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Nokia takes confident stance with updated guidanceNokia takes confident stance with updated guidance

Finnish vendor is now expecting a comparable operating margin of 12.4% to 12.6% for 2021.

Anne Morris

January 11, 2022

2 Min Read
Nokia takes confident stance with updated guidance

Nokia is set to publish its annual financial results for 2021 in early February, but it is already indicating that certain figures will be better than expected.

The Finnish vendor has updated its guidance for 2021 and is expecting a comparable operating margin of 12.4% to 12.6%. In October last year, Nokia CEO Pekka Lundmark was still guiding for a full-year operating margin of between 10% and 12%.

Nokia also now estimates net sales of about €22.2 billion (US$25.2 billion), which falls within its previous guidance of €21.7 billion ($24.6 billion) to €22.7 billion ($25.8 billion).

While Nokia's underlying business performed largely as anticipated in the fourth quarter of 2021, the vendor said other operating income was higher than expected, including further benefits from venture fund investments.

It also cited a one-off software contract in the second quarter, bad debt provision reversals, and some other one-time benefits.

The ongoing concern is that supply bottlenecks for components will affect growth this year. "We believe it is likely it will get worse before it gets better," Lundmark said in October. "We expect it will limit margin expansion potential next year. This is an overhanging shadow for 2022."

Looking ahead

Nokia has nevertheless provided a new comparable operating margin guidance of 11% to 13.5% for 2022. It said the new guidance "considers estimated continued improvements in the underlying business, supply constraints and cost inflation, with the year-on-year progression also impacted by the significant one-offs seen in 2021."

Nokia is currently in the middle of a turnaround strategy, which Lundmark announced when he replaced Rajeev Suri in 2020. Efforts have largely focused on a mobile networks business that accounts for about 43% of sales.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading. More should be revealed on how this strategy is progressing when Nokia releases its fourth-quarter and full-year 2021 financial results on February 3. The vendor indicated that it will also revisit its longer-term outlook. Certainly, analysts will be hoping to see further evidence of an improvement in Nokia's 5G business. The vendor has at least been able to report more 5G deals this year after long-standing partner Tele2 selected Nokia as its 5G radio network access (RAN) partner in Estonia, Latvia and Lithuania. Related posts: Tele2 picks Nokia for 5G RAN in Baltics Nokia shrugs off components crunch with sharp rise in profit — Anne Morris, contributing editor, special to Light Reading

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About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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