Nokia is growing particularly in India, Latin America and on the seabed

The Finnish telecom equipment supplier Nokia had a turnover of 7.4 billion euros in the fourth quarter of 2022, 16 percent more in the fourth quarter of 2021. For the year as a whole, Nokia reported a 12 percent increase in sales to 24.9 billion euros. The company has managed to grow in all regions of the world.

Nokia’s regions with the highest sales are North America (+17% to 8.4 billion euros) and Europe (+6% to 6.7 billion euros, although Nokia has withdrawn from Russia). This emerges from the financial data published Thursday morning. Nokia recorded the relatively strongest sales growth in India (+25% to 1.3 billion euros), closely followed by Latin America (+24% to 2.3 billion euros) and the market for submarine networks (+24% to 1.2 billion euros). Euro). The lowest growth was in China and the surrounding area (Greater China, +5% to 1.6 billion euros). In between were Africa and the Middle East (+11% to 2 billion euros) and the rest of Asia including the Pacific region (+7% to 2.6 billion euros).

Nokia’s operating profit rose 19 percent to 882 million euros in the fourth quarter. For the year as a whole, the operating profit was EUR 2.3 billion (+7%). The final quarter of the year was therefore particularly profitable. Operating cash flow increased in the fourth quarter (+17% to 567 million euros), but fell by almost half for the year as a whole (-44% to 1.5 billion euros).

The annual dividend is to increase by half from twelve euro cents per share. Investors didn’t expect that. Nokia shares gained four percent on Thursday. For 2023, management expects sales to increase by two to eight percent after adjusting for exchange rate fluctuations.

Why the net profit is suddenly so high

The net profit reported for the last three months of 2022 has really exploded: 364 percent growth means 3.2 billion euros. For the year as a whole, Nokia shows an increase of 159 percent to 4.3 billion euros.

However, these multiplications are due to the new optimism of the management. Nokia has made heavy losses in previous years. This results in loss carryforwards, which can be offset against profits in future years in the tax assessment, which reduces the tax burden. However, loss carryforwards in Finland have an expiry date. The loss carryforwards therefore have value for the company, but only if they can actually be used.

At the end of 2020, Nokia expected a drop in sales and less profit; it no longer expected to be able to use its loss carryforwards to reduce taxes. A corresponding write-down was therefore necessary at the time, which led to a significant net loss in the fourth quarter of 2020. In the meantime, the management believes in more sales and profits, and thus more taxes. Therefore, it has reactivated loss carryforwards of 2.5 billion euros in the balance sheet. That explains why net income has risen so much more sharply than operating income.

(ds)