Nokia's Sales Flat, Focus On Licensing Grows In Q4 2017

Nokia Logo 2017 AH 1

Nokia Corporation on Thursday published its consolidated financial report for the final quarter of 2017, revealing that its non-IFRS net sales largely remained flat in the past 12 months, having amounted to €6.7 billion ($8.33 billion), the same figure reported in the fourth quarter of 2016. The company still boasted about its positive cash performance during the three-month period ending December 31st that it attributed to its net working capital management, having generated €1.8 billion ($2.24 billion) of additional cash than in the previous quarter, posting €4.5 billion ($5.59) in total.

Nokia Technologies, the division responsible for consumer products and licensing, recorded a 146 percent annual operating profit increase, with its income rising even faster than its turnover which grew 79 percentage points year-on-year, amounting to €554 million ($689.91 million). The company hence became even more reliant on its licensing business than it did in the previous quarter which already signaled such a shift on a significant scale as Nokia continued to struggle to grow its other units. The Finnish tech giant remains adamant that its prospects will improve as the industry moves closer toward the commercialization of the fifth generation of mobile networks, allowing it to start generating returns on its massive investments in 5G research and development. The trend is still unlikely to be reversed before 2019, with Nokia revealing it expects its core market to continue declining over the course of this year, though not as quickly as it previously expected, largely thanks to North America and the United States in particular. The company is projecting its operations will be largely rejuvenated by 2020 once large-scale 5G rollouts begin on an international level. Until the next wireless revolution is here, Nokia told investors to expect some additional “pressure” on its operating profit margin that the firm will try to alleviate by placing an even larger focus on its licensing business and other ventures meant to expand its reach to new markets.

The licensing division is presently largely fueled by Nokia’s agreement with HMD Global that has been selling Nokia-branded smartphones since early 2017. Regardless, around €210 million ($261 million) of Nokia Technologies’ turnover in the final quarter of the year was described as being non-recurring in nature, prompted by some recently settled patent disagreements, making it unclear how effectively will this unit of the firm be able to make up for its stagnating growth in other segments in the coming months.