During the announcement of Nokia Q3 2020 results, Pekka Lundmark who recently took over as President and CEO of the company says that it will invest whatever it takes to win in 5G.
Lundmark adds that his first quarter as the CEO of Nokia has revealed both opportunities and challenges. Nokia reported net sales of $6.1 billion (€5.3 billion) during Q3 2020. While this was lesser than its net sales of $6.6 billion (€5.7 billion) in 2019, it represented a 15% year-on-year growth in net sales for Nokia Enterprise.
Additionally, the company’s financial performance was negatively impacted by COVID-19 related factory closures. Also, the pandemic affected operational costs but positively, as Nokia reports that it expects a ‘temporary benefit’. This is approximately $291 million (€250 million), for the full 2020, from lower travel and personnel expenses.
Due to its improved Mobile Access and Optical Networks performance, Nokia reported increased gross profit and operating profit in its Networks businesses. It further says; “In Optical Networks, our significantly improved year-on-year results were due to a particularly strong Q3 2020, which benefitted from pent-up demand following the easing of temporary supply chain constraints related to COVID-19”.
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In the first quarter of 2019, Nokia established a programme that focuses on free cash flow. Q3 2020 was the fifth consecutive quarter that the company had solid free cash flow. Also, since the programme began running, Nokia has used reduced working capital as a ‘significant source of cash’. As it explains, this is because of lower net sales and improved execution.
Thus, in Q3 2020 Nokia reported an end-of-quarter net cash balance of $2.2 billion (€1.9 billion) and total cash balance of $8.8 billion (€7.6 billion).
Pekka Lundmark also announced during the Q3 2020 Nokia earning report that the company was making changes to its operating model. The new model will focus on the needs of customers and lead to improved performances.
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