Nokia says quarterly profit rose but cautions on outlook

HELSINKI – Nokia Corp. saw fourth-quarter profit grow more than 50 per cent to 498 million euros ($560 million) on a slight increase in sales, but the telecom networks company cautioned it would face some “market headwinds,” especially in China.

The pared-down Finnish company, which sold off HERE mapping services in November after selling its handsets division, said it can expect a challenging first quarter as the company prepares to establish itself as a leading global networks provider on the completion of its 15.6 billion-euro acquisition of ailing French company Alcatel-Lucent.

Analysts said the results were much as expected, although some markets had brought disappointments, pushing Nokia’s share price to close down 2 per cent at 5.22 euros on the Helsinki Stock Exchange.

“Nokia is struggling to wrap up the Alcatel deal and the market for networks is pretty tough globally, so no major surprises there,” said Neil Mawston from Strategy Analytics near London. “This year will probably be pretty much the same as 2015, with some markets see-sawing from quarter to quarter.”

Revenue grew 3 per cent for continuing operations in the period, to 3.6 billion euros, with strong growth in the technologies sector.

Nokia said it booked a gain of $2.5 billion euros from the sale of its mapping services to leading auto companies, Audi, BMW and Daimler, completed in December and reported it as discontinued operations. CEO Rajeev Suri said the company was on track to compete the acquisition of Alcatel-Lucent with 91 per cent of its share capital.

Describing 2015 as “another dramatic year of transformation,” Suri said he was pleased to close the year with “solid performances” from both remaining units — networks and technologies.

Networks, which accounts for 90 per cent of total sales, grew 5 per cent year-on-year to 3.2 billion euros in the quarter, while the technology unit, which controls the company’s vast portfolio of patents, saw sales jump 170 per cent in the quarter to 403 million euros.

“While the competitive environment in networks remained generally stable in the fourth quarter, we do expect some market headwinds in 2016 as 4G/LTE rollouts in China and some other markets start to slow,” Suri said. “The first quarter, in particular, looks quite challenging.”

Buoyed by arbitration, mainly from Samsung, Nokia says it expects to receive at least 1.3 billion euros of cash during the next three years from settled and ongoing arbitrations. Although the company would have liked to see a better result from the Samsung arbitration, Suri said they will continue to discuss with Samsung about other intellectual property rights not covered by the arbitration.

He said that arbitration continues with another company, but gave no details, and said that licensing talks are continuing also with other companies.

“I remain confident that our intellectual property portfolio is second to none in the industry,” Suri told analysts during a conference call.

In the full-year, Nokia’s overall sales from continuing operations grew 6 per cent to 12.5 billion euros, while net profit fell by more than half to 1.2 billion euros.