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Nokia 6-K 2007

Documents found in this filing:

  1. 6-K
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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a -16 or 15d -16 of

the Securities Exchange Act of 1934

 

Report on Form 6-K dated August 2, 2007

 

Nokia Corporation

Nokia House

Keilalahdentie 4

02150 Espoo

Finland

(Name and address of registrant’s principal executive office)

 

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

 

Form 20-F  x                Form 40-F  o

 

 



 

Enclosures:

 

1.               Nokia stock exchange release dated August 2, 2007: Nokia reports Q2 2007 net sales of EUR 12.6 billion and EPS of EUR 0.72

 



 

PRESS RELEASE

 

 

 

 

 

 

 

 

 

 

 

August 2, 2007

 

 

 

Nokia reports Q2 2007 net sales of EUR 12.6 billion and EPS of EUR 0.72

Leading device portfolio drives estimated 38% market share and strongly increased device margins

 

 

 

NOKIA IN THE SECOND QUARTER 2007*

 

EUR million

 

Q2/2007
**

 

Q2/2006
**

 

Change

 

Net sales

 

12 587

 

9 813

 

28

%

Mobile Phones

 

5 931

 

5 875

 

1

%

Multimedia

 

2 680

 

1 891

 

42

%

Enterprise Solutions

 

549

 

283

 

94

%

Nokia Siemens Networks

 

3 438

 

1 766

 

 

 

Operating profit

 

2 359

 

1 502

 

57

%

Mobile Phones

 

1 252

 

979

 

28

%

Multimedia

 

561

 

304

 

85

%

Enterprise Solutions

 

99

 

-63

 

 

 

Nokia Siemens Networks ***

 

-1 266

 

399

 

 

 

Group Common Functions

 

1 713

 

-117

 

 

 

Operating margin (%)

 

18.7

%

15.3

%

 

 

Mobile Phones (%)

 

21.1

%

16.7

%

 

 

Multimedia (%)

 

20.9

%

16.1

%

 

 

Enterprise Solutions (%)

 

18.0

%

-22.3

%

 

 

Nokia Siemens Networks (%) ***

 

-36.8

%

22.6

%

 

 

Net profit

 

2 828

 

1 140

 

148

%

EPS, EUR

 

 

 

 

 

 

 

Basic

 

0.72

 

0.28

 

157

%

Diluted

 

0.72

 

0.28

 

157

%

 


* As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for periods from April 1, 2007 are not directly comparable to any prior period results. Prior periods include the former Nokia Networks business group only.

 

**Q2 2007 special items:

                  EUR 1 883 million non-taxable gain on formation of Nokia Siemens Networks (impacting Group Common Functions operating result)

                  EUR 905 million restructuring charges and other one-time items in Nokia Siemens Networks (impacting Nokia Siemens Networks operating result)

                  EUR 15 million gain on sale of real estate (impacting Group Common Functions operating result)

                  EUR 23 million Nokia Siemens Networks related other costs (impacting Group Common Functions operating result)

                  Excluding special items, diluted EPS was EUR 0.32

 

**Q2 2006 special items:

 

                  EUR 276 million gain representing Nokia’s share of the proceeds from the Telsim sale (impacting Nokia Networks operating profit)

                  Excluding this special item, diluted EPS was EUR 0.23

 

*** Important note to Nokia Siemens Networks Q2 2007 operating profit: In addition to the 'special items' listed above, Nokia Siemens Networks reported operating profit also includes EUR 297 million of other acquisition related costs for intangible asset amortization (EUR 115 million) and inventory value adjustments (EUR 182 million). The inventory value adjustments only impact Q2 2007.

 

1



 

 

SECOND QUARTER 2007 HIGHLIGHTS

 

                  Nokia diluted EPS of EUR 0.32, excluding special items, growing 39% from Q2 2006.

                  Nokia operating cash flow of EUR 1.5 billion.

                  Nokia device volumes of 100.8 million units, up 11% sequentially and up 29% year on year.

                  Nokia estimated device market share of 38%, up from 36% in Q1 2007 and up from 34% in Q2 2006.

                  Nokia device ASP of EUR 90, up from EUR 89 in Q1 2007.

                  Mobile Phones, Multimedia and Enterprise Solutions gross and operating margins up significantly sequentially and year on year.

                  Enterprise Solutions reached profitability with 18.0% operating margin.

                  Excellent performance from new devices: Nokia 6300, Nokia N95 and Nokia E65.

                  Nokia Siemens Networks operating margin was -10.5%, excluding special items.

                  Nokia and Nokia Siemens Networks have accelerated their cost synergy target for Nokia Siemens Networks and now aim to achieve the approximate EUR 1.5 billion of annual cost synergies by the end of 2008 rather than by 2010.

                  Nokia and Nokia Siemens Networks are also targeting a further EUR 500 million of annual cost synergies.

 

OLLI-PEKKA KALLASVUO, NOKIA CEO:

“Nokia continued to grow in the second quarter thanks to an excellent performance from our device businesses. Nokia’s share of the global device market improved to an estimated 38%, while operating margins in our device businesses were at their highest level in three years. Diluted EPS was up 39% year on year, excluding special items.

 

Nokia now has some major hit products across what is already the industry’s broadest product portfolio. I am particularly encouraged by the success of a number of recently launched higher end devices, which made a strong contribution to increased profitability.

 

Nokia Siemens Networks had a challenging quarter. Both net sales and margins were weak and these adverse developments require decisive action. Accordingly, Nokia and Nokia Siemens Networks are accelerating and increasing the new company’s annual cost synergies target. Nokia Siemens Networks must also ensure that the company is positioned for success and leadership in the fast changing infrastructure market.”

 

INDUSTRY AND NOKIA OUTLOOK

                  Nokia expects industry mobile device volumes in the third quarter 2007 to be slightly up sequentially.

                  We expect Nokia’s device market share in the third quarter 2007 to increase sequentially.

                  Nokia now expects industry mobile device volumes in 2007 to grow by 10% or more from the approximately 978 million units Nokia estimate for 2006. The previous estimate for the industry mobile device volume growth in 2007 was up to 10%.

                  Nokia continues to expect the device industry to experience value growth in 2007, but expects some decline in industry ASPs, primarily reflecting the increasing impact of the emerging markets and competitive factors in general.

                  Nokia continues to target an increase in its market share in mobile devices in 2007.

                  Nokia continues to expect very slight market growth for the mobile and fixed infrastructure and related services market in euro terms in 2007.

                  Nokia and Nokia Siemens Networks no longer target a double digit operating margin (excluding special items) for Nokia Siemens Networks by the end of the new company’s first year of operations.

                  Nokia and Nokia Siemens Networks now expect the new company’s operating margin (excluding special items) to improve in the second half of 2007.

                  Nokia Siemens Networks restructuring charges and other special items are expected to be significantly less during Q3 2007 and Q4 2007 than in Q2 2007.

 

2



 

 

                  Nokia and Nokia Siemens Networks have accelerated their cost synergy target for Nokia Siemens Networks and now aim to achieve the approximate EUR 1.5 billion of annual cost synergies by the end of 2008 rather than by 2010.

                  Nokia and Nokia Siemens Networks are also targeting a further EUR 500 million of annual cost synergies.

 

3



 

 

q2 2007 FINANCIAL HIGHLIGHTS

(Comparisons are given to the second quarter 2006 results, unless otherwise indicated.)

 

As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for periods from April 1, 2007 are not directly comparable to any prior period results. Prior periods include the former Nokia Networks business group only.

 

Nokia Group

Nokia's second quarter 2007 net sales increased 28% to EUR 12.6 billion, compared with EUR 9.8 billion in the second quarter 2006. At constant currency, group net sales would have increased 32%.

 

Nokia's second quarter 2007 operating profit grew 57% to EUR 2.4 billion (including the net positive impact of EUR 970 million in special items), compared with EUR 1.5 billion in the second quarter 2006 (including the positive impact of the EUR 276 million special item). The special items for the second quarter 2007 included a EUR 1 883 million gain on the formation of Nokia Siemens Networks (impacting Group Common Functions operating result); EUR 905 million restructuring charges and other one-time items in Nokia Siemens Networks (impacting Nokia Siemens Networks operating profit); a EUR 15 million gain on sale of real estate (impacting Group Common Functions operating result); and EUR 23 million Nokia Siemens Networks related other costs (impacting Group Common Functions operating result). Nokia’s second quarter 2007 operating margin was 18.7% (15.3%), including the EUR 970 million net positive impact of the respective special items. Excluding the special items, Nokia’s second quarter 2007 operating margin was 11.0% (12.5%).

 

Operating cash flow for the second quarter 2007 was EUR 1.5 billion, compared with EUR 0.9 billion for the second quarter 2006, and total combined cash and other liquid assets were EUR 8.3 billion, compared with EUR 8.5 billion at December 31, 2006. As of June 30, 2007, our net debt-equity ratio (gearing) was -51%, compared with -68% at December 31, 2006.

 

Mobile devices

In the second quarter 2007, the total mobile device volume achieved by our Mobile Phones, Multimedia and Enterprise Solutions business groups reached 100.8 million units, representing 29% year on year growth and an 11% sequential increase. The overall industry volume for the same period reached an estimated 262 million units, representing 14% year on year growth and a 3% sequential increase.

 

Converged device industry volumes increased to an estimated 27.0 million units, compared with 18.9 million units in Q2 2006. Nokia's own converged device volume rose to 13.9 million units, compared with 9.0 million units in Q2 2006. Nokia shipped over 9 million Nokia Nseries and almost 2 million Nokia Eseries devices during the second quarter 2007.

 

The following chart sets out Nokia's mobile device volumes for the periods indicated, as well as the year on year and sequential growth rates by geographic area.

 

4



 

 

NOKIA MOBILE DEVICE VOLUME BY GEOGRAPHIC AREA

 

(million units)

 

Q2 2007

 

Q2 2006

 

YoY
Change
(%)

 

Q1 2007

 

QoQ
Change
(%)

 

Europe

 

27.1

 

21.1

 

28.4

 

23.9

 

13.4

 

Middle East & Africa

 

17.1

 

12.5

 

36.8

 

15.7

 

8.9

 

China

 

15.9

 

11.7

 

35.9

 

15.7

 

1.3

 

Asia-Pacific

 

25.6

 

18.8

 

36.2

 

23.7

 

8.0

 

North America

 

4.1

 

5.2

 

-21.2

 

4.8

 

-14.6

 

Latin America

 

11.0

 

9.1

 

20.9

 

7.3

 

50.7

 

Total

 

100.8

 

78.4

 

28.6

 

91.1

 

10.6

 

 

Based on our preliminary market estimate, Nokia’s market share for the second quarter 2007 was 38%, compared with 34% in the second quarter 2006 and 36% in the first quarter 2007. Nokia’s year on year market share increase was driven primarily by strong gains in Europe, Middle East & Africa, Asia-Pacific and Latin America. Nokia’s market share in China was at approximately the same level year on year. Nokia had strong sequential market share gains in Europe, Middle East & Africa, China, and Asia-Pacific and to a lesser degree in Latin America. Nokia’s market share was down both year on year and sequentially in North America. Nokia believes that its global market share in the second quarter 2007 was positively impacted by an enhanced overall product portfolio, supported by Nokia’s strengths of its world class logistics and brand. Nokia also believes that its market share in the second quarter 2007 was positively impacted by the clearing of certain competitors’ excess device inventory in the market that was carried over from the first quarter 2007.

 

Nokia’s average selling price in the second quarter 2007 was EUR 90, down from EUR 102 in the second quarter 2006 and up from EUR 89 in the first quarter 2007. The lower year on year ASP in the second quarter 2007 was primarily the result of a significantly higher proportion of entry level device sales, where the industry growth especially in the emerging markets has been strong. Sequentially, second quarter 2007 ASPs were positively impacted by a higher percentage of higher end device sales, which more than offset continued robust sales from the entry-level segment.

 

Business Groups

Mobile Phones: Second quarter 2007 net sales grew 1% to EUR 5.9 billion, compared with EUR 5.9 billion in the second quarter 2006, driven by strong industry volumes and our competitive product portfolio. Volume growth was partly offset by declining ASPs. Net sales increased in all regions year on year except North America and Latin America, with net sales growth strongest in Asia-Pacific and Middle East and Africa, followed by China and Europe.

 

Mobile Phones operating profit grew 28% to EUR 1.3 billion, compared with EUR 979 million in the second quarter 2006, with an operating margin of 21.1% (16.7%). The increase in operating profit for the second quarter 2007 was driven by an improved gross margin, compared to the second quarter 2006, primarily due to Mobile Phones newer and more profitable higher end products, like the Nokia 6300, Nokia 5200 and Nokia 5300.

 

Multimedia: Second quarter 2007 net sales increased 42% to EUR 2.7 billion, compared with EUR 1.9 billion in the second quarter 2006. Net sales increased year on year in all regions. Multimedia net sales more than doubled year on year in Latin America and North America. Multimedia net sales growth was driven by high volumes of Nokia Nseries multimedia computers, especially the Nokia N70, Nokia N73 and Nokia N95, combined with a stable ASP year on year.

 

5



 

 

Multimedia second quarter operating profit grew 85% to EUR 561 million, compared with EUR 304 million in the second quarter 2006, with an operating margin of 20.9% (16.1%). Operating profit growth in the second quarter 2007 was driven by strong net sales growth compared to the second quarter 2006.

 

Enterprise Solutions: Second quarter 2007 net sales increased 94% to EUR 549 million, compared with EUR 283 million in the second quarter 2006. Net sales were up significantly year on year in all regions except China and North America. Net sales were driven primarily by strong volume growth in Enterprise Solutions device business, especially the Nokia E65, compared to the second quarter 2006.

 

In the second quarter 2007, Enterprise Solutions operating profit was EUR 99 million, compared with an operating loss of EUR 63 million in the second quarter 2006, with an operating margin of 18.0%
(-22.3%). The significantly improved operating performance for the second quarter 2007 reflected strong net sales growth and effective cost control, compared to the second quarter 2006. Each of the Enterprise Solutions business units (devices, software, and security) was profitable in the second quarter 2007.

 

Nokia Siemens Networks:

The second quarter 2007 was the first quarter of operations for Nokia Siemens Networks.

 

Second quarter 2007 net sales were EUR 3.4 billion. Net sales were negatively impacted primarily by competition related issues as the price competition in the infrastructure market was unusually aggressive. Net sales were also impacted by challenges related to the start of operations, including delayed purchases by customers to a greater extent than expected, increased management focus on integration, and implementation of the previously announced compliance program, which also required certain management attention.

 

The following chart sets out Nokia Siemens Networks net sales for the second quarter of 2007 by geographic area.

 

NOKIA SIEMENS NETWORKS NET SALES BY GEOGRAPHIC AREA

 

EUR million

 

Q2 2007

 

Europe

 

1 186

 

Middle East & Africa

 

369

 

China

 

294

 

Asia-Pacific

 

1 183

 

North America

 

164

 

Latin America

 

242

 

Total

 

3 438

 

 

Nokia Siemens Networks second quarter operating profit was negative EUR 1.3 billion, with an operating margin of -36.8%. The reported second quarter 2007 operating profit included a charge of EUR 905 million related to Nokia Siemens Networks restructuring costs and other one time charges. The operating profit for the second quarter 2007, excluding these charges, was negative EUR 361 million, with an operating margin of -10.5%.

 

The negative operating profit, excluding special items, was negatively impacted by a combination of low net sales, pricing pressure, and the mix of lower margin regions and lower margin products.

 

6



 

 

The reported operating profit in the second quarter 2007 also included EUR 297 million of other acquisition related costs for intangible asset amortization (EUR 115 million) and inventory value adjustments (EUR 182 million). The inventory value adjustments only impact Q2 2007.

 

Q2 2007 OPERATING HIGHLIGHTS

Mobile Phones

 

                  Nokia launched seven products with functions and features specially designed for consumers in emerging markets: the Nokia 1200, Nokia 1208, Nokia 1650, Nokia 2660, Nokia 2505, Nokia 2630 and Nokia 2760.

                  Nokia continued its strong focus on enduring design with the introduction of the Nokia 8800 Sirocco Gold Edition and the Nokia 8600 Luna.

                  Nokia introduced five new mid-range 3G devices: the Nokia 6500 classic, Nokia 6500 slide, Nokia 6121 classic, Nokia 6120 classic and the Nokia 6267.

                  Nokia introduced two other affordable models with straightforward functionality: the Nokia 3109 classic and Nokia 3500 classic.

                  Nokia continued to expand the Vertu range with the introduction of three new collections: the Vertu Ascent Summer Season Special Editions, Vertu Signature Rose Gold Pink Diamonds and Vertu Signature Rose Gold Pink Sapphires.

 

Multimedia

                  Volumes of the high-end Nokia N95 were approximately 1.5 million units during the quarter. The device is now available in almost all markets, including the United States and China.

                  First shipments began of the slim Nokia N76 and the DVB-H enabled Nokia N77 Multimedia Computers.

                  Nokia announced the availability of Nokia photo printing services in Europe. The new services enable people to order high-quality prints easily and directly from their Nokia device, over cellular or WLAN networks, and have them delivered.

                  The recently launched Nokia Maps application and navigation service were well received by the market in the second quarter.

 

Enterprise Solutions

                  Nokia shipped more than 1 million units of the Nokia E65 in the second quarter. Volumes of the Nokia E61i grew and Nokia began early shipments of the Nokia E90 Communicator late in the quarter.

                  Nokia won seven new wireless email operator customers for its Intellisync software and more than 300,000 licensed users signed up during the second quarter. By the end of the second quarter, Nokia had sold more than 3.6 million Intellisync Mobile Suite licenses.

                  Nokia completed a full refresh of its IP Security appliance portfolio, providing new scalability, reliability and price-performance advantage over competitors.

                  Nokia announced the availability of the Nokia Eseries in the United States through complementary channels, including Ingram Micro and Dell.com, for businesses and consumers.

                  Nokia announced the commercial availability of Nokia Call Connect for Cisco, allowing businesses to route calls through corporate PBXs instead of cellular networks, with the aim of realizing significant cost savings and improved worker flexibility, collaboration and productivity.

 

Nokia Siemens Networks

                  Nokia Siemens Networks agreed to sell a U.K. R&D center to Aricent and announced that some 230 R&D personnel in Finland would move to TietoEnator, a Finnish IT services company.

                  Nokia Siemens Networks presented its proposed personnel reduction plans to employees.

                  During the quarter Nokia Siemens Networks defined values for the new company and introduced its ethics and integrity guidelines for all employees.

 

7



 

 

                  Nokia Siemens Networks' Next Generation Passive Optical Network innovation project is approaching future commercial deployment. NG PON brings four times faster connections and five times the distance for broadband access connections to subscribers’ home.

                  Wins in India included a USD 500 million network expansion contract with Idea Cellular, an expansion contract with Bharat Sanchar Nigam Limited (BSNL), and a deal from Aircel to build and operate a greenfield GSM network in Kolkata.

                  The company won a WCDMA 900 radio network contract from Vodafone New Zealand.

                  Nokia Siemens Networks conducted leading work in Virtual MIMO, aiming to allow operators to optimize spectrum use and provide a better user experience.

                  A deal announced with Blyk will see Nokia Siemens Networks building and hosting the core network for the pan-European mobile virtual network operator (MVNO). The full hosting contract was Nokia Siemens Networks’ first for an MVNO.

 

For more information on the operating highlights mentioned above, please refer to related press announcements, which can be accessed at the following link: http://www.nokia.com/press and http://www.nokiasiemensnetworks.com/press.

 

NOKIA IN THE SECOND QUARTER 2007

(International Financial Reporting Standards (IFRS) comparisons given to the second quarter 2006 results, unless otherwise indicated.)

 

As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for periods from April 1, 2007 are not directly comparable to any prior period results. Prior periods include the former Nokia Networks business group only.

 

Nokia’s net sales increased 28% to EUR 12 587 million (EUR 9 813 million). Net sales of Mobile Phones increased 1% to EUR 5 931 million (EUR 5 875 million). Net sales of Multimedia increased 42% to EUR 2 680 million (EUR 1 891 million). Net sales of Enterprise Solutions increased 94% to EUR 549 million (EUR 283 million). Net sales of Nokia Siemens Networks were EUR 3 438 million.

 

Operating profit increased to EUR 2 359 million (EUR 1 502 million), representing an operating margin of 18.7% (15.3%). Operating profit in Mobile Phones increased 28% to EUR 1 252 million (EUR 979 million), representing an operating margin of 21.1% (16.7%). Operating profit in Multimedia increased 85% to EUR 561 million (EUR 304 million), representing an operating margin of 20.9% (16.1%). Enterprise Solutions reported an operating profit of EUR 99 million (operating loss of EUR 63 million), representing an operating margin of 18.0% (-22.3%). Nokia Siemens Networks reported an operating loss of EUR 1 266 million representing an operating margin of -36.8%. Group Common Functions operating profit totaled EUR 1 713 million, including a EUR 1 883 million gain on the formation of Nokia Siemens Networks (operating loss EUR 117 million).

 

Financial income was EUR 60 million (EUR 55 million). Profit before tax and minority interests was EUR 2 446 million (EUR 1 565 million). Net profit totaled EUR 2 828 million (EUR 1 140 million). Earnings per share increased to EUR 0.72 (basic) and to EUR 0.72 (diluted), compared with EUR 0.28 (basic) and EUR 0.28 (diluted) in the second quarter of 2006.

 

NokIA IN January - june 2007

(International Financial Reporting Standards (IFRS) comparisons given to the January-June 2006 results, unless otherwise indicated.)

 

8



 

 

As of April 1, 2007, Nokia results include those of Nokia Siemens Networks on a fully consolidated basis. Nokia Siemens Networks, a company jointly owned by Nokia and Siemens, is comprised of the former Nokia Networks and Siemens’ carrier-related operations for fixed and mobile networks. Accordingly, the results of Nokia Group and Nokia Siemens Networks for periods from April 1, 2007 are not directly comparable to any prior period results. Prior periods include the former Nokia Networks business group only.

 

Nokia’s net sales increased 16% to EUR 22 443 million (EUR 19 320 million). Sales of Mobile Phones decreased 2% to EUR 11 514 million (EUR 11 744 million). Net sales of Multimedia increased 35% to EUR 4 932 million (EUR 3 649 million). Net sales of Enterprise Solutions increased 87% and totaled EUR 875 million (EUR 469 million). Net sales of Nokia Siemens Networks were EUR 5 135 million.

 

Operating profit increased to EUR 3 631 million (EUR 2 869 million), representing an operating margin of 16.2% (14.8%). Operating profit in Mobile Phones increased 6% to EUR 2 188 million (EUR 2 064 million), representing an operating margin of 19.0% (17.6%). Operating profit in Multimedia increased 57% to EUR 985 million (EUR 627 million), representing an operating margin of 20.0% (17.2%). Enterprise Solutions reported an operating profit of EUR 61 million (operating loss of EUR 129 million). Operating loss in Nokia Siemens Networks was EUR 1 188 million, representing an operating margin of -23.1%. Group Common Functions operating profit totaled EUR 1 585 million, including a gain of EUR 1 883 million on the formation of Nokia Siemens Networks (operating loss EUR 241 million).

 

In the period from January to June 2007, net financial income was EUR 108 million (EUR 129 million). Profit before tax and minority interests was EUR 3 771 million (EUR 3 010 million). Net profit totaled EUR 3 807 million (EUR 2 188 million). Earnings per share increased to EUR 0.97 (basic) and to EUR 0.96 (diluted), compared with EUR 0.53 (basic) and EUR 0.53 (diluted).

 

PERSONNEL

The average number of employees during the first half was 88 587. At June 30, 2007, Nokia employed a total of 109 871 people (68 483 people at December 31, 2006). The increase in personnel at June 30, 2007 is primarily attributable to Nokia Siemens Networks.

 

SHARES

The total number of Nokia shares on June 30, 2007 was 3 931 732 067. On June 30, 2007, Nokia and its subsidiary companies owned 52 131 392 Nokia shares, representing approximately 1.3% of the total number of Nokia shares and the total voting rights.

 

REORGANIZATION OF NOKIA FROM JANUARY 1, 2008

On June 20, 2007 Nokia announced that it will introduce a new structure from January 1, 2008. Under the new organization, Nokia's current business group and horizontal group structure in the device business will be replaced by three main functional units: Devices; Services & Software; and Markets. From January 1, 2008 onwards, under the new structure, Nokia will have two reportable segments: Devices & Services and Nokia Siemens Networks. Nokia will report on these two segments in its quarterly and annual results announcements.

 

9



 

 

Q2 2007 BY BUSINESS GROUP, EUR million

(unaudited)

 

 

 

Mobile
Phones

 

Multimedia

 

Enterprise
Solutions

 

Nokia
Siemens
Networks

 

Group
Common
Functions

 

Eliminations

 

Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

5 931

 

2 680

 

549

 

3 438

 

 

 

-11

 

12 587

 

Gross profit

 

2 001

 

1 097

 

263

 

534

 

21

 

 

 

3 916

 

Gross margin, %

 

33.7

 

40.9

 

47.9

 

15.5

 

 

 

 

 

31.1

 

Research and development expenses

 

-319

 

-256

 

-72

 

-986

 

-83

 

 

 

-1 716

 

% of net sales

 

5.4

 

9.6

 

13.1

 

28.7

 

 

 

 

 

13.6

 

Selling and marketing expenses

 

-413

 

-262

 

-75

 

-499

 

-14

 

 

 

-1 263

 

% of net sales

 

7.0

 

9.8

 

13.7

 

14.5

 

 

 

 

 

10.0

 

Administrative and general expenses

 

-21

 

-13

 

-18

 

-285

 

-69

 

 

 

-406

 

% of net sales

 

0.4

 

0.5

 

3.3

 

8.3

 

 

 

 

 

3.2

 

Other operating income and expenses

 

4

 

-5

 

1

 

-30

 

1858

 

 

 

1 828

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

1 252

 

561

 

99

 

-1 266

 

1 713

 

 

 

2 359

 

Operating margin, %

 

21.1

 

20.9

 

18.0

 

-36.8

 

 

 

 

 

18.7

 

 

Q2 2006 BY BUSINESS GROUP, EUR million

(unaudited)

 

 

 

Mobile
Phones

 

Multimedia

 

Enterprise
Solutions

 

Networks

 

Group
Common
Functions

 

Eliminations

 

Group

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

5 875

 

1 891

 

283

 

1 766

 

 

 

-2

 

9 813

 

Gross profit

 

1 738

 

770

 

121

 

603

 

8

 

 

 

3 240

 

Gross margin, %

 

29.6

 

40.7

 

42.8

 

34.1

 

 

 

 

 

33.0

 

Research and development expenses

 

-315

 

-228

 

-87

 

-292

 

-59

 

 

 

-981

 

% of net sales

 

5.4

 

12.1

 

30.7

 

16.5

 

 

 

 

 

10.0

 

Selling and marketing expenses

 

-412

 

-222

 

-77

 

-131

 

-9

 

 

 

-851

 

% of net sales

 

7.0

 

11.7

 

27.2

 

7.4

 

 

 

 

 

8.7

 

Administrative and general expenses

 

-19

 

-11

 

-22

 

-55

 

-61

 

 

 

-168

 

% of net sales

 

0.3

 

0.6

 

7.8

 

3.1

 

 

 

 

 

1.7

 

Other operating income and expenses

 

-13

 

-5

 

2

 

274

 

4

 

 

 

262

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

979

 

304

 

-63

 

399

 

-117

 

 

 

1 502

 

Operating margin, %

 

16.7

 

16.1

 

-22.3

 

22.6

 

 

 

 

 

15.3

 

 

10



 

 

NOKIA NET SALES BY GEOGRAPHIC AREA, EUR million

(unaudited)

 

 

 

4-6/2007

 

Y-o-Y
change,
%

 

4-6/2006

 

1-12/2006

 

 

 

 

 

 

 

 

 

 

 

Europe

 

4 792

 

32

 

3 636

 

15 587

 

Middle-East & Africa

 

1 695

 

27

 

1 335

 

5 277

 

China

 

1 523

 

23

 

1 242

 

5 361

 

Asia-Pacific

 

3 087

 

50

 

2 055

 

8 361

 

North America

 

527

 

-22

 

674

 

2 970

 

Latin America

 

963

 

11

 

871

 

3 565

 

 

 

 

 

 

 

 

 

 

 

Total

 

12 587

 

28

 

9 813

 

41 121

 

 

NOKIA PERSONNEL BY GEOGRAPHIC AREA

 

 

 

30.06.07

 

Y-o-Y
change,
%

 

30.06.06

 

31.12.06

 

 

 

 

 

 

 

 

 

 

 

Europe

 

60 873

 

56

 

39 155

 

39 306

 

Middle-East & Africa

 

4 431

 

508

 

729

 

1 021

 

China

 

12 814

 

89

 

6 780

 

7 452

 

Asia-Pacific

 

15 613

 

97

 

7 925

 

9 868

 

North America

 

5 739

 

-6

 

6 103

 

5 574

 

Latin America

 

10 401

 

93

 

5 400

 

5 262

 

 

 

 

 

 

 

 

 

 

 

Total

 

109 871

 

66

 

66 092

 

68 483

 

 

11



 

 

CONSOLIDATED PROFIT AND LOSS ACCOUNT, IFRS, EUR million

(unaudited)

 

 

 

4-6/2007

 

4-6/2006

 

1-6/2007

 

1-6/2006

 

1-12/2006

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

12 587

 

9 813

 

22 443

 

19 320

 

41 121

 

Cost of sales

 

-8 671

 

-6 573

 

-15 265

 

-12 856

 

-27 742

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

3 916

 

3 240

 

7 178

 

6 464

 

13 379

 

Research and development expenses

 

-1 716

 

-981

 

-2 641

 

-1 927

 

-3 897

 

Selling and marketing expenses

 

-1 263

 

-851

 

-2 052

 

-1 539

 

-3 314

 

Administrative and general expenses

 

-406

 

-168

 

-579

 

-333

 

-666

 

Other income

 

1 988

 

335

 

2 041

 

387

 

522

 

Other expenses

 

-160

 

-73

 

-316

 

-183

 

-536

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

2 359

 

1 502

 

3 631

 

2 869

 

5 488

 

Share of results of associated companies

 

27

 

8

 

32

 

12

 

28

 

Financial income and expenses

 

60

 

55

 

108

 

129

 

207

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before tax

 

2 446

 

1 565

 

3 771

 

3 010

 

5 723

 

Tax

 

-44

 

-401

 

-381

 

-782

 

-1 357

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit before minority interests

 

2 402

 

1 164

 

3 390

 

2 228

 

4 366

 

Minority interests

 

426

 

-24

 

417

 

-40

 

-60

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit attributable to equity holders of the parent

 

2 828

 

1 140

 

3 807

 

2 188

 

4 306

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share, EUR

 

 

 

 

 

 

 

 

 

 

 

(for profit attributable to the equity holders of the parent)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

0.72

 

0.28

 

0.97

 

0.53

 

1.06

 

Diluted

 

0.72

 

0.28

 

0.96

 

0.53

 

1.05

 

 

 

 

 

 

 

 

 

 

 

 

 

Average number of shares (1 000 shares)

 

 

 

 

 

 

 

 

 

 

 

Basic

 

3 906 768

 

4 075 726

 

3 928 035

 

4 112 804

 

4 062 833

 

Diluted

 

3 946 398

 

4 093 122

 

3 959 486

 

4 127 661

 

4 086 529

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization, total

 

386

 

163

 

559

 

352

 

712

 

 

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense, total

 

55

 

28

 

103

 

57

 

192

 

 

12



 

 

CONSOLIDATED BALANCE SHEET, IFRS, EUR million (unaudited)

 

 

 

30.06.2007

 

30.06.2006

 

31.12.2006

 

ASSETS

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Capitalized development costs

 

387

 

248

 

251

 

Goodwill

 

1 437

 

452

 

532

 

Other intangible assets

 

2 557

 

272

 

298

 

Property, plant and equipment

 

1 939

 

1 603

 

1 602

 

Investments in associated companies

 

331

 

204

 

224

 

Available-for-sale investments

 

307

 

247

 

288

 

Deferred tax assets

 

1 307

 

695

 

809

 

Long-term loans receivable

 

109

 

19

 

19

 

Other non-current assets

 

58

 

8

 

8

 

 

 

8 432

 

3 748

 

4 031

 

Current assets

 

 

 

 

 

 

 

Inventories

 

2 661

 

1 796

 

1 554

 

Accounts receivable

 

8 609

 

5 266

 

5 888

 

Prepaid expenses and accrued income

 

2 933

 

1 781

 

2 496

 

Other financial assets

 

493

 

149

 

111

 

Available-for-sale investments, liquid assets

 

5 026

 

5 121

 

5 012

 

Available-for-sale investments, cash equivalents

 

935

 

1 082

 

2 046

 

Bank and cash

 

2 346

 

1 670

 

1 479

 

 

 

23 003

 

16 865

 

18 586

 

Total assets

 

31 435

 

20 613

 

22 617

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY AND LIABILITIES

 

 

 

 

 

 

 

Capital and reserves attributable to equity holders of the parent

 

 

 

 

 

 

 

Share capital

 

246

 

246

 

246

 

Share issue premium

 

2 833

 

2 612

 

2 707

 

Treasury shares

 

-1 036

 

-644

 

-2 060

 

Translation differences

 

47

 

22

 

-34

 

Fair value and other reserves

 

-97

 

-81

 

-14

 

Reserve for invested non-restricted equity

 

42

 

 

 

Retained earnings

 

10 391

 

8 891

 

11 123

 

 

 

12 426

 

11 046

 

11 968

 

Minority interests

 

2 372

 

94

 

92

 

Total equity

 

14 798

 

11 140

 

12 060

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Long-term interest-bearing liabilities

 

106

 

70

 

69

 

Deferred tax liabilities

 

1 055

 

133

 

205

 

Other long-term liabilities

 

125

 

118

 

122

 

 

 

1 286

 

321

 

396

 

Current liabilities

 

 

 

 

 

 

 

Current portion of long-term loans

 

2

 

 

 

Short-term borrowing

 

615

 

337

 

247

 

Accounts payable

 

5 777

 

3 509

 

3 732

 

Accrued expenses

 

5 299

 

3 000

 

3 796

 

Provisions

 

3 658

 

2 306

 

2 386

 

 

 

15 351

 

9 152

 

10 161

 

Total shareholders’ equity and liabilities

 

31 435

 

20 613

 

22 617

 

Interest-bearing liabilities

 

723

 

407

 

316

 

Shareholders’ equity per share, EUR

 

3.20

 

2.72

 

3.02

 

Number of shares (1 000 shares) 1)

 

3 879 601

 

4 055 527

 

3 965 730

 

 


1) Shares owned by Group companies are excluded.

 

13



 

 

CONSOLIDATED CASH FLOW STATEMENT, IFRS, EUR million

(unaudited)

 

 

 

1-6/2007

 

1-6/2006

 

1-12/2006

 

Cash flow from operating activities

 

 

 

 

 

 

 

Profit attributable to equity holders of the parent

 

3 807

 

2 188

 

4 306

 

Adjustments, total

 

-1 363

 

819

 

1 857

 

Profit attributable to equity holders of the parent before change in net working capital

 

2 444

 

3 007

 

6 163

 

Change in net working capital

 

1 054

 

-712

 

-793

 

Cash generated from operations

 

3 498

 

2 295

 

5 370

 

Interest received

 

181

 

108

 

235

 

Interest paid

 

-50

 

-6

 

-18

 

Other financial income and expenses, net received

 

-26

 

14

 

54

 

Income taxes paid

 

-425

 

-548

 

-1 163

 

Net cash from operating activities

 

3 178

 

1 863

 

4 478

 

 

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

 

 

Acquisition of Group companies, net of acquired cash

 

378

 

-390

 

-517

 

Purchase of current available-for-sale investments, liquid assets

 

-2 407

 

-1 473

 

-3 219

 

Purchase of non-current available-for-sale investments

 

-47

 

-28

 

-88

 

Purchase of shares in associated companies

 

-10

 

-9

 

-15

 

Additions to capitalized development costs

 

-83

 

-59

 

-127

 

Long-term loans made to customers

 

 

-12

 

-11

 

Proceeds from repayment and sale of long-term loans receivable

 

-11

 

56

 

56

 

Recovery of impaired long-term loans made to customers

 

 

276

 

276

 

Proceeds from (+), payment of (-) other long-term loans receivable

 

4

 

-1

 

-3

 

Proceeds from (+), payment of (-) short-term loans receivable

 

395

 

121

 

199

 

Capital expenditures

 

-344

 

-312

 

-650

 

Proceeds from disposal of shares in associated companies

 

 

1

 

1

 

Proceeds from maturities and sale of current available-for-sale investments, liquid assets

 

2 345

 

3 105

 

5 058

 

Proceeds from sale of non-current available-for-sale investments

 

22

 

6

 

17

 

Proceeds form sale of fixed assets

 

27

 

8

 

29

 

Net cash from investing activities

 

269

 

1 289

 

1 006

 

 

 

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

 

 

Proceeds from stock option exercises

 

78

 

31

 

46

 

Purchase of treasury shares

 

-1 708

 

-1 955

 

-3 371

 

Proceeds from long-term borrowings

 

1

 

57

 

56

 

Repayment of long-term borrowings

 

-1

 

-7

 

-7

 

Proceeds from (+), payment of (-) short-term borrowings

 

-351

 

-6

 

-137

 

Dividends paid

 

-1 722

 

-1 536

 

-1 553

 

Net cash used in financing activities

 

-3 703

 

-3 416

 

-4 966

 

 

 

 

 

 

 

 

 

Foreign exchange adjustment

 

12

 

-42

 

-51

 

Net increase (+)/decrease (-) in cash and cash equivalents

 

-244

 

-306

 

467

 

Cash and cash equivalents at beginning of period

 

3 525

 

3 058

 

3 058

 

Cash and cash equivalents at end of period

 

3 281

 

2 752

 

3 525

 

 


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.

 

14



 

 

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY, IFRS, EUR million

(unaudited)

 

 

 

Share
capital

 

Share
issue
premium

 

Treasury
shares

 

Translation
difference

 

Fair value
and other
reserves

 

Reserve
for
invested
non-restricted
equity

 

Retained
earnings

 

Before
minority

 

Minority
interest

 

Total
equity

 

Balance at December 31, 2005

 

266

 

2 458

 

-3 616

 

69

 

-176

 

 

 

13 154

 

12 155

 

205

 

12 360

 

Tax benefit on stock options exercised

 

 

 

17

 

 

 

 

 

 

 

 

 

 

 

17

 

 

 

17

 

Translation differences

 

 

 

 

 

 

 

-99

 

 

 

 

 

 

 

-99

 

-9

 

-108

 

Net investment hedge gains

 

 

 

 

 

 

 

52

 

 

 

 

 

 

 

52

 

 

 

52

 

Cash flow hedges, net of tax

 

 

 

 

 

 

 

 

 

133

 

 

 

 

 

133

 

 

 

133

 

Available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

-38

 

 

 

 

 

-38

 

 

 

-38

 

Other decrease, net

 

 

 

 

 

 

 

 

 

 

 

 

 

-12

 

-12

 

 

-12

 

Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

2 188

 

2 188

 

40

 

2 228

 

Total recognized income and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

expense

 

 

17

 

 

-47

 

95

 

 

2 176

 

2 241

 

31

 

2 272

 

Stock options exercised

 

 

 

28

 

 

 

 

 

 

 

 

 

 

 

28

 

 

 

28

 

Stock options exercised related to acquisitions

 

 

 

-1

 

 

 

 

 

 

 

 

 

 

 

-1

 

 

 

-1

 

Share-based compensation

 

 

 

87

 

 

 

 

 

 

 

 

 

 

 

87

 

 

 

87

 

Settlement of performance shares

 

 

 

3

 

34

 

 

 

 

 

 

 

 

 

37

 

 

 

37

 

Acquisition of treasury shares

 

 

 

 

 

-1 992

 

 

 

 

 

 

 

 

 

-1 992

 

 

 

-1 992

 

Reissuance of treasury shares

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

3

 

 

 

3

 

Cancellation of treasury shares

 

-20

 

20

 

4 927

 

 

 

 

 

 

 

-4 927

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

-1 512

 

-1 512

 

-23

 

-1 535

 

Acquisition of minority interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-119

 

-119

 

Total other equity movements

 

-20

 

137

 

2 972

 

 

 

 

-6 439

 

-3 350

 

-142

 

-3 492

 

Balance at June 30, 2006

 

246

 

2 612

 

-644

 

22

 

-81

 

 

8 891

 

11 046

 

94

 

11 140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2006

 

246

 

2 707

 

-2 060

 

-34

 

-14

 

 

11 123

 

11 968

 

92

 

12 060

 

Tax benefit on stock options exercised

 

 

 

-1

 

 

 

 

 

 

 

 

 

 

 

-1

 

 

 

-1

 

Excess tax benefit on share-based compensation

 

 

 

29

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

29

 

Translation differences

 

 

 

 

 

 

 

75

 

 

 

 

 

 

 

75

 

4

 

79

 

Net investment hedge losses

 

 

 

 

 

 

 

6

 

 

 

 

 

 

 

6

 

 

 

6

 

Cash flow hedges, net of tax

 

 

 

 

 

 

 

 

 

-116

 

 

 

 

 

-116

 

 

 

-116

 

Available-for-sale investments, net of tax

 

 

 

 

 

 

 

 

 

33

 

 

 

 

 

33

 

 

 

33

 

Other increase, net

 

 

 

 

 

 

 

 

 

 

 

 

 

-120

 

-120

 

 

 

-120

 

Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

3 807

 

3 807

 

-417

 

3 390

 

Total recognized income and expense

 

 

28

 

 

81

 

-83

 

 

3 687

 

3 713

 

-413

 

3 300

 

Stock options exercised

 

 

 

46

 

 

 

 

 

 

 

42

 

 

 

88

 

 

 

88

 

Stock options exercised related to acquisitions

 

 

 

-2

 

 

 

 

 

 

 

 

 

 

 

-2

 

 

 

-2

 

Share-based compensation

 

 

 

100

 

 

 

 

 

 

 

 

 

 

 

100

 

 

 

100

 

Settlement of performance shares

 

 

 

-46

 

44

 

 

 

 

 

 

 

 

 

-2

 

 

 

-2

 

Acquisition of treasury shares

 

 

 

 

 

-1 757

 

 

 

 

 

 

 

 

 

-1 757

 

 

 

-1 757

 

Reissuance of treasury shares

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

 

 

4

 

Cancellation of treasury shares

 

 

 

 

 

2 733

 

 

 

 

 

 

 

-2 733

 

 

 

 

 

Dividend

 

 

 

 

 

 

 

 

 

 

 

 

 

-1 686

 

-1 686

 

-37

 

-1 723

 

Minority interest from formation of Nokia Siemens Networks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2 730

 

2 730

 

Total of other equity movements

 

 

 

98

 

1 024

 

 

 

42