Nokia Corporation released its financial report for the fourth quarter (Q4) and full year of 2023, highlighting a resilient performance in the face of macroeconomic challenges.
Financial Highlights
In Q4 2023, Nokia Corporation showcased resilience amidst challenging economic conditions, reporting a 21% year-on-year (YoY) decline in net sales in constant currency (-23% reported). The full-year net sales were down 8% YoY in constant currency (-11% reported). Despite these challenges, the company demonstrated its ability to maintain profitability, with the Q4 comparable gross margin declining by 40 basis points YoY to 43.1%. The comparable operating margin for Q4 also declined by 70 basis points YoY to 14.8%, reflecting a robust performance relative to the net sales decline. Notably, the Q4 free cash flow was positive at EUR 1.7 billion, contributing to a net cash balance of EUR 4.3 billion for the full year. In a move to return value to shareholders, the board proposed a dividend authorization of EUR 0.13 per share and initiated a two-year EUR 600 million share buyback program.
Nokia's Resilient Performance Amid Economic Challenges in Q4 2023
Net sales for the quarter experienced a 21% YoY decline in constant currency (-23% reported), contributing to an 8% YoY decrease for the full year (-11% reported). Despite these economic headwinds, the company demonstrated resilience with a 40 basis points decline in comparable gross margin to 43.1% and a 70 basis points decrease in comparable operating margin to 14.8% in Q4. Nokia's positive Q4 free cash flow of EUR 1.7 billion led to a strong net cash balance of EUR 4.3 billion for the full year. The board proposed a dividend authorization of EUR 0.13 per share and initiated a two-year EUR 600 million share buyback program, signaling confidence in Nokia's financial stability and commitment to shareholder value.
Nokia's Forward-Looking Strategy
Looking ahead, Nokia anticipates a challenging business landscape for the first half of 2024, acknowledging the persisting economic uncertainties. Despite these challenges, the company has identified positive indicators, notably in the improved order intake, particularly within the Network Infrastructure segment. Nokia has set ambitious targets for 2024, aiming for a comparable operating profit ranging between EUR 2.3 billion to 2.9 billion. Furthermore, the company is focused on enhancing its free cash flow conversion, targeting a range of 30% to 60%.
CEO Pekka Lundmark, recognizing the complexity of the current market environment, expressed confidence in Nokia's resilience and its ability to navigate through uncertainties, underscoring a determined approach to future growth and stability.
Dividend and Share Buyback
In a strategic move with shareholder value in mind, Nokia's board has proposed a dividend of EUR 0.13 per share for the 2023 financial year. This decision reflects the company's commitment to providing returns to its investors. Additionally, Nokia has taken a proactive step by initiating a two-year share buyback program, amounting to EUR 600 million. This program underscores the company's confidence in its financial position and long-term prospects, aiming to enhance shareholder value by returning cash to investors over the next two years. These measures align with Nokia's strategic approach to balance financial strength with delivering value to its shareholders.
