Nokia has revealed a significant revision in its financial projections for the year 2023, saying it will not achieve net sales, comparable operating margin, and free cash flow attainment.
According to the previous communication, Nokia was aiming to achieve annual sales of EUR 23.2 billion to EUR 24.6 billion in 2023 with comparable operating margin of 11.5 percent to 13 percent. Nokia’s target was to achieve free cash flow of 20 to 50 percent conversion from comparable operating profit.
The Finland-based telecommunications giant attributed the downward revision in business outlook to limitations in customer spending during the quarter, coupled with unresolved license renewals in Nokia Technologies.
Nokia in a news statement clarified that the negotiations for license renewals are anticipated to extend into 2024, promising a potential boost to its fiscal performance next year, inclusive of related catch-up payments.
While Nokia acknowledged ongoing negotiations and favorable court decisions globally in its favor, the telecom giant emphasized safeguarding the value of its patent portfolio over meeting specific resolution deadlines.
The revised financial results for the fourth quarter and the entirety of 2023 are set to be unveiled on January 25, 2024. Nokia plans to supplement this disclosure with a comprehensive financial forecast for 2024 during the same announcement.
Despite facing hurdles, Nokia anticipates a notable sequential upturn in the revenue of its networks businesses for Q4 2023. However, challenges stemming from constrained customer spending and pivotal decisions by major clients, notably AT&T, have made this quarter more demanding than anticipated.
AT&T recently announced a $12 billion plus deal with Ericsson.
Nokia reassured stakeholders that its networks businesses would maintain a robust performance within the initially communicated comparable operating margin assumptions.
This affirmation aligns with the company’s unchanged initial planning assumptions for each unit in 2024, as shared in its Nokia Progress Update on December 12, 2023. The telecom networking firm pointed to improving order trends in the fourth quarter, particularly in Network Infrastructure, supporting these assumptions.