Nokia confident Networks business will improve operating margin in 2015

Nokia increased its 2015 operating profit goals for its Networks business, as it detailed a company-wide growth strategy and reaffirmed its commitment to restart dividend payments in the long term.

NSN CEO Rajeev Suri

 Nokia CEO Rajeev Suri

In its annual Capital Markets Day, Nokia revealed it is now aiming to achieve a long-term non-IFRS operating income margin in the range of 8 per cent to 11 per cent, compared to its previous goal of a margin ranging from 5 per cent to 10 per cent. The business achieved a margin of 13.5 per cent in the third quarter, and 11.4 per cent in the nine months to end-September.

The company's Here mapping business will target a non-IFRS operating profit margin of between 5 per cent and 10 per cent in the full year 2015. The division's margin fell to 0 per cent in the recent quarter from 10 per cent in Q3 2013, and from 3.5 per cent in the opening nine months of 2013 to 1.6 per cent in 2014.

Here will seek improvements through increased use of cloud location technology, and a greater focus on the automotive industry and enterprise. Profitability improvements at the business will be sought through increased efficiencies.

Nokia Technologies, the company's IP research and licensing division, will act as an investment incubator for emerging technologies in addition to continuing its patent, technology and brand licensing duties.

Rajeev Suri, president and CEO of Nokia, said the company's strategy accounts for a shift in the telecoms industry towards "connecting things as well as people." The company predicts "more than 50 billion connected things," including devices, modules, and sensors will be in use by 2025, Suri added.

CFO Timo Ihamuotila said "recommencing an ordinary dividend" remains one of Nokia's main priorities, adding that the company expects "to continue to repurchase shares as part of our capital structure optimisation program."

The CFO said a strong balance sheet shows Nokia is making "clear progress" with the optimisation program.

Nokia last month revealed a vast 451 per cent year-on-year improvement in third quarter profit. The figure hit €760 million ($946 million), as sales grew 13 per cent compared to Q3 2013. Nokia Networks' sales grew 13 per cent annually, Here sales increased 12 per cent, and Nokia Technologies recorded a 9 per cent rise.

For more:
- see Nokia's strategy announcement
- view the company's earnings statement [PDF]

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