Nokia Corporation Financial Report for Q3 and January-September 2017

Nokia Corporation 
Interim report
October 26, 2017 at 08:00 (CET +1)

Nokia Corporation Financial Report for Q3 and January-September 2017

Strong earnings driven by Nokia Technologies

This is a summary of the Nokia Corporation financial report for Q3 and January-September 2017 published today. The complete financial report for Q3 and January-September 2017 with tables is available at www.nokia.com/financials. Investors should not rely on summaries of our financial reports only, but should review the complete reports with tables.

FINANCIAL HIGHLIGHTS

• Non-IFRS net sales in Q3 2017 of EUR 5.5bn (EUR 6.0bn in Q3 2016). Reported net sales in Q3 2017 of EUR 5.5bn (EUR 5.9bn in Q3 2016). 7% year-on-year net sales decrease (4% decrease on a constant currency basis) in Q3 2017, on both a non-IFRS and reported basis.
• Strong non-IFRS gross margin of 42.7% (40.0% in Q3 2016), and non-IFRS operating margin of 12.1% (9.3% in Q3 2016), driven by Nokia Technologies and resilience in Nokia’s Networks business. Reported gross margin of 39.7% (37.9% in Q3 2016) and reported operating margin of negative 4.2% (positive 0.9% in Q3 2016).
• Non-IFRS diluted EPS in Q3 2017 of EUR 0.09 (EUR 0.04 in Q3 2016) benefited from a lower than expected non-IFRS tax rate of 15%. Reported diluted EPS in Q3 2017 of negative EUR 0.03 (negative EUR 0.02 in Q3 2016).
• Given the strong year-on-year group-level performance with both gross and operating margins up significantly and continued momentum in the execution of our strategy, Nokia’s Board of Directors plans to propose a dividend of EUR 0.19 per share for 2017 (EUR 0.17 for 2016).

Nokia’s Networks business

• 9% year-on-year net sales decrease (6% decrease on a constant currency basis) in Q3 2017, primarily due to Ultra Broadband Networks, reflecting challenges related to market conditions and certain projects in Mobile Networks, primarily in North America and Greater China.
• In Q3 2017, on a constant currency basis, the year-on-year net sales performance in IP Networks and Applications and Global Services improved, when compared to the year-on-year performance in Q2 2017. On a constant currency basis, year-on-year net sales grew by 2% in both Global Services and IP Routing.
• Solid Q3 2017 gross margin of 38.6% supported by continued operational discipline. Operating margin of 6.9% reflected weak results in Ultra Broadband Networks, which was partially offset by improved year-on-year performance in Global Services and IP Networks and Applications.

Nokia Technologies

• 37% year-on-year net sales increase and 73% year-on-year operating profit increase in Q3 2017, primarily related to a settled arbitration in the third quarter 2017. Approximately EUR 180 million of the net sales were non-recurring in nature and related to catch-up net sales for prior periods. With fast and effective execution against our patent licensing strategy, we have approximately doubled our recurring license revenue from EUR 578 million in 2014.
  
  

Dividend and capital structure update

Nokia’s Board of Directors plans to propose a dividend of EUR 0.19 per share for 2017. The dividend is Nokia’s principal method of distributing earnings to shareholders, and Nokia targets to deliver an earnings-based growing dividend. Over the long term, Nokia targets to grow the dividend by distributing approximately 40% to 70% of non-IFRS EPS, taking into account Nokia’s cash position and expected cash flow generation.

On October 29, 2015, after Nokia’s Board of Directors conducted a thorough analysis of Nokia’s potential long-term capital structure requirements, Nokia announced a EUR 7 billion program to optimize the efficiency of its capital structure. This program consists of approximately EUR 4 billion in shareholder distributions and approximately EUR 3 billion of de-leveraging.  As of the end of the third quarter 2017, approximately EUR 6.9 billion of our capital structure optimization program had been completed. The remaining amount of approximately EUR 0.1 billion relates to planned share repurchases, and is expected to be completed by the end of 2017. Following the completion of this program, and factoring in our targeted dividend for 2017, Nokia is confident that it will have a strong and efficient capital structure.

Non-IFRS results provide meaningful supplemental information regarding underlying business performance

In addition to information on our reported IFRS results, we provide certain information on a non-IFRS, or underlying business performance, basis. We believe that our non-IFRS results provide meaningful supplemental information to both management and investors regarding Nokia’s underlying business performance by excluding the below-described items that may not be indicative of Nokia’s business operating results. These non-IFRS financial measures should not be viewed in isolation or as substitutes to the equivalent IFRS measure(s), but should be used in conjunction with the most directly comparable IFRS measure(s) in the reported results.

Non-IFRS results exclude costs related to the acquisition of Alcatel-Lucent and related integration, goodwill impairment charges, intangible asset amortization and purchase price related items, restructuring and associated charges, and certain other items that may not be indicative of Nokia’s underlying business performance. The non-IFRS exclusions are not allocated to the segments, and hence they are reported only at the Nokia consolidated level.

Financial discussion

The financial discussion included in this financial report of Nokia’s results comprises the results of Nokia’s businesses – Nokia’s Networks business and Nokia Technologies, as well as Group Common and Other. For more information on our reportable segments, please refer to note 3, “Segment information”, in the Financial statement information section in this report.

CEO STATEMENT

Nokia delivered excellent non-IFRS earnings-per-share in the third quarter of EUR 0.09; strong year-on-year group-level performance, with both gross and operating margins up significantly; and continued momentum in the execution of our strategy. Given this good progress, Nokia’s Board of Directors plans to propose a dividend of 19 euro cents for 2017, up 2 cents from one year ago.

The performance of our patent licensing business was the clear highlight of the quarter. We reached a favorable arbitration outcome with LG and have since reached agreement with them on a license for a longer term than what was set out in the arbitration. With this fast and effective execution against our patent licensing strategy, we have approximately doubled our recurring licensing revenue from EUR 578 million in 2014. I am also particularly pleased that in 2017 the growth in patent licensing has helped to offset the sales decline on the Networks side. We have excellent momentum and considerable opportunity to further develop the business in 2018 and beyond.

We also saw strength in many parts of our Networks business in the quarter. On the sales side, we saw constant currency year-on-year growth in Global Services and IP Routing as well as our Middle East and Africa, and Asia-Pacific regions. Orders were up in many areas, including Applications & Analytics, which logged its fifth consecutive quarter of order growth in Q3, showing the progress we are making in our strategy to build a strong, stand-alone software business.

On the profitability side, the overall Networks gross margin of 38.6% was up compared to one year ago, a remarkable achievement in the context of a market that remains challenging. In addition, Global Services and IP Networks and Applications delivered significant improvements in operating margin compared to Q3 2016, at 8.1% and 10.7%, respectively.

We continued to build momentum in our strategy to expand our customer base beyond communication service providers. Across the adjacent segments that we are targeting, year-to-date orders were up by double-digit percentages and sales were up by 8%, excluding the former Alcatel-Lucent third-party integration business that we are currently winding down.

We also added more than 60 new customers in these adjacent segments so far this year, including China Pacific Insurance Company, the first large enterprise win for our Nuage business in China. With cable operators, we won the first customer – WOW! in the United States – for our new products coming from the acquisition of Gainspeed, which we are also trialing with almost a dozen customers, including some of the industry’s largest players.

These results reflect the power of our disciplined operating model and the advantages of our end-to-end portfolio. In a market where competition remains robust, operational discipline is a must, and it is a core strength of Nokia. Furthermore, as the market transitions to 5G, I believe that the benefits of our portfolio will become even more apparent given that 5G is about much more than Radio. It requires Cloud core, IP routing, transport of many kinds, fixed wireless access, Software-Defined Networking and more – and Nokia is one of the very few companies that is able to meet all those needs.

Despite the progress we made in the quarter, we experienced some challenges in our Mobile Networks business and see a continued decline in our primary addressable market in 2018. That decline, which we estimate to be in the range of 2% to 5%, is the result of the multiple technology transitions underway; robust competition in China; and near-term headwinds from potential operator consolidation in a handful of countries.

In terms of the issues we are facing in Mobile Networks, I have noted in previous quarters that the R&D team in this business group has faced an extraordinarily high workload. Given this situation, we have seen some issues with the time taken to converge some products that have, unfortunately, impacted a small number of customers. As a result, Mobile Networks has experienced both revenue pressure and an increase in expected network equipment swap costs.

My team is fully committed to getting these things back on track and we are already seeing meaningful improvements. Field deployments of our new AirScale products were ramping up in all our geographies, including with key North American customers. These products help improve operator competitiveness, not just by addressing cost challenges, but also by setting a new standard for performance and flexibility. We also saw a meaningful increase in customer satisfaction scores.

I would also note that despite some additional investment required in Mobile Networks to maintain product leadership, we are committed to our EUR 1.2 billion cost savings plan in full-year 2018. These savings come at a slightly higher cost than previously expected, and we continue to assess opportunities to deliver further savings in the area of cost-of-goods sold.

Regarding our cash position, I am not satisfied with our performance in the third quarter and we are redoubling our efforts in this area. Maintaining our strong balance sheet is a clear priority.

In short, Q3 was a period in which we faced some challenges, but delivered good performance in many areas as well as momentum in the execution of our strategy.

Rajeev Suri
President and CEO

NOKIA IN Q3 2017 – NON-IFRS

Non-IFRS net sales and non-IFRS operating profit

Nokia non-IFRS net sales decreased 7% year-on-year and decreased 2% sequentially. On a constant currency basis, Nokia non-IFRS net sales would have decreased 4% year-on-year and increased 2% sequentially.

A discussion of our results within Nokia’s Networks business, Nokia Technologies and Group Common and Other is included in the sections “Nokia’s Networks business”, “Nokia Technologies” and “Group Common and Other” below.

Year-on-year changes

On a year-on-year basis, foreign exchange fluctuations had a negative impact on non-IFRS gross profit, a slightly positive impact on non-IFRS operating expenses and a slightly positive net impact on non-IFRS operating profit in the third quarter 2017.

Sequential changes

On a sequential basis, foreign exchange fluctuations had a negative impact on non-IFRS gross profit, a slightly positive impact on non-IFRS operating expenses and a slightly positive net impact on non-IFRS operating profit in the third quarter 2017.

Non-IFRS profit attributable to the equity holders of the parent

Year-on-year changes

Non-IFRS taxes

Nokia’s regional profit mix in the third quarter 2017 resulted in an unexpectedly low non-IFRS tax rate of 15%.

Non-IFRS financial income and expenses

The net positive fluctuation in financial income and expenses was primarily due to gains from venture fund investments, partially offset by an impairment charge related to the performance of certain private funds investing in intellectual property rights (“IPR”).

Sequential changes

Non-IFRS taxes

Nokia’s regional profit mix in the third quarter 2017 resulted in an unexpectedly low non-IFRS tax rate of 15%.

Non-IFRS financial income and expenses

The flat financial income and expenses were primarily due to income related to gains from venture fund investments and foreign exchange fluctuations, fully offset by an impairment charge related to the performance of certain private funds investing in IPR.

NOKIA IN Q3 2017 – REPORTED

FINANCIAL DISCUSSION

Net sales

Nokia net sales decreased 7% year-on-year and decreased 2% sequentially. On a constant currency basis, Nokia net sales would have decreased 4% year-on-year and would have increased 2% sequentially.

Year-on-year discussion

The year-on-year decrease in net sales in the third quarter 2017 was primarily due to Nokia’s Networks business and Group Common and Other, partially offset by Nokia Technologies and lower non-IFRS exclusions related to a purchase price allocation adjustment related to a reduced valuation of deferred revenue that existed on Alcatel-Lucent’s balance sheet at the time of the acquisition.

Sequential discussion

The sequential decrease in Nokia net sales in the third quarter 2017 was primarily due to Nokia’s Networks business, Group Common and Other and higher non-IFRS exclusions related to product portfolio strategy costs, partially offset by Nokia Technologies.

Operating profit

Year-on-year discussion

In the third quarter 2017, Nokia recorded an operating loss compared to an operating profit in the third quarter 2016. The change was primarily due to a net negative fluctuation in other income and expenses and lower gross profit, partially offset by lower selling, general and administrative (“SG&A”) expenses.

The decrease in gross profit was primarily due to lower gross profit in Nokia’s Networks business, higher non-IFRS exclusions and lower gross profit in Group Common and Other, partially offset by Nokia Technologies.

The decrease in SG&A expenses was primarily due to Nokia Technologies, Group Common and Other and Nokia’s Networks business.

The net negative fluctuation in Nokia’s other income and expenses was primarily related to higher non-IFRS exclusions attributable to higher restructuring and associated charges and an impairment charge, partially offset by Nokia’s Networks business and Group Common and Other.

In the third quarter 2017, Nokia recorded a non-cash charge to other income and expenses of EUR 141 million, due to the impairment of goodwill related to its digital health business, which is part of Nokia Technologies. Following third quarter 2017 results, Nokia adjusted its long-term cash flow projections for its digital health cash generating unit, and recorded an impairment charge. The impairment charge was excluded from our non-IFRS results and allocated to the carrying amount of goodwill held within the digital health cash generating unit, which was reduced to zero. Going forward, Nokia Technologies aims to have a larger impact with consumers and the medical community through a more focused, more agile digital health business.

Sequential discussion

In the third quarter 2017, the increase in operating loss was primarily due to a net negative fluctuation in other income and expenses and lower gross profit, partially offset by lower SG&A expenses.

The decrease in gross profit was primarily due to lower gross profit in Nokia’s Networks business, higher non-IFRS exclusions related to product portfolio strategy costs and lower gross profit in Group Common and Other, partially offset by Nokia Technologies.

The decrease in SG&A expenses was primarily due to Nokia Technologies and lower non-IFRS exclusions primarily related to transaction and integration costs.

The net negative fluctuation in Nokia’s other income and expenses was primarily due to higher non-IFRS exclusions attributable to an impairment charge and higher restructuring and associated charges, partially offset by Group Common and Other and Nokia Technologies.

In the third quarter 2017, Nokia recorded a non-cash charge to other income and expenses of EUR 141 million, due to the impairment of goodwill related to its digital health business, which is part of Nokia Technologies. Following third quarter 2017 results, Nokia adjusted its long-term cash flow projections for its digital health cash generating unit, and recorded an impairment charge. The impairment charge was excluded from our non-IFRS results and allocated to the carrying amount of goodwill held within the digital health cash generating unit, which was reduced to zero. Going forward, Nokia Technologies aims to have a larger impact with consumers and the medical community through a more focused, more agile digital health business.

Profit/(Loss) attributable to the equity holders of the parent

Year-on-year discussion

In the third quarter 2017, the increase in loss attributable to the equity holders of the parent was primarily due to operating loss in the third quarter 2017 compared to an operating profit in the third quarter 2016. This was partially offset by a tax benefit in the third quarter 2017, compared to a tax expense in the third quarter 2016, and, to a lesser extent, a net positive fluctuation in financial income and expenses.

The net positive fluctuation in financial income and expenses was primarily due to gains from venture fund investments, partially offset by an impairment charge related to the performance of certain private funds investing in IPR.

The change in taxes from an expense in the third quarter 2016 to a benefit in the third quarter 2017 was primarily due to lower taxes resulting from a change in Nokia’s regional profit mix.

Sequential discussion

In the third quarter 2017, the decrease in loss attributable to the equity holders of the parent was primarily due to a tax benefit in the third quarter 2017, compared to a tax expense in the second quarter 2017, and a net positive fluctuation in financial income and expenses. This was partially offset by an increase in operating loss.

The net positive fluctuation in financial income and expenses was primarily due to the absence of non-IFRS exclusions related to Nokia’s tender offer to purchase the 6.50% notes due January 15, 2028, the 6.45% notes due March 15, 2029 and the 5.375% notes due May 15, 2019, which negatively affected the second quarter 2017, as well as higher gains related to venture fund investments. This was partially offset by an impairment charge related to the performance of certain private funds investing in IPR.

The change in taxes from an expense in the second quarter 2017, to a benefit in the third quarter 2017, was primarily due to the absence of both a non-recurring change to uncertain tax positions and a non-recurring tax expense related to deferred tax valuation allowance.

Description of non-IFRS exclusions in Q3 2017

Non-IFRS exclusions consist of costs related to the acquisition of Alcatel-Lucent and related integration, goodwill impairment charges, intangible asset amortization and purchase price related items, restructuring and associated charges, and certain other items that may not be indicative of Nokia’s underlying business performance. For additional details, please refer to note 2, “Non-IFRS to reported reconciliation”, in the Financial statement information section in this report.

Non-IFRS exclusions in net sales

In the third quarter 2017, non-IFRS exclusions in net sales amounted to EUR 38 million, and related to product portfolio strategy costs and a purchase price allocation adjustment related to a reduced valuation of deferred revenue that existed on Alcatel-Lucent’s balance sheet at the time of the acquisition.

Non-IFRS exclusions in operating profit

In the third quarter 2017, non-IFRS exclusions in operating profit amounted to EUR 898 million, and were primarily due to non-IFRS exclusions that adversely affected gross profit, research and development (“R&D”) expenses, SG&A expenses and other income and expenses as follows:

In the third quarter 2017, non-IFRS exclusions in gross profit amounted to EUR 181 million, and were primarily due to product portfolio strategy costs related to the acquisition of Alcatel-Lucent, and the deferred revenue.

In the third quarter 2017, non-IFRS exclusions in R&D expenses amounted to EUR 177 million, and were primarily due to the amortization of intangible assets resulting from the acquisition of Alcatel-Lucent and, to a lesser extent, product portfolio strategy costs related to the acquisition of Alcatel-Lucent.

In the third quarter 2017, non-IFRS exclusions in SG&A expenses amounted to EUR 139 million, and were primarily due to the amortization of intangible assets resulting from the acquisition of Alcatel-Lucent and integration and transaction related costs.

In the third quarter 2017, non-IFRS exclusions in other income and expenses amounted to EUR 401 million, and were primarily due to restructuring and associated charges for Nokia’s cost reduction and efficiency improvement initiatives, and a EUR 141 million impairment charge.

Non-IFRS exclusions in profit/(loss) attributable to the equity holders of the parent

In the third quarter 2017, non-IFRS exclusions in profit/(loss) attributable to the equity holders of the parent amounted to EUR 706 million, and were primarily due to the non-IFRS exclusions affecting operating profit, in addition to non-IFRS exclusions that adversely affected financial income and expenses and taxes as follows:

In the third quarter 2017, non-IFRS exclusions in financial income and expenses amounted to zero.

In the third quarter 2017, non-IFRS exclusions in taxes amounted to EUR 192 million, and were due to non-IFRS exclusions in operating profit.

Cost savings program

The following table summarizes the financial information related to our cost savings program, as of the end of the third quarter 2017. Balances related to previous Nokia and Alcatel-Lucent restructuring and cost savings programs have been included as part of this overall cost savings program as of the second quarter 2016.

The following table summarizes our full year 2016 results and future expectations related to our cost savings program and network equipment swaps.

In full year 2016, the actual total cost savings benefitted from lower incentive accruals, related to the full year 2016 financial performance. Lower incentive accruals drove more than half of the higher than previously expected decrease in total costs in 2016, and this is expected to reverse in 2017, assuming full year 2017 financial performance in-line with our expectations. On a cumulative basis, Nokia continues to be on track to achieve the targeted EUR 1.2 billion of total cost savings in full year 2018.

The increase in restructuring and associated charges is expected to be approximately EUR 200 million, approximately half of which is related to a non-cash US pension curtailment and the other half related to a number of smaller items, which are expected to have an approximately EUR 100 million cash impact.

The approximately EUR 500 million increase in estimated charges and cash outflows related to network equipment swaps was primarily due to the extended time taken to converge a limited set of products. We are now fully in the deployment phase of our swaps program. In addition to the increase in estimated charges and cash outflows, the program was also extended into 2019.

OUTLOOK

¹For further details related to the cost savings and network equipment swaps guidance, please refer to the “Cost savings program” section above.

RISKS AND FORWARD-LOOKING STATEMENTS

a It should be noted that Nokia and its businesses are exposed to various risks and uncertainties and certain statements herein that are not historical facts are forward-looking statements, including, without limitation, those regarding: A) our ability to integrate acquired businesses into our operations and achieve the targeted business plans and benefits, including targeted benefits, synergies, cost savings and efficiencies; B) expectations, plans or benefits related to our strategies and growth management; C) expectations, plans or benefits related to future performance of our businesses; D) expectations, plans or benefits related to changes in organizational and operational structure; E) expectations regarding market developments, general economic conditions and structural changes; F) expectations and targets regarding financial performance, results, operating expenses, taxes, currency exchange rates, hedging, cost savings and competitiveness, as well as results of operations including targeted synergies and those related to market share, prices, net sales, income and margins; G) expectations, plans or benefits related to any future collaboration or to business collaboration agreements or patent license agreements or arbitration awards, including income to be received under any collaboration or partnership, agreement or award; H) timing of the deliveries of our products and services; I) expectations and targets regarding collaboration and partnering arrangements, joint ventures or the creation of joint ventures, and the related administrative, legal, regulatory and other conditions, as well as our expected customer reach; J) outcome of pending and threatened litigation, arbitration, disputes, regulatory proceedings or investigations by authorities; K) expectations regarding restructurings, investments, capital structure optimization efforts, uses of proceeds from transactions, acquisitions and divestments and our ability to achieve the financial and operational targets set in connection with any such restructurings, investments, capital structure optimization efforts, divestments and acquisitions; and L) statements preceded by or including “believe,” “expect,” “anticipate,” “foresee,” “sees,” “target,” “estimate,” “designed,” “aim,” “plans,” “intends,” “focus,” “continue,” “project,” “should,” “is to,” “will” or similar expressions. These statements are based on management’s best assumptions and beliefs in light of the information currently available to it. Because they involve risks and uncertainties, actual results may differ materially from the results that we currently expect. Factors, including risks and uncertainties that could cause these differences include, but are not limited to: 1) our ability to execute our strategy, sustain or improve the operational and financial performance of our business and correctly identify and successfully pursue business opportunities or growth; 2) our ability to achieve the anticipated benefits, synergies, cost savings and efficiencies of acquisitions, including the acquisition of Alcatel-Lucent, and our ability to implement changes to our organizational and operational structure efficiently; 3) general economic and market conditions and other developments in the economies where we operate; 4) competition and our ability to effectively and profitably compete and invest in new competitive high-quality products, services, upgrades and technologies and bring them to market in a timely manner; 5) our dependence on the development of the industries in which we operate, including the cyclicality and variability of the information technology and telecommunications industries; 6) our global business and exposure to regulatory, political or other developments in various countries or regions, including emerging markets and the associated risks in relation to tax matters and exchange controls, among others; 7) our ability to manage and improve our financial and operating performance, cost savings, competitiveness and synergies generally or after the acquisition of Alcatel-Lucent; 8) our dependence on a limited number of customers and large multi-year agreements; 9) exchange rate fluctuations, as well as hedging activities; 10) Nokia Technologies’ ability to protect its IPR and to maintain and establish new sources of patent licensing income and IPR-related revenues, particularly in the smartphone market; 11) our ability to successfully realize the expectations, plans or benefits related to any future collaboration or business collaboration agreements and patent license agreements or arbitration awards, including income to be received under any collaboration, partnership, agreement or arbitration award; 12) our dependence on IPR technologies, including those that we have developed and those that are licensed to us, and the risk of associated IPR-related legal claims, licensing costs and restrictions on use; 13) our exposure to direct and indirect regulation, including economic or trade policies, and the reliability of our governance, internal controls and compliance processes to prevent regulatory penalties in our business or in our joint ventures; 14) our ability to identify and remediate material weaknesses in our internal control over financial reporting; 15) our reliance on third-party solutions for data storage and service distribution, which expose us to risks relating to security, regulation and cybersecurity breaches; 16) inefficiencies, breaches, malfunctions or disruptions of information technology systems; 17) Nokia Technologies’ ability to generate net sales and profitability through licensing of the Nokia brand, technology licensing and the development and sales of products and services for instance in digital health, as well as other business ventures, which may not materialize as planned; 18) our exposure to various legislative frameworks and jurisdictions that regulate fraud and enforce economic trade sanctions and policies, and the possibility of proceedings or investigations that result in fines, penalties or sanctions; 19) adverse developments with respect to customer financing or extended payment terms we provide to customers; 20) the potential complex tax issues, tax disputes and tax obligations we may face in various jurisdictions, including the risk of obligations to pay additional taxes; 21) our actual or anticipated performance, among other factors, which could reduce our ability to utilize deferred tax assets; 22) our ability to retain, motivate, develop and recruit appropriately skilled employees; 23) disruptions to our manufacturing, service creation, delivery, logistics and supply chain processes, and the risks related to our geographically-concentrated production sites; 24) the impact of litigation, arbitration, agreement-related disputes or product liability allegations associated with our business; 25) our ability to optimize our capital structure as planned and re-establish our investment grade credit rating or otherwise improve our credit ratings; 26) our ability to achieve targeted benefits from or successfully achieve the required administrative, legal, regulatory and other conditions and implement planned transactions, as well as the liabilities related thereto; 27) our involvement in joint ventures and jointly-managed companies; 28) the carrying amount of our goodwill may not be recoverable; 29) uncertainty related to the amount of dividends and equity return we are able to distribute to shareholders for each financial period; 30) pension costs, employee fund-related costs, and healthcare costs; and 31) risks related to undersea infrastructure, as well as the risk factors specified on pages 67 to 85 of our 2016 annual report on Form 20-F under “Operating and financial review and prospects-Risk factors” and in our other filings or documents furnished with the U.S. Securities and Exchange Commission. Other unknown or unpredictable factors or underlying assumptions subsequently proven to be incorrect could cause actual results to differ materially from those in the forward-looking statements. We do not undertake any obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.

The financial report was authorized for issue by management on October 25, 2017.

MEDIA AND INVESTOR CONTACTS:

Communications, tel. +358 10 448 4900 email: press.services@nokia.com
Investor Relations, tel. +358 4080 3 4080 email: investor.relations@nokia.com

• Nokia plans to publish its fourth quarter and annual 2017 results on February 1, 2018.

About Nokia
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