Final Results
Nokia Corporation
24 January 2002
PRESS RELEASE
January 24, 2002
Nokia continues strong performance
in challenging year 2001
Company exceeds fourth quarter profit target
and achieves significant market share gains in mobile phones
Fourth quarter 2001 compared with fourth quarter 2000:
• Net sales decreased 5% to EUR 8 788 million (EUR 9 284 million in 4Q
2000)
• Pro forma operating profit was EUR 1 589 million (EUR 1 728 million);
operating margin was 18.1% (18.6%)
• Pro forma adjustments for 4Q 2001 were EUR 736 million, consisting of:
• goodwill amortization of EUR 87 million
• goodwill impairment of EUR 464 million relating to Nokia
Networks Broadband business and Nokia Internet Communications
• restructuring expenses of EUR 105 million
• impairment of minority investments of EUR 80 million
• Pro forma net profit was EUR 1 153 million (EUR 1 210 million)
• Pro forma earnings per share (diluted) was EUR 0.24 (EUR 0.25)
• Reported (IAS) net profit was EUR 450 million (EUR 1 204 million) and
reported earnings per share (diluted) was EUR 0.09 (EUR 0.25)
Full year 2001 compared with full year 2000:
• Net sales grew 3% to EUR 31 191 million (EUR 30 376 million in 2000)
• Pro forma operating profit was EUR 5 237 million (EUR 5 861 million),
operating margin was 16.8% (19.3%)
• Pro forma adjustments for 2001 were EUR 1 875 million
• Pro forma net profit was EUR 3 789 million (EUR 4 027 million)
• Pro forma earnings per share (diluted) was EUR 0.79 (EUR 0.84)
• Reported (IAS) net profit was EUR 2 200 million (EUR 3 938 million)
and reported earnings per share (diluted) was EUR 0.46 (EUR 0.82)
• At year-end, the net cash position was EUR 5.1 billion (EUR 2.9
billion) and the net debt-to-equity ratio (gearing) was -41% (-26%)
Nokia's Board of Directors will propose a dividend of EUR 0.27 per share
in respect of 2001.
Jorma Ollila, Nokia Chairman and CEO, said: 'The year was characterised by
intense competition, extreme volatility and a weakened global economy. Even in
this environment, with our strong and focused team we increased sales, sustained
solid profitability and achieved extraordinarily strong operating cash flow of
EUR 6.5 billion. As we enter 2002, our strategic position is better than ever
backed by a very strong brand, product range and operational ability.'
'I am more than happy with Nokia's fourth quarter performance. We achieved
significant market share gains maintaining excellent profitability in our mobile
phone business and succeeded in substantially reducing the impact of a
challenging environment on our networks business. We increased our full-year
market share in mobile phones for the fourth consecutive year, reaching
approximately 37% - almost double the level of 19% in 1997.'
NOKIA 4Q and 2001 - PRO FORMA
(excludes goodwill amortization and non-recurring items)
EUR million 4Q/2001 4Q/2000 Change (%) 2001 2000 Change (%)
Net sales 8 788 9 284 -5 31 191 30 376 +3
Nokia Networks 1 957 2 361 -17 7 534 7 714 -2
Nokia Mobile Phones 6 710 6 709 0 23 158 21 887 +6
Nokia Ventures Organization 142 241 -41 585 854 -31
Operating profit 1 589 1 728 -8 5 237 5 861 -11
Nokia Networks 254 407 -38 1 073 1 400 -23
Nokia Mobile Phones 1 479 1 444 +2 4 648 4 897 -5
Nokia Ventures Organization -61 -104 -327 -307
Common Group Expenses -83 -19 -157 -129
Financial income and expenses 45 51 -12 125 102 +23
Profit before tax and minority interests 1 631 1 772 -8 5 350 5 947 -10
Net profit 1 153 1 210 -5 3 789 4 027 -6
EPS, EUR
Basic 0.24 0.26 -8 0.81 0.86 -6
Diluted 0.24 0.25 -4 0.79 0.84 -6
*All pro forma 4Q 2001 figures can be found in the tables on pages 7-9
NOKIA 4Q and 2001 - REPORTED
EUR million 4Q/2001 4Q/2000 Change (%) 2001 2000 Change (%)
Net sales 8 788 9 284 -5 31 191 30 376 +3
Nokia Networks 1 957 2 361 -17 7 534 7 714 -2
Nokia Mobile Phones 6 710 6 709 0 23 158 21 887 +6
Nokia Ventures Organization 142 241 -41 585 854 -31
Operating profit 853 1 726 -51 3 362 5 776 -42
Nokia Networks -73 388 -73 1 358
Nokia Mobile Phones 1 457 1 429 +2 4 521 4 879 -7
Nokia Ventures Organization -374 -127 -855 -387
Common Group Expenses -157 36 -231 -74
Financial income and expenses 45 51 -12 125 102 +23
Profit before tax and minority interests 895 1 770 -49 3 475 5 862 -41
Net profit 450 1 204 -63 2 200 3 938 -44
EPS, EUR
Basic 0.10 0.26 -62 0.47 0.84 -44
Diluted 0.09 0.25 -64 0.46 0.82 -44
*All reported 4Q 2001 figures can be found in the tables at the end of this
report
BUSINESS ENVIRONMENT AND FORECASTS
Nokia sees market conditions improving during 2002. Both the company's
infrastructure and mobile phone businesses are expected to show full-year sales
growth of about 15%. First quarter sales in 2002 are anticipated to be
approximately 6-10% lower when compared with the strong sales in the first
quarter 2001 (Nokia Networks 16-20% lower and Nokia Mobile Phones 3-7% lower).
Low double-digit sales growth is expected to follow in the second quarter,
accelerating to the 25-35% level during the fourth quarter at the latest. The
company's competitive position remains strong, and first-quarter pro forma EPS
(diluted) is expected to be in the range of EUR 0.15 and EUR 0.17.
Nokia estimates the overall networks market to be flat in 2002. The company sees
its own accessible market expanding by more than 10% this year as operators in
the Americas migrate to GSM/EDGE, and other operators join the WCDMA community.
Despite robust GSM growth in the US, challenging conditions are likely to
prevail in our largest market, Europe, in the earlier part of the year. Nokia
estimates the second half to be significantly stronger than the first as 3G
network sales enter the books.
Nokia's preliminary market research indicates that approximately 380 million
mobile phones were sold globally in the 2001, with fourth quarter volumes rising
to about 106 million units. Nokia's own mobile phone sales volume in 2001 grew
by approximately 9% to 140 million units. This resulted in a significant rise in
the company's global market share from around 32% in 2000 to an estimated share
of about 37% in 2001, bringing the company closer to its targeted long-term 40%
market share.
In 2002, the company sees total market volumes rising by 10-15% to 420-440
million units. Double-digit annual market volume growth is expected to continue
in 2003. As future mobile phone market growth will increasingly be driven by the
replacement market and multiple product ownership, Nokia is well positioned with
its very strong brand and a stream of new product launches scheduled for this
year, including many entirely new product concepts. The company anticipates
replacement sales to reach approximately 55% of market volumes in 2002, compared
with an estimated 45% in 2001.
Pro forma operating margins for Nokia Networks are expected to increase from
around 10% in the first half of 2002 to the mid-teens in the second half, while
pro forma operating margins in Nokia Mobile Phones are expected to remain around
the high teens throughout 2002. Nokia Ventures Organization is expected to post
a pro forma loss of around EUR 200 million for 2002.
Backed by ongoing good profitability and efficient working capital management,
the company expects operating cash flow for 2002 to continue at a healthy level.
JORMA OLLILA, CHAIRMAN AND CEO
The year was characterised by intense competition, extreme volatility and a
weakened global economy. Even in this environment, with our strong and focused
team we increased sales, sustained solid profitability and achieved
extraordinarily strong operating cash flow of EUR 6.5 billion. As we enter 2002,
our strategic position is better than ever backed by a very strong brand,
product range and operational ability.
I am more than happy with Nokia's fourth quarter performance. We achieved
significant market share gains maintaining excellent profitability in our mobile
phone business and succeeded in substantially reducing the impact of a
challenging environment on our networks business. We increased our full-year
market share in mobile phones for the fourth consecutive year, reaching
approximately 37% - almost double the level of 19% in 1997.
In 2002, we expect the current quarter to be an exception in revenue growth
terms, hampered partly by steep comparisons with the first quarter 2001 and
normal seasonality factors, as well as the impact of new product transitions. As
we move into the second quarter, the influence of these will be less pronounced,
and we expect to see quarterly growth in excess of 10%, rising higher in the
latter part of the year.
We believe we are on track to achieving 35% of the overall mobile infrastructure
market in the long term. Although conditions in this market will continue to be
challenging in early 2002, we expect operators to increase investments in
quality and capacity as large numbers of new multimedia products and services
come on stream. Our third generation network coverage rollouts are accelerating.
We have also made good progress in EDGE, signing our largest systems deal ever
with US operator Cingular Wireless.
In mobile phones, new technologies such as packet switching and multimedia
messaging are now becoming tangible reality in the form of completely new
product categories and concepts. In the first half of 2002 alone, we plan to
ship more than 20 new models, with our 3G devices entering the market in the
second half.
As traditional barriers separating IT, media and telecommunications are lowered
and the functionality of our products extends from a voice-centric approach to
include media, imaging, entertainment and business applications, we believe
growth opportunities abound. For example, new phones coming on stream such as
the Nokia 7650 imaging phone, which also has a camera, or the Nokia 5510, which
works as a music player or game console, are creating entirely new
communications markets.
China continues to be our second largest market and we are investing strongly
there. At the end of last year, we inaugurated a major manufacturing facility in
the XingWang industrial park in Beijing. We see ourselves uniquely positioned to
build on our established presence in this market, as well as expand our export
base in China.
Over the last few months, leading companies in our industry have committed to
the Open Mobile Architecture initiative, laying a foundation for the smooth
transition to a global multimedia services market. As the industry enters a new
phase, we see a collaborative and open environment energising the industry and
creating conditions for a competitive global mass volume services market with
freedom of choice for consumers.
The strength of our full-year performance speaks very highly for the commitment
of our people. I would like to extend my special thanks to everyone at Nokia for
their contribution and loyalty during a difficult year.
NOKIA NETWORKS
Nokia's accessible infrastructure market continues to grow as more operators
join the WCDMA community and some significant US operators migrate from TDMA to
GSM/EDGE based 3G solutions. During the fourth quarter, Nokia won its biggest
systems deal to date, signing a GSM/EDGE contract with US operator Cingular
Wireless. The deal, valued at well over USD 1 billion, significantly strengthens
the company's position in the US mobile networks market and the global cellular
industry as a whole. In 3G networks, volume shipments are proceeding well. In
early January, Nokia also became the first 3G vendor to begin shipping EDGE
network equipment in volumes.
In addition, Nokia signed a new 3G customer in Sweden and two nationwide GPRS
deals in Hungary and China. In GSM, the company won seven deals in addition to
Cingular, the majority of which were expansion agreements. Two new contracts to
supply broadband equipment in Sweden and China were also signed during the
quarter, along with a new TETRA deal in Hong Kong.
Key fourth quarter developments in the Networks business also included the
establishment of a research and development center in Hangzhou, China. The new
unit will concentrate on developing Nokia's ATM and IP technologies for 3G
solutions.
NOKIA MOBILE PHONES
During the fourth quarter, Nokia Mobile Phones introduced twelve new products
and three new product categories.
In October, Nokia unveiled its first phone in the entertainment category with
the Nokia 5510 (GSM 900/1800). It has a music player, FM radio, messaging
machine, games platform and phone - all in one. Shipments started in November.
In November, Nokia introduced three new GSM phones and two new phone categories
(one for Europe and Africa and one for Asia-Pacific regions). The first phone in
the active category, the Nokia 5210, featuring WAP, represents a totally new
concept with innovative materials, wearability options and improved durability.
With the Nokia 6510, Nokia introduced a new design for its classic category
phones. The small modern phone supports WAP 1.2.1, GPRS, HSCSD and infrared for
flexible data connections. It comes with a mobile wallet and FM radio. The Nokia
5210 and the Nokia 6510 are expected to start shipping in February 2002.
The Nokia 7650 is the first phone in the imaging category. It combines a digital
camera and multimedia messaging (MMS) and delivers a full range of functions for
professional needs such as GPRS and HSCSD connections, WAP, wireless Bluetooth
and infrared connectivity, email and MIDP Java support. The Symbian Operating
System allows the phone to be customized and upgraded by corporations and
individual users, who will be able to purchase numerous add-on software
applications designed by independent software developers. The Nokia 7650 is
expected to start shipping in the second quarter 2002.
Nokia also introduced three new Bluetooth accessories: the Nokia Wireless
Headset, the Nokia Wireless Car Kit, and the Nokia Connectivity Card. They are
compatible with the latest 1.1 version of the Bluetooth specification and are
expected to be available in the first quarter of 2002.
Specifically for the Asia-Pacific GSM market, Nokia unveiled an additional three
new products: the Nokia 3350, a new WAP-enabled phone with an array of trendy
colors as well as new fun personalization features; the Nokia 6500, an
attractive slimline design with an active flip cover, and featuring WAP over
GPRS; and the Nokia 8855, a WAP-enabled premium phone. Shipments of all of these
are expected to start in the first quarter of 2002.
In the Americas, Nokia unveiled the new Nokia 6360 TDMA phone with WAP 1.2.1,
e-mail support, text and picture messaging, mobile chat as well as voice
dialling, commands and recording. Shipments of the Nokia 6360 are expected to
begin in the first quarter 2002. Shipments of the previously announced GSM/GPRS
model, the Nokia 8390 for the Americas market, are also scheduled for the first
quarter.
In December, Nokia introduced the Nokia THR 850 (TETRA) terminal with WAP and IP
functionality, and started deliveries of the earlier announced GSM/GPRS model
Nokia 6310.
As an example of Nokia's commitment to open mobile architecture, Nokia started
in November to license the Series 60 smartphone software platform and client
components to handset manufacturers as source-code products. The first agreement
following this announcement was published with Samsung on licensing the Nokia
Mobile Browser and Smart Messaging technology, while Matsushita began the
evaluation and testing of the Nokia's Series 60 platform.
During the quarter, Nokia also introduced server products for content
downloading services and for automatic over-the-air management and configuration
of mobile phones. In addition, Nokia opened an online shop, the Nokia Software
Market, where users can customize their Nokia 9210 Communicators with
state-of-the-art mobile applications. For developers, Nokia kicked off the Nokia
Mobile Challenge, a series of contests encouraging creation of innovative mobile
applications.
NOKIA VENTURES ORGANIZATION
Nokia Internet Communications strengthened its Internet security portfolio
through new products and continued to deploy its IP network security solutions
as a critical element of its customers network infrastructure.
The unit also expanded its global alliance with Check Point Software
Technologies. This intensified relationship will allow Nokia to expand its
existing leadership in network security and mobile communication to orchestrate
the delivery of highly advanced security solutions for both wired and wireless
network environments.
Nokia Internet Communications also introduced the first commercial solutions as
a result of the new partnership with F5 Networks. The Nokia BIG-IP solutions
deliver more efficient ways to manage growing traffic and network security.
To strengthen the company's venturing initiatives, Nokia Ventures Organization
launched the Nokia Early Stage Technology Fund, a EUR 40 million corporate
venture fund aimed at providing early-stage financing for new business ideas
inside the company.
NOKIA IN OCTOBER-DECEMBER 2001 REPORTED
(International Accounting Standards, IAS, comparisons given to the fourth
quarter 2000 results)
Nokia's net sales decreased by 5% to EUR 8 788 million (EUR 9 284 million).
Sales of Nokia Networks decreased by 17% to EUR 1 957 million (EUR 2 361
million), reflecting significant revenue declines in Europe and Asia Pacific,
partially offset by growth in the Americas. Sales of Nokia Mobile Phones were
virtually unchanged at EUR 6 710 million (EUR 6 709 million), with flat revenues
in Europe and the Americas and slight growth in Asia Pacific. Sales of Nokia
Ventures Organization decreased by 41% and totaled EUR 142 million (EUR 241
million).
Operating profit decreased by 51% to EUR 853 million (EUR 1 726 million),
representing an operating margin of 9.7% (18.6%). Operating profit in Nokia
Networks decreased to an operating loss of EUR 73 million (operating profit EUR
388 million), representing an operating margin of -3.7% (16.4%). Operating
profit in Nokia Mobile Phones increased by 2% to EUR 1 457 million (EUR 1 429
million), representing an operating margin of 21.7% (21.3%). Nokia Ventures
Organization reported an operating loss of EUR 374 million (operating loss of
EUR 127 million). Common Group Expenses, which comprises Nokia Head Office and
Nokia Research Center, totaled EUR 157 million (EUR 36 million).
During the fourth quarter 2001, operating profit was negatively impacted by
non-recurring items totaling EUR 649 million, which consisted of goodwill
impairment of EUR 464 million relating to Nokia Networks Broadband business and
Nokia Internet Communications, restructuring charges of EUR 105 million, and
impairment of minority investments of EUR 80 million. Goodwill amortization for
the fourth quarter 2001 was EUR 87 million. In the fourth quarter 2000,
operating profit included a EUR 55 million positive item relating to a change in
the accounting of the company's Finnish pension plan.
Financial income totaled EUR 45 million (EUR 51 million). Profit before tax and
minority interests was EUR 895 million (EUR 1 770 million). Net profit totaled
EUR 450 million (EUR 1 204 million). Earnings per share decreased to EUR 0.10
(basic) and to EUR 0.09 (diluted) compared with EUR 0.26 (basic) and EUR 0.25
(diluted) in the fourth quarter 2000.
At December 31, 2001, net debt-to-equity ratio (gearing) was -41% (-26% at the
end of 2000). During the October to December period 2001, capital expenditures
amounted to EUR 221 million (EUR 409 million).
At the end of 2001, outstanding long-term loans to customers totaled EUR 1 128
million, while guarantees given on behalf of customers totaled EUR 127 million.
In addition, Nokia had financing commitments totaling EUR 2 955 million at the
end of 2001. Of the total committed and outstanding customer financing, EUR 3
607 million related to 3G networks.
CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million
(unaudited)
Pro forma Pro forma Reported Reported
10-12/01 10-12/00 10-12/01 10-12/00
Net sales 8,788 9,284 8,788 9,284
Cost of sales 1) -5,536 -5,942 -5,559 -5,942
Research and development expenses -750 -764 -750 -764
Selling, general and administrative expenses 2) -913 -850 -995 -795
One-time charges/customer finance - - - -
Impairment of minority investments - - -80 -
Impairment of goodwill - - -464 -
Amortization of goodwill - - -87 -57
Operating profit 1,589 1,728 853 1,726
Share of results of associated companies -3 -7 -3 -7
Financial income and expenses 45 51 45 51
Profit before tax and minority interests 1,631 1,772 895 1,770
Tax -459 -532 -426 -536
Minority interests -19 -30 -19 -30
Net profit 1,153 1,210 450 1,204
Earnings per share, EUR
Basic 0.24 0.26 0.10 0.26
Diluted 0.24 0.25 0.09 0.25
Average number of shares
(1,000 shares)
Basic 4,721,431 4,685,458 4,721,431 4,685,458
Diluted 4,797,959 4,795,272 4,797,959 4,795,272
Depreciation and amortization, total 416 323
1) Includes in 2001 non-recurring restructuring charges of EUR 23 million
2) Includes in 2001 non-recurring restructuring charges of EUR 82 million. 2000 includes a pension credit of
EUR 55 million
CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million
(unaudited)
Pro forma Pro forma Reported Reported
1-12/01 1-12/00 1-12/01 1-12/00
Net sales 31,191 30,376 31,191 30,376
Cost of sales 1) -19,693 -19,072 -19,787 -19,072
Research and development expenses -2,985 -2,584 -2,985 -2,584
Selling, general and administrative expenses 2) -3,276 -2,859 -3,443 -2,804
One-time charges/customer finance 3) - - -714 -
Impairment of minority investments - - -80 -
Impairment of goodwill - - -518 -
Amortization of goodwill - - -302 -140
Operating profit 5,237 5,861 3,362 5,776
Share of results of associated companies -12 -16 -12 -16
Financial income and expenses 125 102 125 102
Profit before tax and minority interests 5,350 5,947 3,475 5,862
Tax -1,478 -1,780 -1,192 -1,784
Minority interests -83 -140 -83 -140
Net profit 3,789 4,027 2,200 3,938
Earnings per share, EUR
Basic 0.81 0.86 0.47 0.84
Diluted 0.79 0.84 0.46 0.82
Average number of shares
(1,000 shares)
Basic 4,702,852 4,673,162 4,702,852 4,673,162
Diluted 4,787,219 4,792,980 4,787,219 4,792,980
Depreciation and amortization, total 1,430 1009
1) Includes in 2001 non-recurring charges of EUR 71 million from 2Q and EUR 23 million from 4Q.
2) Includes in 2001 non-recurring charges for 2001: EUR 85 million from 2Q, including a EUR 24 million gain from the
disposal of certain production operations, and EUR 82 million from 4Q. Non-recurring items for 2000 include a pension
credit of EUR 55 million
3) Includes in 2001 one-time charges/customer finance from 3Q.
NET SALES BY BUSINESS GROUP, EUR million
10-12/2001 10-12/2000 1-12/2001 1-12/2000
Nokia Networks 1,957 2,361 7,534 7,714
Nokia Mobile Phones 6,710 6,709 23,158 21,887
Nokia Ventures Organization 142 241 585 854
Inter-business group eliminations -21 -27 -86 -79
Nokia Group 8,788 9,284 31,191 30,376
OPERATING PROFIT BY BUSINESS GROUP, EUR million
(unaudited)
Pro forma 10-12/2001 10-12/2000 1-12/2001 1-12/2000
Nokia Networks 254 407 1,073 1,400
Nokia Mobile Phones 1,479 1,444 4,648 4,897
Nokia Ventures Organization -61 -104 -327 -307
Common Group Expenses -83 -19 -157 -129
Nokia Group 1,589 1,728 5,237 5,861
Goodwill amortization 10-12/2001 10-12/2000 1-12/2001 1-12/2000
Nokia Networks -41 -19 -105 -42
Nokia Mobile Phones -22 -15 -92 -18
Nokia Ventures Organization -24 -23 -105 -80
Common Group Expenses - - - -
Total -87 -57 -302 -140
Non-recurring items 10-12/2001 10-12/2000 1-12/2001 1-12/2000
Nokia Networks -286 - -1041 -
Nokia Mobile Phones - - -35 -
Nokia Ventures Organization -289 - -423 -
Common Group Expenses -74 55 -74 55
Total -649 55 -1,573 55
Reported 10-12/2001 10-12/2000 1-12/2001 1-12/2000
Nokia Networks -73 388 -73 1,358
Nokia Mobile Phones 1,457 1,429 4,521 4,879
Nokia Ventures Organization -374 -127 -855 -387
Common Group Expenses -157 36 -231 -74
Nokia Group 853 1,726 3,362 5,776
Statutory Release of Annual Accounts 2001
REVIEW BY THE BOARD OF DIRECTORS
(The below review by the Board of Directors forms part of the financial
statements for 2001)
Nokia in 2001: IAS Reported
Nokia's net sales in 2001 increased by 3% compared with 2000 and totaled EUR 31
191 million
(EUR 30 376 million in 2000). Sales in Nokia Networks decreased by 2% to EUR 7
534 million (EUR 7 714 million) and grew in Nokia Mobile Phones by 6% to EUR 23
158 million (EUR 21 887 million). Sales decreased in Nokia Ventures Organization
by 31% to EUR 585 million (EUR 854 million).
Operating profit in 2001 decreased by 42% and totaled EUR 3 362 million (EUR 5
776 million in 2000). Operating margin was 10.8% (19.0% in 2000). Operating
profit in Nokia Networks decreased to an operating loss of EUR 73 million
(operating profit EUR 1 358 million in 2000) and in Nokia Mobile Phones
decreased 7% to EUR 4 521 million (EUR 4 879 million in 2000). Operating margin
in Nokia Networks was -1.0% (17.6% in 2000) while the operating margin in Nokia
Mobile Phones was 19.5% (22.3% in 2000). Nokia Ventures Organization showed an
operating loss of EUR 855 million (operating loss of EUR 387 million in 2000).
Common Group Expenses totaled EUR 231 million (EUR 74 million in 2000).
During 2001, operating profit was negatively impacted by non-recurring items
totaling EUR 1 573 million, which consisted of goodwill impairment of EUR 518
million, restructuring charges of EUR 261 million, increases in reserves for
Telsim and Dolphin receivables of EUR 714 million, and impairment of minority
investments of EUR 80 million.
Financial income totaled EUR 125 million in 2001 (EUR 102 million in 2000).
Profit before tax and minority interests was EUR 3 475 million in 2001 (EUR 5
862 million in 2000). Net profit totaled EUR 2 200 million in 2001 (EUR 3 938
million in 2000). Earnings per share decreased to EUR 0.47 (basic) and to EUR
0.46 (diluted) in 2001 compared with EUR 0.84 (basic) and EUR 0.82 (diluted) in
2000.
At December 31, 2001, net-debt-to-equity ratio (gearing) was -41% (-26% at the
end of 2000). Total capital expenditures in 2001 amounted to EUR 1 041 million
(EUR 1 580 million in 2000).
At the end of 2001, outstanding long-term loans to customers totaled EUR 1 128
million, while guarantees given on behalf of customers totaled EUR 127 million.
In addition, Nokia had financing commitments totaling EUR 2 955 million at the
end of 2001. Of the total committed and outstanding customer financing, EUR 3
607 million related to 3G networks.
Global Reach
In 2001, Europe accounted for 49% of Nokia's net sales (52% in 2000), the
Americas 25% (25% in 2000) and Asia-Pacific 26% (23% in 2000). The 10 largest
markets were the US, China, the UK, Germany, France, Italy, the Philippines,
Thailand, Brazil and Spain, together representing 63% of total sales.
Research and development
In 2001, Nokia continued to invest in its worldwide research and development
network and cooperation. At year-end, Nokia had 18 600 R&D employees,
approximately 35% of Nokia's total personnel. Investments in research and
development increased by 16% (47% in 2000) and totalled EUR 2 985 million (EUR 2
584 million in 2000), representing 9.6% of net sales (8.5% of net sales in
2000).
People
The average number of personnel for 2001 was 57 716 (58 708 for 2000). At the
end of 2001, Nokia employed 53 849 people worldwide (60 289 at year-end 2000).
In 2001, Nokia's personnel decreased by a total of 6 440 employees (increase of
5 029 in 2000).
Nokia continued to develop motivating and performance-based compensation and
benefit programs for its employees. During the year, the number of personnel
participating in the Nokia global stock-option plans increased significantly to
more than 25,000.
Acquisitions and divestments
During 2001, Nokia completed two acquisitions designed to enhance its portfolio
of businesses. In January, Nokia completed the acquisition of Ramp Networks, a
US-based provider of purpose-built Internet security appliances specifically
designed for small office applications. In August, Nokia acquired Amber
Networks, a US-based networking infrastructure company that develops
fault-tolerant routing platforms. The technology driven acquisition is a logical
step in Nokia's strategy of extending leadership into future intelligent edge
technologies and in the all-IP service integration for carrier grade high
reliability routing.
Joint Initiatives
Nokia entered into several new initiatives with other industry leaders during
2001. In November, Nokia announced its commitment to the Open Mobile
Architecture initiative together with 18 industry leaders, laying a foundation
for the smooth transition to a global multimedia services market. The companies
participating in the joint announcement were AT&T Wireless, Cingular Wireless,
MM02, NTT DoCoMo, Telefonica Moviles, Vodafone, Fujitsu, Matsushita, Mitsubishi
Electric, Motorola, NEC, Nokia, Samsung, Sharp, Siemens, Sony, Sony Ericsson,
Toshiba and Symbian.
In December, leading IT infrastructure companies BEA Systems, Borland,
Hewlett-Packard, IBM, Oracle and Sun Microsystems expressed their support for
the initiative. Expanding the global scope of the Open Mobile Architecture
initiative, China Mobile also joined the supporters in late December.
Furthermore, Nokia and Sony announced collaboration in developing an open
middleware platform.
In December, Nokia joined the Service Availability Forum as a founding member.
This industry-wide coalition will set standards allowing the integration of
open, standardized third-party building blocks into network infrastructure
equipment. These building blocks will contribute to service availability as well
as create new flexibility for system suppliers like Nokia in extending their
product creation reach by leveraging innovation from across the industry.
NOKIA NETWORKS
The first quarter 2001 remained very strong in the company's network business.
Reduced investments by operators did not start to have a significant effect on
top-line growth until the second half of the year when sales fell sharply
resulting in an overall sales decline of 2% compared with 2000.
However, throughout 2001, operators continued to invest in capacity, most
notably in the US and Asia where GSM is advancing steadily and thus
strengthening its position as the dominant global 2G standard. In Europe,
operators are accelerating their preparations for the onset of next generation
multimedia products and services.
In the Americas, Nokia made significant headway beginning with the decision by
ATT Wireless Service (AWS) at the end of 2000 to join the GSM/EDGE/WCDMA market
in a landmark deal with Nokia for the delivery of next generation wireless
infrastructure. This was followed in the second quarter by a significant GSM
deal with Telemar in Brazil and capped later in the year with Nokia's largest
ever systems deal with Cingular Wireless of the US.
During 2001, the company signed 22 deals with operators to supply 3G-network
infrastructure bringing the total number of 3G customers to 28. The largest
deals announced were with Orange/France Telecom, followed by Cable & Wireless
Optus and Hutchison 3G UK. In addition, Nokia made a significant breakthrough in
Japan when J-Phone selected Nokia to supply its 3G networks.
With these breakthroughs in the Americas and Japan, Nokia expanded its
accessible market in geographical terms to include all the world's key markets,
bringing the company closer to achieving its targeted long-term 35% share of the
overall mobile infrastructure market.
In GPRS, Nokia signed 15 new deals in 2001, which brings the total number of
customers to 59. The company also signed seven new GSM customers from around the
world in addition to numerous GSM expansion deals. In Nokia's TETRA business,
deals were signed in Hong Kong, Finland and Belgium. In fixed broadband
networks, the US markets continued to be challenging, but several new contracts
were signed in Europe and China.
During 2001, in response to adverse developments in the market and customer
environment, Nokia realigned parts of its organisational structure in a move to
increase overall efficiencies. This included decisions in both manufacturing and
R&D to focus resources on high value-added parts of the business while
outsourcing others. This is in line with Nokia's ongoing strategy of focusing
and building on core skills while teaming up with select global partners.
NOKIA MOBILE PHONES
Strong sales growth in the first half of 2001 was partially offset in the second
half by weaker sales primarily in Europe and Asia Pacific, resulting in an
annual increase in net sales of 6% compared with 2000.
Nokia sold 140 million mobile phones in 2001, representing about 9% year-on-year
growth. Contrary to the market development, Nokia's sales volumes continued to
grow in all geographical regions, with growth strongest in Asia Pacific.
This resulted in a significant rise in the company's global market share from
around 32% in 2000 to an estimated share of about 37% in 2001, bringing the
company closer to its targeted long-term 40% market share. The shipment of 14
new models from a total of 22 new mobile phone introductions during the year
boosted market share growth. In 2001, Nokia increased its market share for the
fourth consecutive year-almost doubling it from the level of 19% in 1997.
According to Nokia's preliminary estimates, global mobile phone market volume in
2001 declined about 5% to approximately 380 million units. Replacement purchases
are estimated to have accounted for about 45% of the total industry volume. This
share is expected to rise to around 55% of total volume in 2002. In 2001, the
global subscriber base is estimated to have grown by 30% to about 930 million
mobile phone users.
Market volume continued to rise in Asia Pacific in 2001 with about 15% market
growth. Demand in the Americas is estimated to have remained at approximately
the level of the previous year; in Europe, market volume declined an estimated
23% during 2001. In 2002, the company sees total market volumes rising by 10-15%
to 420-440 million units. Double-digit annual market volume growth is expected
to continue in 2003.
NOKIA VENTURES ORGANIZATION
Nokia remains committed to building leadership in the corporate network security
market. However, in 2001, revenue growth at Nokia Internet Communications was
affected by the slowdown in information technology spending. During the year,
Nokia expanded its global alliance with Check Point Software Technologies. The
company also formed a new partnership with F5 Networks, and announced the first
available solutions as a result of this new partnership.
Nokia introduced its first distributed office security appliances based on the
Ramp Networks acquisition. Also introduced in 2001 were the Nokia IP530 and the
gigabit plus performing Nokia IP740 security appliances. Working with Internet
Security Systems, Nokia introduced the latest version of its network Intrusion
Detection System RealSecure (TM) for Nokia.
In IBC (International Broadcasting Convention), Nokia and 10 of Europe's leading
companies in the fields of broadcasting, multimedia and communications announced
a memorandum of understanding to promote the use of digital broadcast standards
for the delivery of multimedia content using the Internet.
CHANGES IN SHARE CAPITAL
In 2001, Nokia's share capital increased by EUR 1 383 428.16 as a result of the
issue of 23 057 136 new shares upon exercise of warrants and stock options
issued to key personnel in 1995, 1997 and 1999. Nokia's share capital was also
increased in September by EUR 1 099 752.72, when 18 329 212 new shares,
corresponding to 0.39% of the share capital, were issued to finance the
acquisition of Amber Networks, Inc. For the same purpose a total of 2 532 000
shares, having a total par value of EUR 151 920 and corresponding to 0.05% of
the share capital, held by Nokia Corporation were transferred to the
stockholders of Amber Networks. Both the newly issued shares and the treasury
shares were issued for a subscription price of EUR 20.7710 per share, the
average market price of Nokia share on the Helsinki Exchanges for a ten
business-day period before closing of the transaction. Effective March 2, a
total of 7 914 Nokia shares were returned to Nokia pursuant to agreements made
in connection with business acquisitions effected before 2001. The aggregate par
value of these shares, which were received without consideration, was EUR 474.84
and they represented less than 0.001% of the share capital of the company and
the total voting rights. Effective April 17, a total of 68 950 shares held by
the company were cancelled pursuant to the shareholders' resolution taken at the
Annual General Meeting. As a result of the cancellation, the share capital was
reduced by the aggregate par value of the shares cancelled, EUR 4 137,
corresponding to less than 0.01% of the share capital of the company and the
total voting rights. The cancellation did not reduce the shareholders' equity.
Neither the aforementioned issuances, the transfer, the receipt of shares nor
the cancellation of shares had any significant effect on the relative holdings
of the other shareholders of the company or on the voting powers among them.
In 2001, Nokia shareholders also approved a new stock option plan, under which
Nokia key personnel were granted a total of 145 million stock options. Each
stock option entitles the holder to subscribe for one Nokia share during share
subscription periods commencing no earlier than July 1, 2002 and terminating no
later than June 30, 2008. The share subscription prices will be determined on
the basis of the market price on the Helsinki Exchanges. An aggregate maximum of
145 million shares, corresponding to 3.1% of the share capital, can be
subscribed for under this plan.
On December 31, 2001, Nokia and its subsidiary companies owned 1 227 752 Nokia
shares. The shares had an aggregate nominal value of EUR 73 665.12, representing
0.03% of the share capital of the company and the total voting rights.
The total number of shares at December 31, 2001 was 4 737 530 121. As a result
of the new share issues, Nokia received a total of EUR 457 882 917.60 in
additional shareholders' equity in 2001. At December 31, 2001, Nokia's share
capital was EUR 284 251 807.26.
MERGER OF SUBSIDIARIES
Effective October 1, Nokia Mobile Phones Ltd, Nokia Networks Oy and some other
Finnish Nokia Group companies merged into Nokia Corporation.
OUTLOOK
Nokia's objective is to take and maintain a leading role in creating
communications products and services that enrich the daily lives of people and
enable enterprises to prosper. The company strives to keep a clear focus on
human needs, managing risks and building reputation, integrating all stakeholder
expectations into its business decision making.
In 2001, Nokia confirmed its ability to perform well in an intensely challenging
environment, translating core strengths of leading brand, excellence in
execution and continuous product renewal into good profitability. Going into
2002, demanding industry conditions are expected to continue. However, with a
stream of new product launches scheduled for this year, including the company's
first 3G devices, Nokia's competitiveness in terms of brand, logistics and
market position should continue to be strong.
DIVIDEND
Nokia's Board of Directors will propose a dividend of EUR 0.27 per share in
respect of 2001.
STATUTORY ANNUAL ACCOUNTS
CONSOLIDATED PROFIT AND LOSS ACCOUNT, IAS, EUR million
(audited)
1-12/01 1-12/00
Net sales 31,191 30,376
Cost of sales -19,787 -19,072
Research and development expenses -2,985 -2,584
Selling, general and administrative expenses -3,443 -2,804
One-time charges/customer finance -714 -
Impairment of minority investments -80 -
Impairment of goodwill -518 -
Amortization of goodwill -302 -140
Operating profit 3,362 5,776
Share of results of associated companies -12 -16
Financial income and expenses 125 102
Profit before tax and minority interests 3,475 5,862
Tax -1,192 -1,784
Minority interests -83 -140
Net profit 2,200 3,938
Earnings per share, EUR
Basic 0.47 0.84
Diluted 0.46 0.82
Average number of shares
(1,000 shares)
Basic 4,702,852 4,673,162
Diluted 4,787,219 4,792,980
Depreciation and amortization, total 1,430 1,009
CONSOLIDATED BALANCE SHEET, IAS, EUR million
(audited)
31.12.2001 31.12.2000
ASSETS
Fixed assets and other non-current assets
Capitalized development costs 893 640
Goodwill 854 1112
Intangible assets 237 242
Property, plant and equipment 2,514 2,732
Investments in associated companies 49 61
Available-for-sale investments 399 337
Deferred tax assets 832 401
Long-term loan receivables 1,128 808
Other non-current assets 6 55
6,912 6,388
Current assets
Inventories 1,788 2,263
Accounts receivables 5,719 5,594
Prepaid expenses and accrued income 1,480 1,418
Short-term loan receivable 403 44
Available-for-sale investments 4,271 2,774
Bank and cash 1,854 1,409
15,515 13,502
Total assets 22,427 19,890
SHAREHOLDERS' EQUITY AND LIABILITIES
Shareholders' equity
Share capital 284 282
Share issue premium 2,060 1,695
Treasury shares -21 -157
Translation differences 326 347
Fair value and other reserves 20 -
Retained earnings 9,536 8,641
12,205 10,808
Minority interests 196 177
Long-term liabilities
Long-term interest bearing liabilities 207 173
Deferred tax liabilities 177 69
Other long-term liabilities 76 69
460 311
Current liabilities
Short-term borrowings 831 1,069
Current portion of long-term debt - 47
Accounts payable 3,074 2,814
Accrued expenses 3,477 2,860
Provisions 2,184 1,804
9,566 8,594
Total shareholders' equity and liabilities 22,427 19,890
Interest-bearing liabilities 1,038 1,289
Shareholders' equity per share, EUR 2.58 2.30
Number of shares (1,000 shares) * 4,736,302 4,692,133
* Shares owned by Group companies are excluded
CONSOLIDATED CASH FLOW STATEMENT, IAS, EUR million
(audited)
1-12/2001 1-12/2000
Cash flow from operating activities
Net profit 2,200 3,938
Adjustments, total 4,132 2,805
Net profit before change in net working capital 6,332 6,743
Change in net working capital 978 -1,377
Cash generated from operations 7,310 5,366
Interest received 226 255
Interest paid -155 -115
Other financial income and expenses 99 -454
Income taxes paid -933 -1,543
Net cash from operating activities 6,547 3,509
Cash flow from investing activities
Acquisition of Group companies,
net of acquired cash -131 -400
Purchase of non-current available-for-sale investments -323 -111
Additions to capitalized development costs -431 -393
Long-term loans receivable made to customers -1,129 -776
Proceeds from/payment of long-term receivables 84 -
Proceeds from/ payments of short-term receivables -114 378
Capital expenditures -1,041 -1,580
Proceeds from disposal of Group companies,
net of disposed cash - 4
Proceeds from sale of available-for-sale investments 204 75
Proceeds from sale of fixed assets 175 221
Dividends received 27 51
Net cash used in investing activities -2,679 -2,531
Cash flow from financing activities
Proceeds from issuance of share capital 77 72
Treasury shares acquired -21 -160
Capital investment by minority shareholders 4 7
Proceeds from long-term borrowings 102 -
Repayments of long-term borrowings -59 -82
Proceeds from/payment of short-term borrowing -602 133
Dividends paid -1,396 -1,004
Net cash used in financing activities -1,895 -1,034
Foreign exchange impact on cash -43 80
Net increase in cash and cash equivalents 1,930 24
Cash and cash equivalents at beginning of period 4,183 4,159
Cash and cash equivalents at end of period 6,113 4,183
Net fair value adjustment on current available-for sale
investments 12 -
As reported on balance sheet for 2001 and 2000 6,125 4,183
NB: The above figures cannot be directly traced from the balance sheet without additional information as a result of
acquisitions and disposals of subsidiaries and net foreign exchange differences arising on consolidation.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY, EUR million (audited)
Share Share Treasury Translation Fair value Retained Total
capital issue shares differences and other earnings
premium reserves
Balance at December 31, 1999 279 1,079 -24 243 5,801 7,378
Share issue 3 554 557
Acquisition of treasury shares -160 -160
Disposal of treasury shares 27 27
Stock options issued on 75 75
acquisitions
Stock options exercised
related to acquisitions -13 -13
Dividend -931 -931
Translation differences 104 104
Change in accounting policy -206 -206
Other increase/decrease, net 39 39
Net profit 3,938 3,938
Balance at December 31, 2000 282 1,695 -157 347 8,641 10,808
Balance at December 31, 2000 282 1,695 -157 347 - 8,641 10,808
Share issue 2 407 409
Acquisition of treasury shares -21 -21
Disposal of treasury shares -52 157 105
Stock options issued on 20 20
acquisitions
Stock options exercised
related to acquisitions -10 -10
Dividend -1,314 -1,314
Translation differences -21 -21
Effect of change in accounting principle (IAS 39) -56 -56
Cash flow hedges 76 76
Available-for-sale investments 0 0
Other increase/decrease, net 9 9
Net profit 2,200 2,200
Balance at December 31, 2001 284 2,060 -21 326 20 9,536 12,205
COMMITMENTS AND CONTINGENCIES, EUR million
(audited) GROUP
31.12.2001 31.12.2000
Collateral for own commitments
Mortgages 18 12
Assets pledged 4 4
Collateral given on behalf of other companies
Assets pledged 33 23
Contingent liabilities on behalf of Group companies
Other guarantees 505 656
Contingent liabilities on behalf of other
companies
Guarantees for loans 95 298
Leasing obligations 1,246 895
NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS, EUR million 1)
(audited)
31.12.2001 31.12.2000
Foreign exchange forward contracts 2), 3) 20,978 10,497
Currency options bought 3) 1,328 2,165
Currency options sold 3) 1,209 2,029
Interest rate swaps - 250
Cash settled equity swaps 4) 182 336
1) The notional amounts of derivatives summarized here do not represent amounts exchanged by the parties and
thus are not a measure of the exposure of Nokia caused by its use of derivatives.
2) Notional amounts outstanding include positions, which have been closed off.
3)As at December 31,2001, notional amount includes contracts amounting to EUR 1.1 billion used to hedge
the net investments of foreign subsidiaries (December 31, 2001 EUR 0.7 billion).
4) Cash settled equity swaps are used to hedge risks relating to incentive programs and investments activities.
Closing rate, 1 EUR = 0.903 USD
Change in Accounting Principles
The Group has adopted, beginning January 1, 2001, IAS 39, Financial instruments:
recognition and measurement. The impact of the changes in policy on opening
shareholders' equity is quantified as follows (EUR m):
Total shareholders' equity at 31 December 2000 as previously reported 10 808
IAS 39 transition adjustments:
Fair value adjustments to available-for-sale debt and equity investments 1)58
Transfer of gains and losses on qualifying cash flow hedging derivatives 2)-114
Total shareholders' equity at 1 January 2001 10 752
1. Available-for-sale investments in debt and equity securities and investments
in unlisted equity shares are measured at fair value unless investments are
held for trading or originated loans or unlisted equities cannot be measured
reliably.
2. Gains and losses on foreign exchange forward contracts that are properly
designated and are highly effective as cash flow hedges of highly probable
forecast foreign currency cash flows are deferred in a hedging reserve
within equity. Previously, such gains and losses were reported as deferred
income or expenses.
It should be noted that certain statements herein which are not historical
facts, including, without limitation those regarding A) the timing of product
deliveries; B) our ability to develop and implement new products and
technologies; C) expectations regarding market growth and developments; D)
expectations for growth and profitability; and E) statements preceded by
'believe,' 'expect,' 'anticipate,' 'foresee' or similar expressions, are
foreward-looking statements. Because these statements involve risks and
uncertainties, actual results may differ materially from the results that we
currently expect. Factors that could cause these differences include, but are
not limited to: 1) developments in the mobile communications market including
the continued development of the replacement market and the Company's success in
the 3G market; 2) demand for products and services; 3) market acceptance of new
products and service introductions; 4) the availability of new products and
services by operators; 5) weakened economic conditions in many of the Company's
principal markets; 6) pricing pressures; 7) intensity of competition; 8) the
impact of changes in technology; 9) consolidation or other structural changes in
the mobile communications market; 10) the success and financial condition of the
Company's partners, suppliers and customers; 11) the management of the Company's
customer financing exposure; 12) the continued success of product development by
the Company; 13) the continued success of cost-efficient, effective and flexible
manufacturing by the Company; 14) the ability of the Company to source component
production, manufacturing and R&D without interruption and at acceptable prices;
15) inventory management risks resulting from shifts in market demand; 16)
fluctuations in exchange rates, including, in particular, the fluctuations in
the euro exchange rate between the US dollar and the Japanese yen; 17) impact of
changes in government policies, laws or regulations; 18) the risk factors
specified on pages 10 to 16 of the Company's Form 20-F for the year ended
December 31, 2000.
NOKIA
Helsinki, January 24, 2002
For more information:
Lauri Kivinen, Corporate Communications, tel. +358 7180 34495
Ulla James, Investor Relations, tel. +1 972 894 4880
Antti Raikkonen, Investor Relations, tel. +358 7180 34290
www.nokia.com
- Nokia plans a mid-quarter update on March 12, 2002.
- Results announcements for 1Q, 2Q and 3Q, 2002 are planned for April 18, July
18 and October 17, respectively.
- The Annual General Meeting will be held on March 21, 2002.
END
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