Nokia Corp - ADR

Q1 Financial Performance: Nokia experienced a 3% year-over-year decline in net sales. However, adjusting for over EUR 400 million of catch-up sales in Nokia Technologies from the previous year, net sales actually grew by 7%. Network Infrastructure reported a strong growth of 11%, particularly in optical networks (15% growth), followed by Cloud and Network Services at 8%. Mobile Networks stabilized with a 2% growth.

Profitability Impact: The company reported a gross margin decline of 820 basis points to 42.3%, largely due to reduced sales in Nokia Technologies and a one-time contract settlement charge of EUR 120 million in Mobile Networks. As a result, the operating margin stood at 3.6%. While profitability was challenged in Q1, the ongoing strategies and customer relationships remain a focus for improvement.

Cash Flow and Financial Health: Nokia generated over EUR 700 million in free cash flow for the quarter, ending with a net cash position of EUR 3 billion. This strong cash generation indicates a solid financial position, though ongoing investments in growth areas remain a priority.