued shares at
September 30 was 4 796 292 460 and the share capital was EUR 287 777 547.60.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million (unaudited)
Pro forma Pro forma Reported Reported
7-9/03 7-9/02 7-9/03 7-9/02
Net sales 6 874 7 224 6 874 7 224
Cost of sales 1) -4 104 -4 517 -4 104 -4 531
Research and development expenses -855 -718 -855 -718
Selling, general and administrative expenses -723 -770 -723 -770
Customer finance impairment charges 2) - - - -292
Adjustment to customer finance impairment - - - -
Amortization of goodwill - - -38 -54
Operating profit 1 192 1 219 1 154 859
Share of results of associated companies -2 -4 -2 -4
Financial income and expenses 70 30 70 30
Profit before tax and minority interests 1 260 1 245 1 222 885
Tax -390 -354 -390 -265
Minority interests -9 -10 -9 -10
Net profit 861 881 823 610
Earnings per share, EUR
Basic 0.18 0.19 0.17 0.13
Diluted 0.18 0.18 0.17 0.13
Average number of shares (1,000 shares)
Basic 4 755 656 4 754 155 4 755 656 4 754 155
Diluted 4 755 678 4 784 404 4 755 678 4 784 404
Depreciation and amortization, total 270 330
Non-recurring items
1) Non-recurring charges of EUR 14 million (MobilCom) in 2002.
2) One-time customer finance charges (MobilCom) in 2002.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million (unaudited)
Pro forma Pro forma Reported Reported
1-9/03 1-9/02 1-9/03 1-9/02
Net sales 20 666 21 173 20 666 21 173
Cost of sales 1) -12 293 -12 813 -12 293 -12 827
Research and development expenses -2 773 -2 200 -2 773 -2 200
Selling, general and administrative expenses -2 363 -2 395 -2 363 -2 395
Customer finance impairment charges 2) - - - -292
Adjustment to customer finance impairment 3) - - 226 13
Amortization of goodwill - - -121 -158
Operating profit 3 237 3 765 3 342 3 314
Share of results of associated companies -9 -19 -9 -19
Financial income and expenses 281 104 281 104
Profit before tax and minority interests 3 509 3 850 3 614 3 399
Tax -1 091 -1 109 -1 157 -1 024
Minority interests -33 -40 -33 -40
Net profit 2 385 2 701 2 424 2 335
Earnings per share, EUR
Basic 0.50 0.57 0.51 0.49
Diluted 0.50 0.56 0.51 0.49
Average number of shares (1,000 shares)
Basic 4 775 731 4 745 586 4 775 731 4 745 586
Diluted 4 776 341 4 787 994 4 776 341 4 787 994
Depreciation and amortization, total 860 965
Non-recurring items
1) Non-recurring charges of EUR 14 million in 3Q 2002.
2) Customer finance charges (MobilCom) in 3Q 2002.
3) In 2003, positive adjustment in 1Q to 3Q 2002 customer finance impairment
charge related to MobilCom. In 2Q 2002, positive adjustment of EUR 13 million
related to the earlier Dolphin write-off in 3Q 2001.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, EUR million (pro forma unaudited / reported audited)
Pro forma Reported, IAS
1-12/02 1-12/02
Net sales 30 016 30 016
Cost of sales 1) -18 305 -18 278
Research and development expenses -3 052 -3 052
Selling, general and administrative expenses -3 239 -3 239
Customer finance impairment charges, net 2) - -279
Impairment of goodwill - -182
Amortization of goodwill - -206
Operating profit 5 420 4 780
Share of results of associated companies -19 -19
Financial income and expenses 156 156
Profit before tax and minority interests 5 557 4 917
Tax -1 557 -1 484
Minority interests -52 -52
Net profit 3 948 3 381
Earnings per share, EUR
Basic 0.83 0.71
Diluted 0.82 0.71
Average number of shares (1,000 shares)
Basic 4 751 110 4 751 110
Diluted 4 788 042 4 788 042
Depreciation and amortization, total 1 311
Non-recurring items
1) In 2002, non-recurring charges of EUR 14 million (MobilCom) in 3Q and positive adjustment of
EUR 41 million related to MobilCom write-off in 4Q.
2) In 2002, customer finance impairment charges of EUR 292 million related to MobilCom in 3Q and
a positive adjustment of EUR 13 million in 2Q related to the earlier Dolphin write-off in 3Q 2001.
NET SALES BY BUSINESS GROUP, EUR million (unaudited)
7-9/2003 7-9/2002 1-9/2003 1-9/2002 1-12/2002
Nokia Mobile Phones 5 620 5 633 16 609 16 469 23 211
Nokia Networks 1 217 1 545 3 914 4 455 6 539
Nokia Ventures Organization 82 89 258 352 459
Inter-business group eliminations -45 -43 -115 -103 -193
Nokia Group 6 874 7 224 20 666 21 173 30 016
OPERATING PROFIT BY BUSINESS GROUP, IAS, EUR million (unaudited)
Pro forma 7-9/2003 7-9/2002 1-9/2003 1-9/2002 1-12/2002
Nokia Mobile Phones 1 257 1 249 3 844 3 628 5 293
Nokia Networks 19 80 -442 397 416
Nokia Ventures Organization -55 -25 -123 -118 -59
Common Group Expenses -29 -85 -42 -142 -230
Nokia Group 1 192 1 219 3 237 3 765 5 420
Goodwill amortization 7-9/2003 7-9/2002 1-9/2003 1-9/2002 1-12/2002
Nokia Mobile Phones -22 -23 -68 -69 -92
Nokia Networks -15 -24 -44 -71 -92
Nokia Ventures Organization -1 -6 -1 -17 -21
Common Group Expenses - -1 -8 -1 -1
Nokia Group -38 -54 -121 -158 -206
Non-recurring items 7-9/2003 7-9/2002 1-9/2003 1-9/2002 1-12/2002
Nokia Mobile Phones - - - - -
Nokia Networks - -306 226 -293 -373
Nokia Ventures Organization - - - - -61
Common Group Expenses - - - - -
Nokia Group - -306 226 -293 -434
Reported 7-9/2003 7-9/2002 1-9/2003 1-9/2002 1-12/2002
Nokia Mobile Phones 1 235 1 226 3 776 3 559 5 201
Nokia Networks 4 -250 -260 33 -49
Nokia Ventures Organization -56 -31 -124 -135 -141
Common Group Expenses -29 -86 -50 -143 -231
Nokia Group 1 154 859 3 342 3 314 4 780
CONSOLIDATED BALANCE SHEET, IAS, EUR million (unaudited)
ASSETS 30.9.2003 30.9.2002 31.12.2002
Fixed assets and other non-current assets
Capitalized development costs 698 1 047 1 072
Goodwill 376 706 476
Other intangible assets 172 210 192
Property, plant and equipment 1 639 2 015 1 874
Investments in associated companies 33 64 49
Available-for-sale investments 947 378 238
Deferred tax assets 737 868 731
Long-term loans receivable 561 1 334 1 056
Other non-current assets 69 26 54
5 232 6 648 5 742
Current assets
Inventories 1 274 1 725 1 277
Accounts receivable 4 672 4 593 5 385
Prepaid expenses and accrued income 1 085 1 229 1 156
Short-term loans receivable 298 508 416
Available-for-sale investments 9 396 6 345 7 855
Bank and cash 1 393 1 689 1 496
18 118 16 089 17 585
Total assets 23 350 22 737 23 327
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital 288 286 287
Share issue premium 2 262 2 141 2 225
Treasury shares -777 -16 -20
Translation differences 21 200 135
Fair value and other reserves 45 106 -7
Retained earnings 12 766 10 599 11 661
14 605 13 316 14 281
Minority interests 166 197 173
Long-term liabilities
Long-term interest-bearing liabilities 54 224 187
Deferred tax liabilities 232 219 207
Other long-term liabilities 66 70 67
352 513 461
Current liabilities
Short-term borrowings 409 731 377
Current portion of long-term debt 57 1 -
Accounts payable 2 761 2 968 2 954
Accrued expenses 2 511 2 571 2 611
Provisions 2 489 2 440 2 470
8 227 8 711 8 412
Total shareholders' equity and liabilities 23 350 22 737 23 327
Interest-bearing liabilities 520 956 564
Shareholders' equity per share, EUR 3.08 2.80 2.98
Number of shares (1000 shares - excludes shares owned by Group companies) 4 740 825 4 759 825 4 786 762
CONSOLIDATED CASH FLOW STATEMENT, IAS, EUR million (unaudited)
1-9/2003 1-9/2002 1-12/2002
Cash flow from operating activities
Net profit 2 424 2 335 3 381
Adjustments, total 1 851 2 312 3 151
Net profit before change in net working capital 4 275 4 647 6 532
Change in net working capital 274 1 465 955
Cash generated from operations 4 549 6 112 7 487
Interest received 208 170 229
Interest paid -33 -34 -94
Other financial income and expenses 211 75 139
Income taxes paid -976 -1 842 -1 947
Net cash from operating activities 3 959 4 481 5 814
Cash flow from investing activities
Acquisition of Group companies, net of acquired cash -2 8 -10
Purchase of non-current available-for-sale investments -270 -104 -99
Additions in capitalized development costs -200 -321 -418
Long-term loans made to customers -97 -497 -563
Proceeds from repayments and sale of long-term loans receivable 107 - 314
Proceeds from (+), payment (-) of other long-term receivables -18 1 -32
Proceeds from (+), payment (-) of short-term loan receivables 77 -161 -85
Capital expenditures -315 -349 -432
Proceeds from disposal of Group companies,
net of disposed cash - 102 93
Proceeds from sale of non-current available-for-sale investments 354 43 162
Proceeds from sale of fixed assets 23 147 177
Dividends received 24 25 25
Net cash used in investing activities -317 -1 106 -868
Cash flow from financing activities
Proceeds from share issue 23 75 163
Purchase of treasury shares -757 -12 -17
Capital investment by minority shareholders - 26 26
Proceeds from long-term borrowings 8 40 100
Repayment of long-term borrowings -50 -39 -98
Proceeds from (+), payment of (-) short-term borrowings 24 -143 -406
Dividends paid -1 380 -1 336 -1 348
Net cash used in financing activities -2 132 -1 389 -1 580
Foreign exchange impact on cash -94 -90 -163
Net increase in cash and cash equivalents 1 416 1 896 3 203
Cash and cash equivalents at beginning of period 9 351 6 125 6 125
Cash and cash equivalents at end of period 10 767 8 021 9 328
Change in net fair value of current available-for-sale
investments 22 13 23
As reported on balance sheet 10 789 8 034 9 351
NB: The figures in the consolidated cash flow statement cannot be directly traced from the balance sheet
without additional information as a result of acquisitions and disposals of subsidiaries and net foreign
exchange differences arising on consolidation.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, EUR million (unaudited)
Share Share Treasury Translation Fair value Retained Total
capital issue shares differences and other earnings
premium reserves
Balance at December 31, 284 2 060 -21 326 20 9 536 12 205
2001
Stock options exercised 2 73 75
Stock options exercised
related
to acquisitions -15 -15
Tax benefit on stock 23 23
options exercised
Acquisition of treasury -12 -12
shares
Reissuance of treasury 17 17
shares
Dividend -1 279 -1 279
Translation differences -106 -106
Net investment hedge -20 -20
losses
Cash flow hedges 46 46
Available-for-sale 40 40
investments
Other increase, net 7 7
Net profit 2 335 2 335
Balance at September 30, 286 2 141 -16 200 106 10 599 13 316
2002
Balance at December 31, 287 2 225 -20 135 -7 11 661 14 281
2002
Stock options exercised 1 23 24
Share issue related to 18 18
acquisitions
Stock options exercised
related
to acquisitions -4 -4
Acquisition of treasury -763 -763
shares
Reissuance of treasury 6 6
shares
Dividend -1 340 -1 340
Translation differences -183 -183
Net investment hedge 69 69
gains
Cash flow hedges -19 -19
Available-for-sale 71 71
investments
Other increase, net 21 21
Net profit 2 424 2 424
Balance at September 30, 288 2 262 -777 21 45 12 766 14 605
2003
COMMITMENTS AND CONTINGENCIES, EUR million (unaudited)
Group
30.9.2003 30.9.2002 31.12.2002
Collateral for own
commitments
Property under mortgages 18 18 18
Assets pledged 13 13 13
Collateral given on behalf of other
companies
Securities pledged 31 36 34
Contingent liabilities on behalf of Group
companies
Other guarantees 226 393 339
Contingent liabilities on behalf of other
companies
Guarantees for loans 51 82 57
Leasing obligations 830 776 704
Financial commitments
Customer financing 631 1127 857
NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS, EUR million 1) (unaudited)
30.9.2003 30.9.2002 31.12.2002
Foreign exchange forward contracts 2) 11 243 14 492 11 118
Currency options bought 2) 1 278 958 1 408
Currency options sold 2) 952 610 1 206
Cash settled equity options 3) 228 - 209
Cash settled equity swaps 3) - 131 12
1) Includes the gross amount of all notional values for contracts that have not
yet been settled or cancelled. The amount of notional value outstanding is not
necessarily a measure or indication of market risk, as the exposure of certain
contracts may be offset by that of other contracts.
2) Notional amounts include contracts used to hedge the shareholders' equity of
foreign subsidiaries.
3) Cash settled equity swaps and options can be used to hedge risks relating to
incentive programs and investment activities.
Closing rate, 1 EUR = 1.123 USD
It should be noted that certain statements herein which are not historical
facts, including, without limitation, those regarding A) the timing of product
deliveries; B) our ability to develop and implement new products and
technologies; C) expectations regarding market growth and developments; D)
expectations for growth and profitability; and E) statements preceded by
'believe,' 'expect,' 'anticipate,' 'foresee' or similar expressions, are
forward-looking statements. Because these statements involve risks and
uncertainties, actual results may differ materially from the results that we
currently expect. Factors that could cause these differences include, but are
not limited to: 1) developments in the mobile communications market including
the continued development of the mobile phone replacement market and the timing
and success of the roll-out of new products and solutions based on 3G and
subsequent new technologies; 2) demand for our products and solutions; 3) the
development of the mobile software and services market in general; 4) the
availability of new products and services by network operators; 5) market
acceptance of new products and service introductions; 6) the intensity of
competition in the mobile communications market and changes in the competitive
landscape; 7) the impact of changes in technology; 8) general economic
conditions globally and in our most important markets; 9) pricing pressures; 10)
consolidation or other structural changes in the mobile communications market;
11) the success and financial condition of the Company's partners, suppliers and
customers; 12) the management of the Company's customer financing exposure; 13)
the success of our product development; 14) our success in maintaining efficient
manufacturing and logistics as well as high product quality; 15) the ability of
the Company to source quality components and research and development without
interruption and at acceptable prices; 16) our ability to have access to the
complex technology involving patents and other intellectual property rights
included in our products and solutions; 17) inventory management risks resulting
from shifts in market demand; 18) fluctuations in exchange rates, including, in
particular, the fluctuations between the euro, which is our reporting currency,
and the US dollar and the Japanese yen; 19) the impact of changes in government
policies, laws or regulations; as well as 20) the risk factors specified on
pages 11 to 18 of the Company's Form 20-F for the year ended December 31, 2002.
NOKIA
Helsinki - October 16, 2003
Media and Investor Contacts:
Corporate Communications, tel. +358 7180 34495 or +358 7180 34900
Investor Relations Europe, tel. +358 7180 34289
Investor Relations US, tel. +1 972 894 4880
www.nokia.com
- The Annual General Meeting is scheduled to be held on March 25, 2004.
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