Nokia reinstated its dividend, launched a share buyback programme and boosted its long-term margin targets as the Finnish telecoms equipment maker signalled a protracted turnround was complete.
Revenues this year should be €22.6bn-€23.8bn, up from €22.2bn in 2021, Nokia said, adding that in the long term it was targeting faster sales growth than that of the wider telecoms equipment market.
Nokia is aiming for an underlying operating margin of 11-13.5 per cent this year and more than 14 per cent in the next three to five years, compared with 12.5 per cent in 2021.
“Thanks to a solid fourth quarter capping off a strong 2021, we have created an excellent foundation as we begin to move into the next phase of our strategy to deliver growth and expand profitability,” said chief executive Pekka Lundmark.
Nokia stumbled at the start of the rollout of 5G networks, losing ground to rivals such as Sweden’s Ericsson and China’s Huawei as it finished the integration of its Alcatel-Lucent acquisition. But under Lundmark, Nokia has stabilised and is now seeking to become more aggressive.
Its board proposed a dividend of €0.08 per share, which would be the first payout in almost three years. It also launched a two-year, €600mn share buyback programme.
Lundmark has promised to spend “whatever it takes” to regain technology leadership in the sector, and said Nokia’s long-term operating margin target of more than 14 per cent would depend on its research and development costs in the coming years.
He added: “Nokia enters 2022 in a strong position with improved margins, faster than expected strategy execution and a high order backlog, although the global supply chain situation remains tight.”
Nokia also reported fourth-quarter results in which revenues fell 2 per cent from the same period in 2020 to €6.4bn, while its underlying operating margin fell from 16.1 per cent in 2020 to 14.2 per cent last year.
“While we view positively the level of margin ambition at over 14 per cent, we think the timescale of three to five years is disappointing relative to rising expectations,” said analysts at Citi, who noted Nokia liked to under-promise and over-deliver.
Nokia said last month that it was going to beat its 2021 earnings guidance, not thanks to sales of telecoms equipment but due to its venture capital investments. On Thursday, it said it would commit $400mn to a new fund at NGP Capital, its venture fund.