Nokia expects strong 2022 as supply crunch eases

Finnish telecommunications giant Nokia performed better than expected last year and expects further growth in 2022 as the supply chain crisis and inflation are expected to ease, the maker said on Tuesday. network equipment.

The announcement follows a series of quarterly profit surprises for the network equipment maker, which managed to boost third-quarter profits last October despite a global shortage of computer chips.

The group largely lived up to expectations with 22.2 billion euros ($ 25.2 billion) in net sales last year.

But it raised its operating margin forecast for 2021 between 12.4% and 12.6%, from 10% to 12%.

The increase was linked to investments in venture capital funds, a one-time software contract in the second quarter, “bad debt provision reversals and other one-time benefits,” the company said in a statement. .

Nokia now expects an operating margin of between 11% and 13.5% in 2022, citing “the estimated continued improvements in the underlying business, supply constraints and cost inflation”.

Nokia chief executive Pekka Lundmark said last year that the company expects gradual improvement in 2022, although this is not “100%” guaranteed.

Lundmark has been credited with turning the tide of the networking giant, which lost in the race with Sweden’s Ericsson and Chinese Huawei in the market for 5G networking equipment.

After taking the helm in mid-2020, Lundmark implemented numerous job cuts, with savings being funneled into the development of more competitive technologies.

The group also partly profited from the misadventures of rival Ericsson, whose market share in China collapsed when Beijing retaliated against Sweden for banning Huawei from rolling out its 5G network.

Finnish telecommunications equipment maker Nokia said on Tuesday it expected to exceed its 2021 profit forecast, thanks to its investments in venture capital funds.

Nokia estimated a comparable operating margin for full year 2021 of 12.4-12.6%, above its previous forecast of 10-12%, and net sales of 21.7 to 22.7 billion euros, within the range previously announced.

The company said its underlying business performed largely as expected in the fourth quarter.

“However, other operating income was higher than expected, including the additional benefits of investing in venture capital funds, leading to a higher comparable operating margin exceeding the 2021 forecast,” he said. he said in a statement.

Nokia is now counting on sales of 6.4 billion euros in the fourth quarter, below expectations of 6.5 billion euros, according to Reuters calculations.

The company is due to release its annual results on February 3.

For 2022, Nokia said it expects a comparable operating margin of 11-13.5%.

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